By Amol S. Navathe, M.D., Ph.D.; Connor W. Boyle, B.A.; Ezekiel J. Emanuel, M.D., Ph.D.
JAMA, June 22, 2020

The US health care system requires major changes to make health care more affordable and higher quality. In the decade since passage of the Patient Protection and Affordable Care Act (ACA), alternative payment models have become central to this effort. These models are designed to replace existing fee-for-service payments with a reimbursement structure that provides incentive for high-quality and cost-effective care—so-called value-based care. The Centers for Medicare & Medicaid Services has introduced several alternative payment models, each with a particular focus, such as Comprehensive Primary Care Plus for primary care and the oncology care model for patients with cancer.

Whether the shift to alternative payment models has been a success or failure is a matter of intense debate with substantial implications for future policy directions. Yet there is a paradox. Individual demonstration projects have not reported significant success. However, overall health care spending as a share of gross domestic product (GDP) has plateaued at just less than 18%, below the 20% predicted by the US Department of Health and Human Services (HHS) Office of the Actuary and the Congressional Budget Office (CBO). This in part may reflect that the economy has expanded at a rate faster than predicted. Nevertheless, the flattening of real per capita Medicare expenditures since the passage of the ACA is evidence of cost control. How can these contradictory findings be explained?

Three Explanations for the Paradox

The ACA established the Center for Medicare and Medicaid Innovation (CMMI) to design and test new payment and care models, which it did at a rapid pace and on a large scale during the past decade. The ACA required the introduction of accountable care organizations (ACOs)—consortiums of physicians, hospitals, and other clinicians designed to reduce spending and improve quality by coordinating care. Today, 1 of every 3 traditional Medicare beneficiaries is enrolled in an ACO. From 2012 to 2017, HHS introduced major payment reform initiatives for primary, specialty, and hospital care and greater than 40% of Medicare payments are now value based.

The Secretary of HHS can scale models tested by the CMMI if they reduce spending while maintaining or improving quality. Hence, the center rigorously evaluates alternative payment models. However, at least 3 main factors help to explain why these individual model evaluations may underestimate the true effects of alternative payment models on health spending.

First is psychological change among clinicians and health care organizations. In 2015, then-HHS Secretary Burwell signaled that delivery system reform was inevitable. Anticipation of ACA-driven expansion of value-based payment may have catalyzed a change in psychology and approach among clinicians and health care entities, and produced practice pattern changes and efficiency gains that decreased spending regardless of alternative payment model participation.

Second is peer network effects. When a clinician’s or health care organization’s neighboring practitioners or medical centers practice differently, they may be influenced by this other behavior. Clinicians and health care organizations observing colleagues or peer organizations engaging in novel, value-oriented behavior may pursue similar efforts. Commercial insurers, now responsible for 60% of ACO contracts, also expanded value-based contracting to align incentives with Medicare’s alternative payment models, further contributing to network effects. This could have accelerated shifts in practice patterns.

Third is control group contamination. Because the CMMI has implemented a large number of models in a short period, it has become practically impossible to ascertain the influence of any single model. Although formal accounting of the degree of contamination across dozens of programs is not yet available, it is likely to be large, supported by reports that more than 350 000 clinicians were exempt from MIPS (Merit-based Incentive Payment System) because of participation in alternative payment models. Thus, it is likely that clinicians and health care organizations affected by 1 or more models may be counted in the control group of another model, yielding smaller estimates than true alternative payment model effects.

Therefore, it may be that after enactment of the ACA, alternative payment models catalyzed broader systemwide control of health care spending that is not detectible in any individual model evaluation but is observed in both the flat per capita Medicare spending and flattening of national health expenditures as a proportion of GDP.

Empirical Data on the Shifting Baseline

The plausible influences of these 3 explanations—psychological changes, peer networks, and control group contamination—may be assessed by examining the secular trend in the control groups used in single-model evaluations. If the control group spending consistently decreased in evaluations of different alternative payment models spanning types of participants (eg, primary care practices, hospitals) and types of spending (eg, total spending per patient, total spending on clinically defined episodes of care), it would suggest underlying changes separate from any particular alternative payment model.

Assessment of peer-reviewed, systematic evaluations of prominent alternative payment model programs that reported Medicare spending trends reveals patterns in the control group spending trend. Despite expectations of an increase in spending based on CBO and HHS projections, there was a consistent “bending of trend,” reflecting slowing of spending growth or actual spending declines in the control group for 7 of 8 studies evaluated (eTable in the Supplement). For the 5 reports in which an absolute decrease in control group spending was reported, the decrease in spending ranged between 1.7 and 7.0 percentage points, with greater decreases in the control group in more recent years.

Consequently, alternative payment model participants were evaluated against a spending baseline that was decreasing. The changes in control group spending would make it more difficult to detect the effects of single alternative payment models. This is an important point; if the trajectory of lower spending in the control group was directly or indirectly a result of the alternative payment model movement, it could lead to systematic underestimation of the effects of individual alternative payment models.

There are alternative explanations for these observations, but they are improbable. Some might argue that the problem is related to inaccurate health expenditure projections. This explanation seems unlikely. For years, projections have been relied on by health economists, insurers, and the government for estimating spending and savings from various policies. These estimates have been accurate. A 2016 systematic review of HHS projections since 1998 confirmed accuracy across 1-, 2-, or 10-year forecasts to within 1%.

Another possible explanation is that financial uncertainty from changes in the US economy led patients to use less health care. However, this is not supported by the evidence, which indicates that Medicare patients have not reduced their demand for health services. As a further possible explanation, perhaps Medicare payment reductions explain the observed declines in spending. Yet a 2012 CBO analysis projected that savings from these reductions would be $35 billion annually, approximately 1% of national health expenditures. A 2014 Kaiser Family Foundation analysis concluded that a large portion (38%) of the gap between projected and realized spending remained unexplained after accounting for CBO projected savings from the ACA, payment reductions in the Budget Control Act of 2011, the slowing of prescription drug price growth, and other policy changes. Payment reductions alone cannot explain the gap. Policy interventions such as alternative payment models have surely played some role in this unexpected slowdown in spending growth.

Policy Implications of a Changing Expenditure Baseline

When the future of alternative payment models and the best ways to improve affordability and quality of health care are considered, it may be necessary to reexamine whether greater interest should be given to micro causal effects of individual models or to the combined macro effects of policy changes on the trajectory of US national health expenditures.

To truly quantify the national system-level change would require augmenting existing methodological approaches. This may require greater comparisons of Medicare with “closed” systems such as Kaiser Permanente or the VA (taking care to recognize that some clinicians simultaneously practice outside of these systems) or greater efforts for rigorous cross-national comparisons.

Moving forward, these findings also may have implications for alternative payment model design in general and control group selection in particular. It may be useful to treat alternative payment models more experimentally from the onset, focusing mandatory models in specific geographic areas while limiting overlap and contamination. Stratification based on participation in existing models, combined with randomization in the event of overlap, could help isolate effects. Randomization at the organization level and within volunteer cohorts also could help ensure robust controls that better isolate the effects of a model against a neutral backdrop.

The slowing or declines in spending in control groups reported in alternative payment model evaluations are important and suggest that it is premature to call alternative payment models a failure. Conversely, through the rapid implementation of broadly transformative models, the Centers for Medicare & Medicaid Services may be a victim of its own success, with broad secular changes prompted by policy undercutting individual program results. Given that few, if any, alternative strategies to decrease health care spending are supported by robust evidence, and that alternative payment models have not led to worsening quality or higher spending, these models remain an attractive option that policy makers should exploit.

https://jamanetwork.com…

Comment:

By Don McCanne, M.D.

The policy community has been fixated on alternative payment models (APMs) as a means of incentivizing value-based care – paying for health care based on value rather than on volume. Accountable care organizations (ACOs) were mandated by the Affordable Care Act (ACA), and CMS has introduced several APMs. Although we hear reports of successes of the models, in fact, the results have been very disappointing, with negligible gains usually being offset by deficiencies in the programs. Even this article states, “Individual demonstration projects have not reported significant success.”

The authors acknowledge the lack of success, yet they contend that health care spending has plateaued as a percent of GDP, and they want to credit the APMs, as ineffective as they have been, for slowing the overall rate of health care cost increases. In their article they cite psychological changes, peer networks, and control group contamination as explanations for how the unsuccessful APMs could have had a favorable influence on overall spending. You have to read their article to try to understand their explanation.

To top this off, they state, “Given that few, if any, alternative strategies to decrease health care spending are supported by robust evidence, and that alternative payment models have not led to worsening quality or higher spending, these models remain an attractive option that policy makers should exploit.” They don’t work, but they didn’t make things worse they claim, so policy makers should exploit them!

All of this has been a diversion from supporting a model of reform that has been proven to work well, not only for slowing increases in spending, but for correcting many of the other deficiencies in health care financing such as covering the uninsured, eliminating the financial hardship of underinsurance, returning choice in health care by eliminating restrictive provider networks, establishing equitable funding through progressive taxes, and so forth. Of course, that would be the single payer model of an improved Medicare that covered everyone.

The policy community absolutely refuses to get off of the broken value-based-reform hobby horse, and has a tizzy-fit every time single payer Medicare for All is mentioned. This is not new. They’ve had their turn. It’s time for us to dismiss them. We can put together our own team who understand exactly how to establish health care justice for all. Just wish the process didn’t have to be political since the United States isn’t doing very well there either.

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By John E. McDonough
The Milbank Quarterly, June 24, 2020

For some years I’ve pondered a Commonwealth Fund chart showing the growth in gross domestic product (GDP) for health care comparing the United States with 10 other high income nations, starting in 1980 and ending in 2018. It shows that 40 years ago, US spending was among the highest but still part of the pack of 11. In the early 1980s, for the first time, US spending leapt above the others, with the distance between the United States and the rest growing ever wider over four decades. This prompts a question: what happened to US health care in the early 1980s–and since then?

Expert opinions abound, as Austin Frakt showed in two New York Times columns on that question, here and here. I suggested then—and now—that a big part of the answer involves the broad economic and political trade winds of the late 1970s and 1980s, often called “Reaganomics” or “supply-side economics” because President Ronald Reagan ushered in a new era in the United States. The term that fits best is “neoliberalism,” which evokes an updating of Adam Smith’s 18th century economic ideas. The 20th century version was inspired by Austrian economist Friedrich Hayek and his key American collaborator, Milton Friedman, among many others. A big part of what happened to US health care in the 1980s and beyond, I hypothesize, for better and worse, resides therein.

Between the late 1940s and the late 1970s, Hayek, Friedman, and collaborators promoted far-reaching ideas to replace the prevailing paradigm of President Franklin Roosevelt’s New Deal liberalism inspired by Keynesian pro-government economics. The neoliberal agenda proposed government reforms in order to guarantee wide-open markets: cutting taxes at all government levels as often as possible, repealing regulations anywhere and everywhere, shrinking or privatizing government at nearly all levels, suppressing organized labor, encouraging free-market trade globally, accepting inequality as the price societies pay for economic freedom, making recipients of publicly provided services and benefits pay as much as possible, and reorienting corporate thinking and behavior to promote return on equity to shareholders as their only legitimate goal. Though health care was not an explicit part of the neoliberal formula, it remained close to Friedman’s thinking (his doctoral dissertation was a frontal assault on government licensure of physicians).

Hayek, Friedman, and company succeeded. Their beliefs became the accepted wisdom of governments across the globe, especially in 1979-1981 with the rise to power of Margaret Thatcher in Great Britain, Deng Xiaoping in China, and Ronald Reagan in the United State, all avid promoters of neoliberal ideas. In prior years, neoliberal ideas (under varied names) had gained prominence in the academy, within corporations and pro-business organizations, and among large numbers of Americans through, for example, the 1980 PBS documentary series, Free to Choose, created and narrated by Friedman with his wife Rose.

The New Deal era lasted for 48 years, from 1933 until Reagan’s inauguration in 1981. The neoliberal era is now in its 40th year. Like any 40 year-old Oldsmobile, rust, cracks, and failing systems abound. Signs include: President Trump’s heretical war on trade, deficit-exploding tax cuts benefiting the wealthy and corporations, anger over “deaths of despair” tied to opioid and other addictions and economic distress, awareness and revulsion about rising levels of inequality across society, and spreading rejection of absolutist “shareholder capitalism.” Last August, the Business Roundtable reversed its 20-year old statement on the “Purpose of the Corporation” to abandon shareholder primacy as the only legitimate goal for corporate America.

But what about health care? Between 1980 and 2020, US health care spending rose far above US economic growth and spending levels in all other high-income nations, while growth in health insurance premiums and cost-sharing increased well beyond advances in household income. On key population health indicators, the United States performs worse than most nations (in some cases, the worst) on life expectancy, infant and maternal mortality, chronic disease mortality (e.g., diabetes), levels of overweight and obesity, suicides, and gun violence), and glaring systemic health inequities. Despite high spending and technological advances, Americans give their system among the lowest satisfaction ratings of any nation. Now with the still-unfolding adverse impact of the Covid-19 pandemic, the US health care system stands on a brink. Not a pretty 40-year track record, in spite of oversized capital investments and world-class salaries and profits.

Between 1965 and the 1980s, for the first time, we saw major infusions of investor capital into all corners of our health care system, courtesy of shareholder-owned for-profit companies who often cut long-lasting ties with local communities. Many welcomed this trend as the “right” medicine for what was recognized as an ailing system. In 1984, health care futurist Jeff Goldsmith described the unfolding transition from government controls to deregulated competitive markets as “the death of a paradigm.” Private markets had evolved to a stage, he argued, where they could better control rising health care costs than could government bureaucrats.

In 1986, the Institute of Medicine released a 600-page report on “For Profit Enterprise in Health Care.” Though the Commission documented extraordinary growth in for-profit enterprise across the system in 1965-1985 (with wide sector variations), they found no evidence to convict for-profits of “killing” health care, instead identifying pluses and minuses that called for closer monitoring.

Today, residents of the United States experience higher spending with worse outcomes and the lowest rate of health insurance coverage among high-income nations, even with gains from the Affordable Care Act. And the for-profit acceleration is not slowing. In fact, one of the fastest growing elements in the for-profit space is private equity, often described as “capitalism on steroids.” Most Americans don’t know it, but private equity firms are principally responsible for today’s scandal of “surprise medical billing.”

US health care tends to look inwards to find solutions to big problems within its own tight borders. Yet, looking outside the health care neighborhood may provide compelling insights and important answers.

Outside the health care circle, large segments of the American public want meaningful systemic change. A 2018 document from the William and Flora Hewlett Foundation, Beyond Neoliberalism is a clarion call for a new policy sphere that is forming in think tanks, academia, advocacy and activist organizations, and the legal community, including surprising allies from Republican/conservative quarters, such as Senator Marco Rubio (R-FL), who now publicly rejects the notion of shareholder primacy. The search is on for a new paradigm for American society. Depending on the outcomes of the November 3rd federal elections, this movement may find itself on a fast track to influence or a slow boat to who-knows-where.

Sometimes we’re like fish in a water-filled tank. Noticing the water can be tough because it’s everywhere. While other societies around the globe have vigorous debate over neoliberal policies in their midst, Americans are mostly unaware. To many, the notion that we still live in the Ronald Reagan era seems bizarre. And yet, here we are. As Maya Angelou wrote: “If you don’t know where you’ve come from, you don’t know where you’re going.” Victor Fuchs put it this way in his 2002 book, Who Shall Live?: “If change is to be for the better, it should be based on an understanding of why things are the way they are.”

US health care faces many challenges within its own space. Some of the biggest challenges, though, connect health care to larger American societal concerns, such as inequality and climate change. We’re all in this mess together, and we need to think and act that way more.

https://www.milbank.org…

Comment:

By Don McCanne, M.D.

In health care, the United States is an outlier – an outlier in high spending on health care, an outlier in the number of uninsured, an outlier in erecting financial barriers to care through underinsurance, an outlier in reducing choice through narrow provider networks, an outlier in lower life expectancy, an outlier in higher infant and maternal mortality, and an outlier in systemic health inequities.

How could this be? It is because we have become an outlier in silently and blindly sinking into the invisible, stifling socioeconomic world of neoliberalism. John McDonough’s article is helpful because it explains what that world of neoliberalism is even though most Americans do not seem to be able to see it. They merely experience its impact. In health care, that impact is very high costs with mediocre health system performance and the worst health care financing system in the world, considering its high costs.

And it is not just health care. It is also the injustices of profound income and wealth inequality. It is the profusion of socioeconomic injustices. It is much more, but, particularly, it is the pending doom from accelerated climate change and the looming extinction of Homo sapiens, which obviously would make all else irrelevant.

The nation has to wake up and discover what neoliberalism has wrought. As Maya Angelou wrote: “If you don’t know where you’ve come from, you don’t know where you’re going.”

We are having a reawakening of protest demonstrations. Let’s see amongst those placards additional ones such as, “EXPOSE NEOLIBERALISM,” “ERADICATE NEOLIBERALISM,” “VOTE OUT THE NEOLIBERALS,” “GOVERNMENT FOR THE PEOPLE – FREE OF NEOLIBERALS,” “PROTECT EARTH – EXTINGUISH NEOLIBERALISM,” “EGALITARIANISM – NOT NEOLIBERALISM,” “MEDICARE FOR ALL – EVEN FOR THE UNDESERVING NEOLIBERALS.” Be innovative. Write your own.

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Commonwealth Fund Health Care Poll: COVID-19, May–June 2020

By Sara R. Collins, Munira Z. Gunja, Gabriella N. Aboulafia, Erin Czyzewicz, Christian H. Kline, Robyn Rapoport, and Sarah Glancey
The Commonwealth Fund, June 23, 2020

What do Americans think of providing people who have employer coverage with a new option to buy insurance on their own?

While the Affordable Care Act provides coverage options for people who don’t have, or lose, insurance through an employer-based plan, switching plans after losing a job can mean losing access to preferred physicians and other providers. When health coverage is not connected to a job, coverage and access to care can be more stable over time. And given the impact of rising employer plan premiums on many with low and moderate incomes, the availability of federal subsidies through marketplace plans may make such plans a more affordable option for many.

We asked survey participants whether they think people who get their health insurance through an employer should have the option of getting similar coverage, at similar cost, through government-regulated and -subsidized health plans. Three-quarters of respondents overall said they believed people should have such an option. Democrats, including those leaning Democratic, expressed the strongest support, but about two-thirds of Republicans also held this view.

Question: Millions of Americans get their health insurance through a job. Should people who get health insurance through their employers have the option of getting similar coverage at a similar cost through government-regulated and -subsidized health plans?

Percent of respondents age 18+ who said “yes”

74% – All
81% – Democrat or leaning Democrat
65% – Republican or leaning Republican
80% – Black
77% – Hispanic
71% – White

https://www.commonwealthfund.org…

Comment:

By Don McCanne, M.D.

Although most of the questions in this latest poll were about job loss and insurance coverage, plus some questions about public policies during the COVID pandemic, the question above stood out since it shows that Americans across the board, including about two-thirds of Republicans, believe that people who get their health insurance through a job should have the option of getting similar coverage at a similar cost through government-regulated and -subsidized health plans.

Recent polls have suggested that there may be some reluctance to support a government-run health plan if it means losing the option to keep an employer-sponsored plan. This poll suggests that there is strong support for being able to move into a government-regulated and -subsidized health plan. So it is not government involvement which people oppose. More likely it is uncertainty about making a change even when the current system has defects such as excessively high deductibles and limiting care to narrow provider networks.

We have yet to see a question such as the following:

Would you prefer a government plan that covered all necessary health care with no deductibles or copayments and allowed free choice of any physician or hospital even though that meant that you could not choose an employer-sponsored plan that required deductibles and copayments and limited you to a list of physicians and hospitals selected by the insurer?

It would be likely that the pollster would have to repeat the question to be sure that the respondent understood the difference. It might be difficult for the respondents to believe that such a government plan could exist, but it would if we enacted a well designed, single payer model of an improved Medicare for All.

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By Leonardo Bursztyn, Aakaash Rao, Christopher P. Roth, David H. Yanagizawa-Drott
National Bureau of Economic Research, June 2020

Abstract

We study the effects of COVID-19 coverage early in the pandemic by the two most widely-viewed cable news shows in the United States – Hannity and Tucker Carlson Tonight, both on Fox News – on downstream health outcomes. We first document large differences in content between the shows and in cautious behavior among viewers. Through both a selection-on-observables strategy and a novel instrumental variable approach, we find that areas with greater exposure to the show downplaying the threat of COVID-19 experienced a greater number of cases and deaths. We assess magnitudes through a simple epidemiological model highlighting the role of externalities and provide evidence that misinformation is a key underlying mechanism.

Conclusion

Examining the effects of misinformation is particularly important during a pandemic given the large externalities involved and the significant consequences of misinformed behavior for individuals’ health and for the health care system as a whole. The two most widely-viewed cable news shows in the United States — Hannity and Tucker Carlson Tonight, both on Fox News – originally took very different stances on the risks associated with the novel coronavirus. While Hannity downplayed the threat during the initial period of the virus’ spread in the United States, Tucker Carlson Tonight warned its viewers that the virus posed a serious threat from early February. In this paper, we show that differential exposure to these two shows affected behavior and downstream health outcomes.

We begin by validating differences in content with independent coding of shows’ transcripts. Consistent with the differences in content, we present new survey evidence that Hannity’s viewers changed behavior in response to the virus later than other Fox News viewers, while Carlson’s viewers changed behavior earlier. Using both OLS regressions with a rich set of controls and different instrumental variable strategies exploiting variation in the timing of TV consumption, we then document that greater exposure to Hannity relative to Tucker Carlson Tonight increased the number of total cases and deaths in the initial stages of the coronavirus pandemic. We also show that a standard epidemiological model can, with reasonable parameter levels, match the approximate magnitude of our measured treatment effects. Finally, we also provide additional evidence that misinformation is an important mechanism driving the effects in the data. Our results indicate that the provision of misinformation on mass media can have significant societal consequences.

https://www.nber.org…

Thursday, June 18, 2020 Scoreboard: Hannity and Carlson Lead Fox News to 4th Straight Prime-Time Win

https://www.adweek.com…

Comment:

By Don McCanne, M.D.

Do television hosts have a responsibility when they disseminate misinformation that results in adverse consequences on the viewing audience? This elaborate study demonstrated that differential exposure to Fox’s Sean Hannity and Fox’s Tucker Carlson affected behavior and downstream health outcomes. They originally took very different stances on the risks associated with the novel coronavirus. Hannity downplayed the threat during the initial period of the virus’ spread in the United States, while Tucker Carlson warned his viewers that the virus posed a serious threat. The authors document that greater exposure to Hannity relative to Carlson increased the number of total cases and deaths in the initial stages of the coronavirus pandemic. They also provide additional evidence that misinformation is an important mechanism driving the effects in the data.

Sean Hannity’s glib approach in disseminating misinformation killed people. He has personally contributed to the tragic outcomes of the COViD-19 pandemic. Yet the most recent ratings demonstrate that the public still supports Hannity and Carlson.

Freedom of speech does not allow you to shout “FIRE!” in a crowded theater, nor should it allow you to disseminate false information that creates a major public health hazard. Hannity’s audience may not care, but their behavior in a pandemic harms other innocent people. What should our response be?

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By Douglas Barthold, Anirban Basu
Health Affairs Blog, June 18, 2020

High-deductible health plans (HDHPs) covered more than 30 percent of enrollees in employer-sponsored plans in the United States in 2019, up from 4 percent in 2006.

The growth of HDHPs is driven by the pursuit of reduced health care spending and premiums for both employees and employers through channeling elements of consumerism and managed care. Often, HDHPs are offered along with a savings option (health savings account or health reimbursement arrangement) in a consumer-directed health plan.

Recently, however, there have been concerns about the out-of-pocket cost burdens imposed on patients by HDHPs and other plans.

It is becoming increasingly clear that HDHPs’ indiscriminate reductions in care usage may not be the best way to contain health care costs. In this post, we suggest that combining the principles of HDHPs and value-based insurance design (VBID), by offering deductible exemptions for high-value services, could provide nuanced incentives with potential to preserve access to the most important services while reducing use of only more wasteful care.

Why Did HDHPs Fail To Deliver Their Intended Consequences?

The intended premise of HDHPs is that beneficiaries facing the full costs of health care services during the deductible phase will engage in price shopping and subsequently choose care commensurate with expected benefits of that care. The hope is that the combination of lower prices and a different mix of services could increase the value of health care used while also reducing costs. Unfortunately, evaluations of HDHPs suggest that consumers neither price shop nor can they discriminate between high- and low-value care when facing high deductibles; accordingly, they reduce use of both essential and inessential services. Not only is this behavior likely to lead to worse health for beneficiaries, but short-term savings for both the beneficiary and the insurer may be offset by increased long-term spending associated with preventable adverse health events. The lack of the hoped-for response to HDHPs (price shopping and reduction in unnecessary care only) may stem from a lack of price transparency, inability to pay for essential care during the deductible phase, or inadequate information about the value of alternate health care services and technologies.

Tying-In Value Conversations Within HDHPs

Health services can be underused and overused when there are differential health-related returns across services, but patients are unaware of the differences. VBIDs have been used by insurers as a mechanism to address this information problem, by signaling the value of alternative health care technologies to consumers through variable cost sharing.

To date, most applications of VBID have focused on applying such designs to copays but not to deductibles. Consequently, results of such applications show the promise of VBID, but to a limited scale, owing to the relative inelasticity of demand for care related to small copay variation. Tying value-based cost sharing within deductibles could generate a bigger “nudge” to align use with value.

Value-Based High-Deductible Plans

We suggest that value-based high-deductible plans (VHDP), which combine the principles of HDHPs and VBID, and have been suggested as “a natural evolution of health plans,” could provide a robust alternative in insurance markets and achieve the goals of both low costs and high value of health care delivery. Our enthusiasm for such designs stems from the dispersion of price-elasticities observed when a value-based system was implemented on copayments. We expect such dispersion can be expanded substantially when VBID is applied to develop VHDPs. Specifically, VHDPs would nudge consumers toward high-value technologies (for example, preventive medications) by exempting their costs from the deductibles, while also providing consumers with transparency on the full costs of low-value services (for example, MRI for back pain or headache), and disincentivizing their use. This would generate a more elastic demand for low-value services, which in turn could move the markets for insured health care services toward more efficient outcomes.

In health care, where we know that both quality and value are at least partially unobservable to the patient, efficient outcomes are typically not attainable, especially when cost sharing indiscriminately alters prices. A VHDP would provide nuanced cost sharing to influence behavior in a manner similar to prices in traditional markets, therefore resolving information asymmetries for low-value services, reducing distortions, and increasing social welfare.

Challenges To Adoption Of Value-Based HDHPs

While value-based pricing improves beneficiaries’ ability to observe value, and therefore reduces the information asymmetries inherent in health care markets, the definition of “value” is an open question. Value could be included in decisions about which services should be exempt from the deductible. The decision of which elements to consider in this decision will depend on the stakeholders and perspectives (for example, payer, health system, employer, societal).

A potential downside of VHDPs is plan complexity, but improved communication (perhaps through health plan stewards) could address this limitation. It would be relatively straightforward to incorporate the cost-sharing design of VHDPs to a value-based tiering system, now widely used in cost sharing.

Qualitative studies of VBID have identified additional barriers to VBID implementation. For example, patients are skeptical of value-based tradeoffs, do not necessarily trust the information provided by their plan, and may resist changes in care delivery. Payers tend to be skeptical of the clinical significance of adherence improvements from VBID and have expressed concern over low return on investment and administrative and information technology hurdles. Finally, providers are concerned about changes to patient behavior that puts their practice at financial risk.

These concerns are important, but potentially addressable with education and carefully planned implementation, to allow VHDPs to strike a nuanced balance between reducing moral hazard consumption of care and adequate risk protection. Such a balance is critical to controlling health spending while maintaining access to the highest-value services and reducing financial uncertainty.

https://www.healthaffairs.org…

Comment:

By Don McCanne, M.D.

Who should be denied health care? People who do not have enough money to pay for it? Apparently we don’t believe that since we have set up systems to try to ensure that health care is available to essentially everyone. We place funds in health insurance risk pools to be sure that funds are there to pay for care when needed. For those who do not have insurance and are too poor to buy it, we set up programs such as Medicaid and CHIP. We help fund community health centers that provide reduced-cost or free care for the needy. We set up programs to cover special groups such as seniors (Medicare), or veterans (VA health care). We require Emergency Departments to accept critical patients who are unable to pay for care (though we reserve the right to ruin their credit if they don’t pay).

Though we have set up these systems, the fragmented and dysfunctional nature of them leaves tens of millions without insurance or with inadequate insurance that results in financial hardship when health care is required. Although our national health expenditures are now $4 trillion, the system is not working for too many individuals and families. With a properly designed financing system, $4 trillion is enough to pay for health care for everyone. The single payer model of an improved Medicare would work just fine. The financing of the system is an issue entirely separate from the delivery of health care. Under single payer, when you need health care, you get it. It’s that simple.

As far as financing a single payer system is concerned, it is still important to pool risk. All funds are paid into a single universal risk pool that covers everyone. Funds are paid into the pool based on ability to pay. Lower income individuals pay less and those with higher incomes pay more. The most equitable way to do this is through progressive taxes. Under this system there is a transfer from the healthy to the sick and from the wealthy to the poor. Most on average will pay less than they do under our current dysfunctional financing system though the wealthy will pay more although still an amount that will be easily affordable for them. So, again, the system functions best when the delivery of health care is totally separated from its financing.

We have a problem. The current system serves some sectors of the medical-industrial complex very well, especially the expensive, administratively-burdensome private insurance industry. Although we waste tremendous resources keeping this industry in play, it has not been able to adequately fulfill the important function of transferring funds from the healthy to the sick and from the wealthy to the poor. They have phased in various gimmicks under the umbrella of consumer-directed health care. They have introduced the exchange of money into the actual health care delivery setting, conflating to some extent the delivery and the financing of health care.

By requiring copayments, coinsurance, and the much larger deductibles, they are placing the patient in the role of a shopper in the health care marketplace. This has been disastrous. The out-of-pocket cost-sharing has made health care unaffordable for far too many of us, and it does so by erecting financial barriers directly tied to the delivery of health care services. The maldistribution of the $4 trillion that we are spending is creating financial hardships and even bankruptcy for too many of us, not to mention that the administrative complexity is wasting tremendous financial resources that should be going to health care instead.

Recognition of these problems certainly is not new. In fact, in response the industry has gone out of its way to manipulate the consumer-directed policies to continue to serve their own industry well, but at a dear cost to the patients.

The extremes to which they go by adding more administrative complexity is demonstrated in today’s article by Barthold and Basu. They explain how the current system is not working well, but their solution is that they want more of it. They report the effort to improve shopper selection by lowering copayments for higher-valued services while increasing copayments for those services of lesser value. Acknowledging that the very modest changes in out-of-pocket spending have not been enough to improve health shoppers’ behavior, they suggest the innovation of using the much larger deductible to make a greater difference in the intensity of the shoppers’ experiences so they will more likely choose higher value care, at least in theory.

The deficiencies should be obvious to anyone who has studied health policy. How do you determine which care is of higher value? Since all patients are different, how do you determine whether that higher value applies to a specific patient? What other choices are there out in the health care marketplace, and how do you find out about them? These issues can be quite complex, as the authors recognize, so their solution is to consider adding more personnel – health plan stewards – to assist the patient in decisions on how they should spend the deductible. More administrative waste and grief!

The obsession with the ideological preference for consumer-directed health care has served the insurance industry well, and has kept the policy community busy, but it has done so at a great disservice to patients, not to mention the burden that it has placed on the health care delivery system. The entire concept, along with the insurers, needs to be dumped. We should take money out of the health care delivery transaction, and simply provide health care whenever and wherever it is needed. The administrative cost of collecting equitable, progressive taxes to pay for the system is a minuscule fraction of the administrative waste that we would recover by changing to single payer Medicare for All.

Imagine prepaid health care where the entire health care system is prepaid for all of us. Can hardly wait.

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By Gracie Himmelstein, M.A., Kathryn EW Himmelstein, M.S.Ed., M.D.
International Journal of Health Services, In Press (Posted June 18, 2020)

Abstract

Racial inequities in health outcomes are widely acknowledged. This study seeks to determine whether hospitals serving people of color in the United States have lesser physical assets than other hospitals. With data on 4,476 Medicare-participating hospitals in the U.S., we defined those in the top decile of the share of Black and Hispanic Medicare inpatients, as “Black-serving” and “Hispanic-serving” respectively. Using 2017 Medicare cost reports and American Hospital Association data, we compared the capital assets (value of land, buildings and equipment), and the availability of capital-intensive services at these hospitals and other hospitals, adjusted for other hospital characteristics. Hospitals serving people of color had lower capital assets, e.g. $5,197/patient-day at Black-serving hospitals, $5,763 at Hispanic-serving hospitals, and $8,325 at other hospitals (p<.0001 for both comparisons). New asset purchases 2013-2017 averaged $1,242, $1,738, and $3,092/patient-day at Black-serving, Hispanic-serving and other hospitals respectively (p<.0001). In adjusted models, hospitals serving people of color had lower capital assets (-$215,121/bed, p<.0001) and recent purchases (-$83,608/bed, p<.0001). They were also less likely to offer 19 of 27 specific capital-intensive services. Our results show that hospitals that serve people of color are substantially poorer in assets than other hospitals, and suggest that equalizing investments in hospital facilities in the U.S. might attenuate racial inequities in care.

From the Discussion

The physical resources available for care at Black- and Hispanic-serving hospitals in the U.S. are sparse relative to other hospitals. The total value of plant and equipment per patient-day is about one-third less at hospitals serving people of color than other hospitals. Moreover, we found similarly large inequities in investment in new capital assets, which suggests that the gap in assets between hospitals serving people of color and other hospitals will persist, or even widen. Unsurprisingly in view of these large inequities, hospitals serving people of color are much less likely to offer many capital-intensive medical technologies and services.

What lies behind these differences? Until the Great Depression two main sources provided capital to build hospitals – federal, state, and local government funded the building of public hospitals, while private philanthropic donors funded the construction of private hospitals. The 1946 Hill-Burton Act (subsequently rolled into the Public Health Service Act) served to greatly expand the government’s role in hospital capital provision, offering grants and loans to build and modernize health care facilities. More recently, hospitals have funded most capital investments from their accumulated profits (which are called surpluses in non-profit hospitals), or from loans or bonds that must be paid back from future profits. For-profit hospitals can also raise capital from investors. In order to access any of these sources of capital, a hospital must be profitable or expect to garner profits in the future.

Several factors contribute to hospitals’ profitability, and hence access to capital. Payer mix, which is strongly linked to patients’ race, plays a key role. Hospitals have historically collected low payments for the care of uninsured and Medicaid patients (who are disproportionately Black and Latinx), while patients with private coverage are most lucrative. Furthermore, elective admissions are generally more profitable than emergencies, and non-white patients have a lower proportion of elective admissions than do white patients for a variety of conditions.

Although studies linking hospital capital investment and health outcomes are scant, and mostly dated, they suggest a positive relationship between investment in hospital capital and improved patient care. Thus, the gaps in capitalization that we found may contribute to ongoing racial inequities in the quality of hospital facilities, and thus health outcomes.

Hospitals’ capital investments “literally set in concrete the future physical configuration of the health care system”. The inequities we document reflect generations of deficient investment in the health care of communities of color. The term “structural racism” – the perpetuation of racial inequities by cultural, economic and political systems that are often inherited from the past and reproduced in the present – seems peculiarly apropos as a description of these stark inequities.

Gracie Himmelstein is an MD candidate at the Icahn School of Medicine at Mount Sinai, and a PhD candidate in Demography and Social Policy at the Office of Population Research at Princeton University. She received her MA in Demography from Princeton in 2019.

Kathryn EW Himmelstein is a resident physician in Internal Medicine at Massachusetts General Hospital. She received her MD degree from the Perelman School of Medicine at the University of Pennsylvania in 2018.

https://pnhp.org…

Comment:

By Don McCanne, M.D.

At a time when our nation is especially concerned about racial inequities and their adverse consequences, this article is a particularly important contribution since it indicates that variation in capital investments in health care serving various socioeconomic and racial populations is a significant contributor to inequities in health care services and outcomes.

Those familiar with the Physicians’ Proposal drafted by PNHP – basically a single payer model of an improved Medicare for All – are aware that it is not only a proposal to finance the delivery of health care for all, but it also proposes separate budgeting of all major capital investments in health care, using regional health planning boards to allocate capital funds for new facilities and expensive new equipment based on medical need, project quality and efficiency. This would essentially eliminate the inequities in health care facilities that Himmelstein and Himmelstein have demonstrated in their research.

Following are excerpts from a separate press release:

Hospitals that care for large numbers of Black and Latinx patients have far less to spend on their facilities such as buildings and equipment, and offer fewer high-tech services than other U.S. hospitals, according to a new study of hospitals’ capital assets and spending. The peer-reviewed study, released ahead of print in the International Journal of Health Services, used data from 4,476 hospitals to determine the total value of each hospitals’ facilities.

Lead author, Gracie Himmelstein, an MD/PhD candidate at Icahn Mount Sinai Medical School and Princeton University’s Office of Population Studies, and a Woodrow Wilson Fellow at Princeton commented: “Our study confirmed the stark differences between rich hospitals and poor hospitals that I’ve seen during my training. Many of the doctors and nurses at poor hospitals are terrific, but they’re fighting an uphill battle; they care for the sickest patients in the most crowded and difficult conditions. To compensate for decades of unequal health financing we need to invest in hospitals serving Black and Latinx patients, and abandon an insurance system that offers hospitals rich rewards to care for some patients, and less or nothing to care for others.”

Co-author Dr. Kathryn Himmelstein, a resident in internal medicine at Massachusetts General Hospital and Harvard Medical School noted, “White Americans were living three and a half years longer than Black Americans even before COVID-19 began ravaging communities of color. If America wants to show that Black lives truly matter, we need to reverse the structural racism that’s literally built into our hospitals.”

Statement of conflict of interest:

Gracie and Kathryn Himmelstein are daughters of Steffie Woolhandler and David Himmelstein, co-founders of Physicians for a National Health Program and icons in the world of health policy research. Not only do the Himmelstein sisters have no conflict of interest inherent in this study, they passionately share with their parents a common interest in health care justice for all. For those of us near the end of our productive years dedicated to health reform advocacy, we can be heartened to know that the future is in good hands. America really will have health care justice for all, and, eventually, so will the world.

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By James M. Perrin
The Milbank Quarterly, June 2020

Barbara Starfield built the field of primary care research and galvanized research and policy documenting the central importance of primary care in health and health care delivery. Her work spanned decades, showing how primary care improves population health and lowers health care expenditures. It guided many of us in the quest to improve health and health care, and rates of publications with primary care in the title have more than doubled from fewer than 1,000 in 2005 to more than 2,000 in 2018. The remarkable and comprehensive review that Starfield and her colleagues, Shi and Macinko, published in 2005 in The Milbank Quarterly summarized a wealth of US and international studies demonstrating that a) health is better in areas with more primary care physicians, b) people who receive care from primary care physicians are healthier, and c) the main characteristics of primary care are associated with better health. Those studied characteristics are first contact care, holistic person-focused care over time, comprehensive care, and coordinated care, concepts expanded in various primary care medical home criteria at the national and state levels. Furthermore, better health outcomes are found in communities and countries that distribute health resources equitably, have no or low copayments for health care, have a universal financing mechanism guaranteed by a publicly accountable body (government or government-regulated insurance plans), and have professional incomes for primary care physicians comparable to those for other specialists. Systems with strong primary care orientation and where primary care physicians are identified as the usual source of care are associated with decreased racial and socioeconomic health disparities and with decreased deaths from premature mortality, infant mortality, and overall mortality from chronic pulmonary disease, cardiovascular disease, and heart disease.

What progress has the United States made since the 2005 Starfield publication? During this period, the United States has become even more racially and ethnically diverse, especially among younger groups. Many in the health sector—and elsewhere—have recognized the importance of the social determinants of health and the role the health sector can play in addressing those determinants. Growing rates of mental and behavioral health conditions, often coexisting with other chronic health conditions, have spawned progress in integrating mental and behavioral health in primary care teams. Spurred partly in response to the recognition of the multifactorial antecedents of health and the central role of mental health, general and subspecialty clinical practice has increasingly embraced team-based care, including some combination of nurse care coordinators, mental health personnel, and family health workers—a phenomenon that Starfield recognized while pondering how to maintain important personal relationships between patients and providers with the transformation to teams. Much work has gone into training team members in their collaborative efforts and, through such work, emphasizing the importance of maintaining a productive personal relationship with ongoing patients.

Despite these generally favorable changes in primary care, the United States has recently experienced striking increases in mortality among people aged 15-60 years. Although some of this growth reflects the opioid epidemic and other drug and alcohol use, much mortality comes from suicide (reflecting the increase in mental health conditions) and cardiovascular and heart disease, partly resulting from the epidemic of obesity. Although high-quality primary care could prevent many of these deaths, the United States perpetuates a serious imbalance in financial support for primary care versus other health investments, with primary care and mental and behavioral health chronically underfunded. Starfield noted that greater relative investment in primary care improves population health and decreases health care expenditures. The US strategy limits access to preventive care throughout the life course for some populations, especially those with low income. Coupled with the persistence of poverty among young families in the United States—much worse than in other OECD countries—the lack of adequate primary care creates an unhealthy underclass beginning in childhood (or even prenatally) and continuing to affect health and death over the decades. The persistent rapid growth of US health care expenditures further indicates the lack of systematic work to implement Starfield’s findings and recommendations. For example, although the Affordable Care Act included provisions to lower the growth in total health care expenditures, many provisions required upfront funding that Congress declined to provide. This failure reflects a lack of political will to take on a complex and powerful health care industry driven by specialist investigations and interventions, rather than investment in primary care to increase access, promote prevention, improve overall quality of care, and reduce unnecessary and potentially harmful specialist care. The United States has paid the price of increased disability, mortality, and other indicators of poor health along with rising costs, all highlighted by Starfield and her colleagues.

Are there important points of light? The Centers for Medicare and Medicaid Services have stimulated greater investment in primary care, especially through their State Innovation Models and Primary Care Plus initiative. However, here too strategies have had negligible impact on equitable pay for primary care physicians, with, for example, the resource-based value structure oriented to procedures over cognitive services and, thus, balanced against adequate support for primary care tasks. Several states have worked to increase primary care investment, some through their Medicaid programs and others through broader health policy oversight, including direct calls for identifying and increasing the percent of health care dollars spent on primary care from public and private sources. The National Academies of Science, Engineering, and Medicine recently empaneled a new study on Implementing High Quality Primary Care, the first serious attention to primary care by the Academies in more than a quarter century. We can hope this new attention will lead to stronger political will and policy changes that begin to approximate Starfield’s original vision for primary care.

The Milbank Quarterly, June 2020, “Detailing the Primary Care Imperative–Remembering Barbara Starfield”:
https://www.milbank.org…

The Milbank Quarterly, September 2005, “Contribution of Primary Care to Health Systems and Health”:
https://www.milbank.org…

National Academy of Sciences, Engineering, and Medicine, “Implementing High-Quality Primary Care”:
https://www.nationalacademies.org…

Comment:

By Don McCanne, M.D.

It is interesting to observe how much we already know about how we can improve our health care system thereby reducing its profound waste that makes it the most expensive system in the world while improving its performance and outcomes, and yet we fail to act. Two systemic changes that would greatly improve value and performance would be to reinforce and expand primary care, and to enact and implement a single payer national health program – an improved version of Medicare that would include everyone.

Today’s selection honors Barbara Starfield and the legacy she left with her work in describing the virtues of primary care. We clearly need a single payer national health program built on a strong foundation of primary care. The task would not be at all difficult – simply enacting and implementing the single payer and primary care policies that have been well described in many other venues.

Since we know what is wrong, and we know how to fix it, why haven’t we done it? Without getting into the subject of divisive politics, we should recognize the imperative of single payer and primary care and just go ahead and do it. For those who clamor about politics, let’s just push them to the side and move forward. There should be plenty of others out there who would enthusiastically join together with us as we include other important policies such as improving our public health infrastructure, supporting the black lives matter movement, advocating for a sustainable environment, shielding us from the threat of guns, improving housing, reducing socioeconomic inequities – especially the maldistribution of income and wealth, making public education more accessible and affordable, providing opportunity for the Dreamers, and… well, you know, making our nation and the world a better place for all of us.

Let’s just not let great ideas, like those of Barbara Starfield, slip away from us by defaulting to mere inertia. We’re better than that.

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