For Many, Few Health-Plan Choices, High Premiums on Online Exchanges

By Timothy W. Martin and Christopher Weaver
The Wall Street Journal, February 12, 2014

Hundreds of thousands of Americans in poorer counties have few choices of health insurers and face high premiums through the online exchanges created by the health-care law, according to an analysis by The Wall Street Journal of offerings in 36 states.

Consumers in 515 counties, spread across 15 states, have only one insurer selling coverage through the online marketplaces, the Journal found. In more than 80% of those counties, the sole insurer is a local Blue Cross & Blue Shield plan. Residents of wealthier, more populated counties in the U.S. receive lower-priced choices than those living in counties with a single insurer.

The price differences reflect the strategy of insurers to pick markets where they believe they can turn a profit—and avoid areas of high unemployment and a concentration of unhealthy residents they deem more risky.

Aetna Inc. and UnitedHealth Group Inc., for instance, have limited their participation in the new health-insurance marketplaces, where consumers shop for coverage, to a much smaller map than their traditional business. They offer coverage in more counties outside of the marketplaces, where plans are sold directly to consumers and federal subsidies aren’t available.

Aetna targeted areas with stable levels of employment and income to attract desirable customers to its marketplace offerings, Chief Executive Mark Bertolini said last fall. “We were very careful to pick the markets” where the insurer could succeed, he said.

Reversing the trend presents a challenge because low-population areas are unlikely to draw more insurers, said Glenn Melnick, a health-care economist at RAND Corp: “I don’t think the health law can overcome those economics.”

http://online.wsj.com/news/articles/SB1000142405270230445090457936695056…

We’ve always know that insurers market their plans in areas where there is the greatest potential for business success. As USC Health Finance Professor Glen Melnick explains, the Affordable Care Act cannot overcome those economics.

Clearly we have the wrong model for reform. Private insurers respond to business opportunities. Public insurance, such as a single payer national health program, simply enrolls everyone; there are no market decisions to be made.

So is it going to continue to be about private insurance markets, or will it be about patients – all patients? An improved Medicare for all would be about the latter.

Physician outcry on EHR functionality, cost will shake the health information technology sector

By Daniel R. Verdon
Medical Economics, February 10, 2014

Despite the government’s bribe of nearly $27 billion to digitize patient records, nearly 70% of physicians say electronic health record (EHR) systems have not been worth it. It’s a sobering statistic backed by newly released data from marketing and research firm MPI Group and Medical Economics that suggest nearly two-thirds of doctors would not purchase their current EHR system again because of poor functionality and high costs.

*  Nearly 45% of physicians from the national survey report spending more than $100,000 on an EHR.

*  Nearly 79% of respondents in practices with more than 10 physicians said their EHR investment was not worth the effort, resources and cost.

*  73% of the largest practices would not purchase their current EHR system. The data show that 66% of internal medicine specialists would not purchase their current system. About 60% of respondents in family medicine would also make another EHR choice.

*  67% of physicians dislike the functionality of their EHR systems.

*  45% of respondents say patient care is worse since implementing an EHR.

*  65% of respondents say their EHR systems result in financial losses for the practice.

*  About 69% of respondents said that coordination of care with hospitals has not improved.

The national survey underscores the major disconnect between the current state of EHR software and the needs of physicians.

http://medicaleconomics.modernmedicine.com/medical-economics/news/physician-outcry-ehr-functionality-cost-will-shake-health-information-technol

Comment:

By Don McCanne, M.D.

Congress keeps coming up with schemes to try to control health care costs. Establishing financial incentives for electronic health records (EHRs) appears to be just one more example where Congress has again fallen short, based on this report of physician outcry over EHR functionality and costs.

It’s too bad. Members of Congress have before them a model that has been proven to be effective in controlling costs – a single payer national health program or “Improved Medicare for All.” If we had such a system in place then other improvements such as a health information technology system (HIT) could be developed in a coordinated manner that would better serve patients and their physicians.

The Office of the National Coordinator for Health Information Technology was established under President George W. Bush, but existed primarily to only encourage the private sector to work together to coordinate their systems. That is asking a lot of competitors that each want to have the dominant system in the market while making sure that competitors’ systems would not be compatible, so they could have the whole thing. The profit incentives in the private, fragmented EHR marketplace are considerably different from the patient care incentives that led to the successful VistA EHRs for the VA Health system – a concept developed by the National Center for Health Services Research and Development of the U.S. Public Health Service (now AHRQ).

Some may cite the boondoggle with the startup of the ACA insurance exchanges as an example of the incompetence of the government in such matters, but it was the government’s reliance on the private sector that resulted in the problems that we saw and are still seeing. Congress should enact a single payer system now so that we’ll have something to work with for the betterment of efficient patient care.

Physician outcry on EHR functionality, cost will shake the health information technology sector

By Daniel R. Verdon
Medical Economics, February 10, 2014

Despite the government’s bribe of nearly $27 billion to digitize patient records, nearly 70% of physicians say electronic health record (EHR) systems have not been worth it. It’s a sobering statistic backed by newly released data from marketing and research firm MPI Group and Medical Economics that suggest nearly two-thirds of doctors would not purchase their current EHR system again because of poor functionality and high costs.

*  Nearly 45% of physicians from the national survey report spending more than $100,000 on an EHR.

*  Nearly 79% of respondents in practices with more than 10 physicians said their EHR investment was not worth the effort, resources and cost.

*  73% of the largest practices would not purchase their current EHR system. The data show that 66% of internal medicine specialists would not purchase their current system. About 60% of respondents in family medicine would also make another EHR choice.

*  67% of physicians dislike the functionality of their EHR systems.

*  45% of respondents say patient care is worse since implementing an EHR.

*  65% of respondents say their EHR systems result in financial losses for the practice.

*  About 69% of respondents said that coordination of care with hospitals has not improved.

The national survey underscores the major disconnect between the current state of EHR software and the needs of physicians.

http://medicaleconomics.modernmedicine.com/medical-economics/news/physic…

Congress keeps coming up with schemes to try to control health care costs. Establishing financial incentives for electronic health records (EHRs) appears to be just one more example where Congress has again fallen short, based on this report of physician outcry over EHR functionality and costs.

It’s too bad. Members of Congress have before them a model that has been proven to be effective in controlling costs – a single payer national health program or “Improved Medicare for All.” If we had such a system in place then other improvements such as a health information technology system (HIT) could be developed in a coordinated manner that would better serve patients and their physicians.

The Office of the National Coordinator for Health Information Technology was established under President George W. Bush, but existed primarily to only encourage the private sector to work together to coordinate their systems. That is asking a lot of competitors that each want to have the dominant system in the market while making sure that competitors’ systems would not be compatible, so they could have the whole thing. The profit incentives in the private, fragmented EHR marketplace are considerably different from the patient care incentives that led to the successful VistA EHRs for the VA Health system – a concept developed by the National Center for Health Services Research and Development of the U.S. Public Health Service (now AHRQ).

Some may cite the boondoggle with the startup of the ACA insurance exchanges as an example of the incompetence of the government in such matters, but it was the government’s reliance on the private sector that resulted in the problems that we saw and are still seeing. Congress should enact a single payer system now so that we’ll have something to work with for the betterment of efficient patient care.

The political origins of health inequity: prospects for change

By Ole Petter Ottersen and 23 other co-authors
The Lancet—University of Oslo Commission on Global Governance for Health, The Lancet, February 11, 2014

Executive summary

Despite large gains in health over the past few decades, the distribution of health risks worldwide remains extremely and unacceptably uneven. Although the health sector has a crucial role in addressing health inequalities, its efforts often come into conflict with powerful global actors in pursuit of other interests such as protection of national security, safeguarding of sovereignty, or economic goals. This report examines power disparities and dynamics across a range of policy areas that affect health and that require improved global governance: economic crises and austerity measures, knowledge and intellectual property, foreign investment treaties, food security, transnational corporate activity, irregular migration, and violent conflict.

Global health inequities

*  About 842 million people worldwide are chronically hungry, one in six children in developing countries is underweight, and more than a third of deaths among children younger than 5 years are attributable to malnutrition. Unequal access to sufficient, safe, and nutritious food persists even though global food production is enough to cover 120% of global dietary needs.

*  1·5 billion people face threats to their physical integrity, their health being undermined not only by direct bodily harm, but also by extreme psychological stress due to fear, loss, and disintegration of the social fabric in areas of chronic insecurity, occupation, and war.

*  Life expectancy differs by 21 years between the highest-ranking and lowest-ranking countries on the human development index. Even in 18 of the 26 countries with the largest reductions in child deaths during the past decade, the difference in mortality is increasing between the least and most deprived quintiles of children.

*  More than 80% of the world’s population are not covered by adequate social protection arrangements. At the same time, the number of unemployed workers is soaring. In 2012, global unemployment rose to 197·3 million, 28·4 million higher than in in 2007. Of those who work, 27% (854 million people) attempt to survive on less than US$2 per day. More than 60% of workers in southeast Asia and sub-Saharan Africa earn less than $2 per day.

* Many of the 300 million Indigenous people face discrimination, which hinders them from meeting their daily needs and voicing their claims. Girls and women face barriers to access education and secure employment compared with boys and men, and women worldwide still face inequalities with respect to reproductive and sexual health rights. These barriers diminish their control over their own life circumstances.

Conclusion

The overarching message of the Commission on Global Governance for Health is that grave health inequity is morally unacceptable, and ensuring that transnational activity does not hinder people from attaining their full health potential is a global political responsibility. The deep causes of health inequity are not of a technical character, devoid of conflicting interests and power asymmetries, but tied to fairness and justice rather than biological variance. Health equity should be a cross-sectoral political concern, since the health sector cannot address these challenges alone. A particular responsibility rests with national governments. We urge policy makers across all sectors, as well as international organisations and civil society, to recognise how global political determinants affect health inequities, and to launch a global public debate about how they can be addressed. Health is a precondition, outcome, and indicator of a sustainable society, and should be adopted as a universal value and a shared social and political objective for all.

http://www.thelancet.com/commissions/global-governance-for-health

The political origins of health inequity: prospects for change (38 pages): http://download.thelancet.com/pdfs/journals/lancet/PIIS0140673613624071.pdf

Comment:

By Don McCanne, M.D.

In reviewing the enormity of the global health inequities and the problems that perpetuate them, our compromised status in the United States seems to be minuscule in comparison. Yet when you think of the difficulties that we do have with addressing our own health inequities, it is mind-boggling to contemplate the international scene.

In a related Lancet article, Professor Ole Petter Ottersen is noted to be at pains to point out that this is far from “a doom and gloom report.” Yet they conclude, “Health equity should be a cross-sectoral political concern, since the health sector cannot address these challenges alone. A particular responsibility rests with national governments.”

Judging from the difficulties that we have had with merely tweaking some of our injustices without addressing effectively the major problems, it is difficult to see how nations will be able to work together in making real progress in improving the health of all – but we have to try.

As this is being written, Prof. Ottersen, in closing remarks in a live webcast from the University of Oslo at which this report was presented, reemphasized that that the improvement in global health will require the involvement of national political systems. And we thought single payer was tough.

The political origins of health inequity: prospects for change

By Ole Petter Ottersen and 23 other co-authors
The Lancet—University of Oslo Commission on Global Governance for Health, The Lancet, February 11, 2014

Executive summary

Despite large gains in health over the past few decades, the distribution of health risks worldwide remains extremely and unacceptably uneven. Although the health sector has a crucial role in addressing health inequalities, its efforts often come into conflict with powerful global actors in pursuit of other interests such as protection of national security, safeguarding of sovereignty, or economic goals. This report examines power disparities and dynamics across a range of policy areas that affect health and that require improved global governance: economic crises and austerity measures, knowledge and intellectual property, foreign investment treaties, food security, transnational corporate activity, irregular migration, and violent conflict.

Global health inequities

*  About 842 million people worldwide are chronically hungry, one in six children in developing countries is underweight, and more than a third of deaths among children younger than 5 years are attributable to malnutrition. Unequal access to sufficient, safe, and nutritious food persists even though global food production is enough to cover 120% of global dietary needs.

*  1·5 billion people face threats to their physical integrity, their health being undermined not only by direct bodily harm, but also by extreme psychological stress due to fear, loss, and disintegration of the social fabric in areas of chronic insecurity, occupation, and war.

*  Life expectancy differs by 21 years between the highest-ranking and lowest-ranking countries on the human development index. Even in 18 of the 26 countries with the largest reductions in child deaths during the past decade, the difference in mortality is increasing between the least and most deprived quintiles of children.

*  More than 80% of the world’s population are not covered by adequate social protection arrangements. At the same time, the number of unemployed workers is soaring. In 2012, global unemployment rose to 197·3 million, 28·4 million higher than in in 2007. Of those who work, 27% (854 million people) attempt to survive on less than US$2 per day. More than 60% of workers in southeast Asia and sub-Saharan Africa earn less than $2 per day.

* Many of the 300 million Indigenous people face discrimination, which hinders them from meeting their daily needs and voicing their claims. Girls and women face barriers to access education and secure employment compared with boys and men, and women worldwide still face inequalities with respect to reproductive and sexual health rights. These barriers diminish their control over their own life circumstances.

Conclusion

The overarching message of the Commission on Global Governance for Health is that grave health inequity is morally unacceptable, and ensuring that transnational activity does not hinder people from attaining their full health potential is a global political responsibility. The deep causes of health inequity are not of a technical character, devoid of conflicting interests and power asymmetries, but tied to fairness and justice rather than biological variance. Health equity should be a cross-sectoral political concern, since the health sector cannot address these challenges alone. A particular responsibility rests with national governments. We urge policy makers across all sectors, as well as international organisations and civil society, to recognise how global political determinants affect health inequities, and to launch a global public debate about how they can be addressed. Health is a precondition, outcome, and indicator of a sustainable society, and should be adopted as a universal value and a shared social and political objective for all.

http://www.thelancet.com/commissions/global-governance-for-health

The political origins of health inequity: prospects for change (38 pages):http://download.thelancet.com/pdfs/journals/lancet/PIIS0140673613624071.pdf

In reviewing the enormity of the global health inequities and the problems that perpetuate them, our compromised status in the United States seems to be minuscule in comparison. Yet when you think of the difficulties that we do have with addressing our own health inequities, it is mind-boggling to contemplate the international scene.

In a related Lancet article, Professor Ole Petter Ottersen is noted to be at pains to point out that this is far from “a doom and gloom report.” Yet they conclude, “Health equity should be a cross-sectoral political concern, since the health sector cannot address these challenges alone. A particular responsibility rests with national governments.”

Judging from the difficulties that we have had with merely tweaking some of our injustices without addressing effectively the major problems, it is difficult to see how nations will be able to work together in making real progress in improving the health of all – but we have to try.

As this is being written, Prof. Ottersen, in closing remarks in a live webcast from the University of Oslo at which this report was presented, reemphasized that that the improvement in global health will require the involvement of national political systems. And we thought single payer was tough.

CMS may require Obamacare insurers to accept Ryan White payments

By Bill Berkrot and Sharon Begley
Reuters, February 9, 2014

The 1990 Ryan White Act offered people with HIV/AIDS federal financial help in paying for AIDS drugs and health insurance premiums, especially in state-run, high-risk pools. Obamacare, which bans insurers from discriminating against people with preexisting conditions, was designed to replace these high-risk pools.

Hundreds of HIV/AIDS patients are dependent on Ryan White payments for Obamacare because they fall into a coverage gap. They are not eligible for Medicaid, the joint federal-state health insurance program for the poor, because Louisiana did not expand the low-income program, and Obamacare federal subsidies don’t kick in until people are at 100 percent of the federal poverty level.

Hundreds of people with HIV/AIDS in Louisiana trying to obtain coverage under President Barack Obama’s healthcare reform are in danger of being thrown out of the insurance plan they selected in a dispute over federal subsidies and interpretation of rules about preventing Obamacare fraud, Reuters reported on Saturday.

Blue Cross and Blue Shield of Louisiana, the state’s largest health insurer, is rejecting checks from a federal program designed to help these patients pay for AIDS drugs and insurance premiums, and has begun notifying customers that their enrollment in its Obamacare plans will be discontinued.

The insurer insists it is not trying to keep people with HIV/AIDS from enrolling in one of its policies under the Affordable Care Act, but is instead rejecting third party premium payments in an effort to prevent potential fraud.

http://www.reuters.com/article/2014/02/09/us-usa-healthcare-obamacare-idUSBREA180W620140209

Comment:

By Don McCanne, M.D.

One of the advantages of the Affordable Care Act (ACA) is that private insurers can no longer reject the applications of individuals with serious, expensive disorders, such as HIV/AIDS. But the response of Blue Cross and Blue Shield of Louisiana – the largest insurer in Louisiana – is another example of how private insurers are not inclined to change from their business model to a patient service model.

For HIV/AIDS patients, the need was so great that Congress passed the Ryan White Act in 1990 in order to provide funds to pay premiums for them in high-risk pools. Since ACA requires insurers to accept all applicants, many of the high-risk pools are transferring their beneficiaries to the exchange plans. These are expensive patients yet the premiums the insurers receive are the same as for everyone else in the individual risk pools.

Clearly, the insurers do not want these patients, yet the Ryan White funds are still available to pay the premiums, especially for those with incomes below poverty in a state that has refused to expand its Medicaid program.

So what did Blue Cross and Blue Shield of Louisiana do? They refused to accept Ryan White checks to pay for the premiums on the basis that such payments could expose the insurer to fraud. What? A federal government check creates a greater potential for fraud?

The fraud is obviously on the part of Blue Cross and Blue Shield of Louisiana which is using this ruse to keep high-cost HIV/AIDS patients out of their health plans – patients which they are required to cover.

HHS’s response? They are going to encourage insurers and Marketplaces to accept Ryan White payments. They offer what doesn’t even amount to a tweak when what we need is get rid of the private insurers and cover everyone with our own improved version of Medicare. The goal should be optimal patient service, not optimal business success for private insurers.

CMS may require Obamacare insurers to accept Ryan White payments

By Bill Berkrot and Sharon Begley
Reuters, February 9, 2014

The 1990 Ryan White Act offered people with HIV/AIDS federal financial help in paying for AIDS drugs and health insurance premiums, especially in state-run, high-risk pools. Obamacare, which bans insurers from discriminating against people with preexisting conditions, was designed to replace these high-risk pools.

Hundreds of HIV/AIDS patients are dependent on Ryan White payments for Obamacare because they fall into a coverage gap. They are not eligible for Medicaid, the joint federal-state health insurance program for the poor, because Louisiana did not expand the low-income program, and Obamacare federal subsidies don’t kick in until people are at 100 percent of the federal poverty level.

Hundreds of people with HIV/AIDS in Louisiana trying to obtain coverage under President Barack Obama’s healthcare reform are in danger of being thrown out of the insurance plan they selected in a dispute over federal subsidies and interpretation of rules about preventing Obamacare fraud, Reuters reported on Saturday.

Blue Cross and Blue Shield of Louisiana, the state’s largest health insurer, is rejecting checks from a federal program designed to help these patients pay for AIDS drugs and insurance premiums, and has begun notifying customers that their enrollment in its Obamacare plans will be discontinued.

The insurer insists it is not trying to keep people with HIV/AIDS from enrolling in one of its policies under the Affordable Care Act, but is instead rejecting third party premium payments in an effort to prevent potential fraud.

http://www.reuters.com/article/2014/02/09/us-usa-healthcare-obamacare-id…

One of the advantages of the Affordable Care Act (ACA) is that private insurers can no longer reject the applications of individuals with serious, expensive disorders, such as HIV/AIDS. But the response of Blue Cross and Blue Shield of Louisiana – the largest insurer in Louisiana – is another example of how private insurers are not inclined to change from their business model to a patient service model.

For HIV/AIDS patients, the need was so great that Congress passed the Ryan White Act in 1990 in order to provide funds to pay premiums for them in high-risk pools. Since ACA requires insurers to accept all applicants, many of the high-risk pools are transferring their beneficiaries to the exchange plans. These are expensive patients yet the premiums the insurers receive are the same as for everyone else in the individual risk pools.

Clearly, the insurers do not want these patients, yet the Ryan White funds are still available to pay the premiums, especially for those with incomes below poverty in a state that has refused to expand its Medicaid program.

So what did Blue Cross and Blue Shield of Louisiana do? They refused to accept Ryan White checks to pay for the premiums on the basis that such payments could expose the insurer to fraud. What? A federal government check creates a greater potential for fraud?

The fraud is obviously on the part of Blue Cross and Blue Shield of Louisiana which is using this ruse to keep high-cost HIV/AIDS patients out of their health plans – patients which they are required to cover.

HHS’s response? They are going to encourage insurers and Marketplaces to accept Ryan White payments. They offer what doesn’t even amount to a tweak when what we need is get rid of the private insurers and cover everyone with our own improved version of Medicare. The goal should be optimal patient service, not optimal business success for private insurers.

Insurers face new pressure over limited doctor choice

By Anna Wilde Mathews and Christopher Weaver
Wall Street Journal, February 6, 2014

Insurers are facing pressure from regulators and lawmakers about plans that offer limited choices of doctors and hospitals, a tactic the industry said is vital to keep down coverage prices in the new health law’s marketplaces.

This week, federal regulators proposed a tougher review process for the doctors and hospitals in plans to be sold next year through HealthCare.gov, a shift that could force insurers to expand those networks. 

Meantime, regulators in states including Washington and New Hampshire are ramping up their own scrutiny, and lawmakers in Mississippi and Pennsylvania, among others, are weighing bills that could force plans to add more hospitals and doctors.

The moves come amid complaints by some consumers that they don’t have access to a broad enough range of care—such as specialists at top academic medical centers…

http://online.wsj.com/news/articles/SB10001424052702304450904579365373011903340?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304450904579365373011903340.html

==

Health law goals face antitrust hurdles

By Eduardo Porter
The New York Times, February 4, 2014

[I]n a remote courthouse in Idaho … less than two weeks ago a district judge sided with the Federal Trade Commission and ordered the unwinding of the merger between one of the state’s biggest hospital systems and its biggest independent network of doctors.

The ruling against St. Luke’s Health System’s 2012 purchase of the Saltzer Medical Group underlined a potentially important conflict between the nation’s antimonopoly laws and the Affordable Care Act. The new law has encouraged the creation of big, broad accountable care organizations, which are paid to keep patients healthy rather than for individual services.

“We want to be providing a more coordinated product that delivers health care at a lower overall cost to the community we serve,” Christine Neuhoff, general counsel at St. Luke’s, told me. ….

Paradoxically, Judge B. Lynn Winmill seemed to agree. In his decision, he noted that the merger, had he let it stand, would probably have improved patient outcomes: “St. Luke’s is to be applauded,” he wrote, “for its efforts to improve the delivery of health care in the Treasure Valley,” which stretches west from Boise.

Still, he slapped it down because the merged group, he reasoned, would be able to demand higher reimbursement rates from health insurers and raise rates for services like X-rays, pushing up health care costs for consumers. “There are other ways” to obtain the desired efficiencies that “do not run such a risk of increased costs,” he concluded.

http://www.isidewith.com/news/article/economic-scene-health-law-goals-face-antitrust-hurdles

==

FTC wins challenge against Idaho hospital deal

By Brent Kendall
Wall Street Journal, January 24, 2014

Lawyer David A. Ettinger, who represented a competing Idaho hospital that opposed the St. Luke’s transaction, said the judge’s ruling effectively rebuts “the notion that all these transactions are appropriate because of the Affordable Care Act.”

http://online.wsj.com/news/articles/SB10001424052702304856504579340733626090534

Comment:

By Kip Sullivan

The Affordable Care Act has set off another wave of mergers among hospitals, and it has induced insurance companies to kick doctors out of their “networks.” Both hospitals and insurers are justifying their behavior by claiming it is exactly what the authors of the Affordable Care Act wanted them to do. Hospitals claim they are merely trying to create “accountable care organizations” (a new synonym for HMO endorsed by the ACA) that will better “coordinate care” and thereby reduce costs. The insurance industry is claiming they are narrowing their networks in order to lower costs and winnow out doctors who don’t care about “quality.”

The emperor here is stark naked. The hospital and insurance industries are building up market power as fast as they can in order to maintain countervailing power against each other. By reducing the size of their networks, insurers create more power over the remaining providers and use it to negotiate lower reimbursements. By merging with other hospitals and buying up clinics, hospitals make it harder for insurers refuse to include them in their networks and to squash their fees. Neither the insurers nor the hospitals can afford to disarm unilaterally.  

Proponents of the ACO provisions within the ACA should have predicted that their handiwork would set off the equivalent of an arms race. The least they can do now is admit that’s what happened and that the consequences – smaller networks and bigger hospital-clinic chains – need to be unraveled. But ACA proponents either ignore the issue or suggest solutions that make no sense. In the New York Times article quoted above, Jonathan Skinner, a leading ACO proponent, argues that empire building by hospitals won’t lead to higher prices because insurance companies are also building up countervailing power by creating narrower networks. The Times quotes Skinner as follows: “It’s certainly true that the consolidation of physician groups and hospitals can lead to greater market power and higher charges to insurance companies. But the insurance companies are creating narrower networks of providers. So providers who try to charge more risk getting dropped entirely from the now narrower network.” What Skinner is saying is that we needn’t worry about giant hospital chains because giant insurance companies will react by reducing consumer choice and all will be well. In this battle between Godzilla and King Kong, patients will lose choice of provider, but that’s not anything we should worry our little minds about. What’s important is that the ACO experiment should play out across the country.

The Times also quotes Obama ally David Cutler saying that if hospital-clinic monopolies do evolve, that’s fine because they are probably the “only way to obtain good care,” and if that turns out to be the case, then we’ll have to “regulate [their] prices or total spending.” Like Skinner, Cutler is assuming that enormous hospital-clinic chains confer such obvious benefits that society must give up choice of provider and learn to tolerate enormous hospital-centered monopolies. The only difference between Cutler’s “solution” and Skinner’s is that the government will play Godzilla to the hospital’s King Kong, not the insurance industry.

But the claim that enormous health “systems,” dressed up as ACOs or anything else, can improve care and lower costs remains unproven. Until it is proven, the FTC, the Justice Department, and state attorneys general should not stand idly by and watch the empire builders. And judges should not treat the claims made by ACO proponents as true as the judge in the St. Luke’s case apparently did. When the FTC or Justice brings the empire builders into court and the empire builders claim they are merely trying to “integrate care” per the ACA, judges should demand evidence that ACOs or “integrated systems” work as advertised. That evidence does not exist today and probably never will exist.

In ruling against St. Luke’s, the Idaho judge made a valuable observation. He said “there are other ways” to achieve the goals ACO advocates claim they want to achieve. Imagine that. May I suggest one way: Why don’t ACO proponents state concretely and specifically what they want ACOs to do, and if evidence indicates what they’re proposing is good for patients, then let’s pay clinics and hospitals (not ACOs) to provide those services. When I say ACO proponents should speak “concretely and specifically,” I mean in everyday language, not “coordinated” this and “integrated” that and other fatuous labels invented by the illuminati at 80,000 feet. 

For example, if ACO proponents were to say that what they really want is nurses to visit heart failure patients at home after discharge and to monitor them remotely thereafter, I believe all of us – ACO proponents and skeptics alike – would agree the evidence indicates that is good for patients http://www.innovations.ahrq.gov/content.aspx?id=275. In that event, we could write a code for those services and order public and private insurers to pay for them. Why funnel un-earmarked “capitation” payments through the headquarters of enormous hospital-clinic chains and hope they’ll use the money to pay nurses to take better care of heart failure patients rather, than, say, more advertising or more mergers? 

Paying clinics and hospitals directly would remove much of the incentive to build empires and it would give society a much better record of where our money went. 

Of course, the ultimate antidote to empire-building is a single-payer system.