U.S. ranks near bottom among industrialized nations in efficiency of health care spending

UCLA Fielding School of Public Health, December 12, 2013

A new study by researchers at the UCLA Fielding School of Public Health and McGill University in Montreal reveals that the United States health care system ranks 22nd out of 27 high-income nations when analyzed for its efficiency of turning dollars spent into extending lives.  

The study, which appears online Dec. 12 in the “First Look” section of the American Journal of Public Health, illuminates stark differences in countries’ efficiency of spending on health care, and the U.S.’s inferior ranking reflects a high price paid and a low return on investment.  

For example, every additional hundred dollars spent on health care by the United States translated into a gain of less than half a month of life expectancy. In Germany, every additional hundred dollars spent translated into more than four months of increased life expectancy.

The researchers also discovered significant gender disparities within countries.  

“Out of the 27 high-income nations we studied, the United States ranks 25th when it comes to reducing women’s deaths,” said Dr. Jody Heymann, senior author of the study and dean of the UCLA Fielding School of Public Health. “The country’s efficiency of investments in reducing men’s deaths is only slightly better, ranking 18th.”  

The study, which utilized data from 27 member countries of the Organization for Economic Cooperation and Development collected over 17 years (1991–2007), is the first-known research to estimate health-spending efficiency by gender across industrialized nations.  

 “While there are large differences in the efficiency of health spending across countries, men have experienced greater life expectancy gains than women per health dollar spent within nearly every country,” said Douglas Barthold, the study’s first author and a doctoral candidate in the department of economics at McGill University.  

The report’s findings bring to light several questions. How is it possible for the United States to have one of the most advanced economies yet one of the most inefficient health care systems? And while the U.S. health care system is performing so poorly for men, why is it performing even worse for women?  

The exact causes of the gender gap are unknown, the researchers said, thus highlighting the need for additional research on the topic, but the nation’s lack of investment in prevention for both men and women warrants attention. 

http://ph.ucla.edu/news/press-release/2013/dec/us-ranks-near-bottom-among-industrialized-nations-efficiency-health-care

American Journal of Public Health:  Abstract – “Analyzing Whether Countries Are Equally Efficient at Improving Longevity for Men and Women”: http://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2013.301494

Comment:

By Don McCanne, M.D.

To no surprise to those who have been paying attention to the U.S. health care system, we rank very low amongst OECD nations – 22nd out of 27 studied – on the efficiency of health care spending when measured by improvements in life expectancy. Spending on women was even less efficient than spending on men. As we have long known, we spend more while getting less.

There are likely many factors that contribute to these differences, but there is no doubt that we have a very dysfunctional, fragmented, wasteful, inequitable health care financing system that certainly is an exemplar of inefficiency. Why should we not expect poor outcomes for our high level of spending?

Once we have in place a single payer national health program it will be much easier to identify the deficiencies specifically related to health care delivery, and then we can correct them. Ladies first, please.

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Health Care Rationing: Doing It Better in Public and Private Health Care Systems

By Alan Maynard
Journal of Health Politics, Policy and Law, December 2013 Abstract All public and private health care systems ration patient access to care. The private sector rations access to consumers who are willing and able to pay. The poor and disadvantaged have limited access to care and inadequate income protection. In public health systems, care is provided on the basis of “need,” that is, the comparative cost-effectiveness of competing treatments. This results in patients being deprived of care if treatments are clinically effective but not cost-effective. Rationing health care is ubiquitous. In both types of systems physicians have discretion to deviate from these rationing principles. This has created inefficient variations in clinical practice. These are difficult to resolve because of the lack of transparency of costs and patient outcomes and perverse incentives. The failure to remove universal inefficiency in a period of economic austerity sharpens awareness of rationing. Hopes of greater efficiency are largely faith based. Competing ideologues from the left and the right continue to offer evidence for free solutions to long-established problems. Inefficiency is unethical, as it deprives potential patients of care from which they could benefit. Reducing inefficiency is essential but difficult. The universal challenge is to decide who shall live when all will die in a world of scarce resources. From the Overview In all countries there is a reluctance to use the word “rationing.” Policy makers and politicians prefer terms such as “prioritization” and “resource allocation.” Call it what you will, rationing in health care is ubiquitous in public and private health care systems. The latter ration by consumers’ ability to pay, and “success” is related to physicians and other providers making a good living. Public health care systems, in principle, ration in relation to need or comparative cost-effectiveness; in practice, prioritization is determined by physicians’ providing treatments that most satisfy the physicians. Productivity variations exist throughout the manufacturing and service industries. Indeed, these variations drive innovators to act smarter and capture market share from rivals. Public and private health care markets are remarkable in that innovation tends to increase costs rather than reduce them, as has happened in information technology and other industries. The causes of this difference are debated and include the power of the medical profession (physicians’ monopoly of many areas of activity where efficient substitutes exist), third-party pays (weak budget caps), and perverse incentives confronting providers and consumers (moral hazard). Mitigating problems such as these could ease rationing constraints but would not remove them. The failure of health care systems to measure and manage these problems with greater transparency and improved incentive structures will result in rationing becoming more explicit. The hope is that the consequent debate about who will die and who will live in what degree of pain and discomfort will not be dominated only by emotion (e.g., hysteria about “death panels”) but by evidence of cost-effectiveness produced by robust HTA programs (health technology assessment) and the transparent judgments of clinicians using this information. The policy priority, as efficient HTA and P4P (pay for performance) schemes increasingly influence rationing choices, will be to ensure that this is seen by the public as improving patient safety and value for money for insurers and taxpayers, and not merely seen as depriving patients of care from which they might benefit marginally but which societies choose not to fund, either by NHS rationing or US rationing by restrictive benefit packages and poor access. http://jhppl.dukejournals.org/content/38/6/1103.abstract

Comment:

By Don McCanne, M.D. “All public and private health care systems ration patient access to care.” Professor Alan Maynard of the University of York, with his characteristic academic objectivity, describes the differences in public and private approaches to health care rationing. Public health care systems ration access in relation to medical need, whereas private systems ration access based on willingness and ability to pay. In public systems, success is measured by the satisfaction of physicians with their ability to meet the medical needs of their patients, whereas in private systems, success is measured by the ability of physicians to make a good living. Both public and private systems experience inefficiency. Since the rationing that results from inefficiency deprives some patients of care that they should have, tolerating inefficiency is unethical. When you compare the public British system with the largely private system in the United States, it is clear that our much greater inefficiency results in an insufferable level of ethical compromise. We do ration far more than the British; we just don’t see it since our victims of rationing are not even allowed a position in the queue. Why do we tolerate this? A clue might be found in Alan Maynard’s words in “The Public-Private Mix for Health” (The Nuffield Trust, 2005): “As societies spend increasing proportions of their rising GDP on healthcare, more realism about its productivity in terms of improving the health of the population is needed. But this is not in the interest of the media, politicians and commerce. Promising miracles increases their income and power!”

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Medicare Patients’ Access to Physicians: A Synthesis of the Evidence

By Cristina Boccuti, Christina Swoope, Anthony Damico and Patricia Neuman
Kaiser Family Foundation, December 10, 2013 Main findings: *  On a national level, Medicare patients have good access to physicians.  The vast majority (96%) of Medicare beneficiaries report having a usual source of care, primarily a doctor’s office or doctor’s clinic. *  Most people with Medicare — about 90 percent — are able to schedule timely appointments for routine and specialty care. Medicare seniors are more likely than privately insured adults age 50-64 to report “never” having to wait longer than they want for timely routine care appointments. *  A small share of Medicare beneficiaries say they looked for a new physician in the past year, and only 2 percent of seniors with Medicare report problems finding one when needed — comparable to rates reported by privately insured adults age 50-64. *  Medicare seniors report foregoing medical care at similar or lower rates than privately insured adults age 50-64. Certain subgroups of the Medicare population are more likely than others to report not seeing a doctor when they thought they needed to during the year, particularly beneficiaries who: are under age 65 and qualify for Medicare because of a permanent disability; have either Medicaid (dually eligible for Medicare and Medicaid) or no supplemental coverage; are Black; have lower incomes; are in fair or poor health, and/or have five or more chronic conditions.  Even within these vulnerable subgroups, however, the majority do not report foregoing doctor visits when needed. *  According to recently-released physician survey data, the majority (91%) of non-pediatric physicians accept new Medicare patients — the same rate that accept new patients with private non-capitated insurance.  This correlation persists generally across states, indicating that physician acceptance of new Medicare patients may be more related to local market factors than issues unique to Medicare overall. *  According to new physician data from Medicare, less than 1 percent of physicians in clinical practice have formally “opted-out” of the Medicare program, with psychiatrists accounting for the largest share (42%). These findings show that according to national patient and physician surveys and other data sources, most Medicare beneficiaries enjoy good access to physician services, comparable to the experiences of privately insured patients.  Most physicians accept new Medicare patients, and relatively few have formally opted out of the Medicare program. http://kff.org/medicare/issue-brief/medicare-patients-access-to-physicians-a-synthesis-of-the-evidence/

Comment:

By Don McCanne, M.D. This comprehensive report lays to rest once and for all the the rumor that physicians are leaving Medicare in droves. Most physicians accept new Medicare patients, and less than 1 percent have formally opted-out of the Medicare program. An improved Medicare would be even more attractive to physicians, especially if it covered everyone. It would dramatically reduce hassles with intrusive third party payers so that physicians could spend most of their time doing what they devoted their lives to – taking care of their patients. As far as the threat that physicians would quit if we enacted an improved Medicare for all, first of all, very few would leave – likely less than 1 percent – and, second, since most of those who would leave seem to be more interested in money rather than patients (think concierge), we really don’t want them around anyway. It would be a great way to clean up our profession.

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AIDS advocates say drug coverage in some marketplace plans is inadequate

By Ariana Eunjung Cha
The Washington Post, December 9, 2013 The nation’s new health-care law says insurers can’t turn anyone away, even people who are sick. But some companies, patient advocates say, have found a way to discourage the chronically ill from enrolling in their plans: offer drug coverage too skimpy for those with expensive conditions. Some plans sold on the online insurance exchanges, for instance, don’t cover key medications for HIV, or they require patients to pay as much as 50 percent of the cost per prescription in co-insurance — sometimes more than $1,000 a month. “The fear is that they are putting discriminatory plan designs into place to try to deter certain people from enrolling by not covering the medications they need, or putting policies in place that make them jump through hoops to get care,” said John Peller, vice president of policy for the AIDS Foundation of Chicago. As the details of the benefits offered by the new health-care plans become clear, patients with cancer, multiple sclerosis, rheumatoid arthritis and autoimmune diseases also are raising concerns, said Marc Boutin, executive vice president of the National Health Council, a coalition of advocacy groups for the chronically ill. “The easiest way [for insurers] to identify a core group of people that is going to cost you a lot of money is to look at the medicines they need and the easiest way to make your plan less appealing is to put limitations on these products,” Boutin said. Insurers say that such accusations are unfounded, and that the drug coverage is more than adequate, with many plans exceeding the minimum levels required by the Affordable Care Act. But they acknowledge that to keep premiums low, they must restrict the use of some costly drugs if there are alternatives. And they say that when high-priced medications must be used, it’s reasonable to expect patients to pick up more of the cost. But people who expected the new plans to provide pharmaceutical coverage comparable with that of employer-sponsored plans have been disappointed. In recent years, employers have compelled workers to pick up a growing share of the costs, especially for brand-name drugs. But insurers selling policies on the exchanges have pared their drug benefits significantly more, according to health advocates, patients and industry analysts. Robert Zirkelbach, a spokesman for American’s Health Insurance Plans, an industry group, said the exchange plans are designed “to try to give consumers better value for their health-care dollars.” http://www.washingtonpost.com/national/health-science/aids-advocates-say-drug-coverage-in-some-marketplace-plans-is-inadequate/2013/12/09/0fca0fd0-5d18-11e3-95c2-13623eb2b0e1_print.html

Comment:

By Don McCanne, M.D. It is no surprise that private insurers would use every devious trick to try to limit their payments for expensive drugs, including requiring the patient to pay more through higher cost sharing, or by omitting expensive drugs from their formulary altogether. From the insurers’ perspective, that’s just good business. What is really nefarious is that they are now using this to discourage patients with expensive disorders from even enrolling in their plans. Patients with HIV/AIDS, multiple sclerosis, rheumatoid arthritis, lupus, cancer, hepatitis C, and other disorders who are on long term therapy with expensive drugs will go elsewhere for their coverage when they find that their current drug regimens would leave them with intolerable costs under these plans. A provision of the Affordable Care Act – guaranteed issue – requires that insurers accept all applicants, no matter how expensive their care is anticipated to be. But Obamacare did not change the nature of the private insurance beast. Insurers will always find more ways to circumvent requirements such as guaranteed issue. Insurers boast to their shareholders about innovation in insurance product design. The problem for us is that the innovations are not designed to improve access and affordability for the insured. The innovations are to improve the bottom line of the insurers. Just think of the innovations we are already seeing – higher deductibles, more limited provider choice through narrower networks, limited benefits within each of the ten categories of required benefits, and greater financial barriers to care such as these outrageous cost sharing requirements for drugs. The insurers are not through. When the insurance lobbyists are saying that they are trying to “give consumers better value for their health-care dollars,” they really mean keeping insurance premiums low enough to compete in the marketplace. They do that by paying as little as possible for health care, shifting ever more of the costs to patients. The sky is the limit on innovations when they are driven by greed. We have the wrong people in charge – the insurers. We need our own public financing system that is designed to help patients get care by removing financial barriers. That’s what an improved Medicare that covered everyone would do for us. Enough of this, “Boy, do we have a plan for you, and it’s cheap, but if you have anything wrong, study this plan carefully since you’ll find that it won’t cover what you need (and then go away kid, you bother me).”

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S. 1782, The American Health Security Act of 2013

Senator Bernie Sanders
Introduced in the Senate, December 9, 2013 Summary of S. 1782, The American Health Security Act of 2013 The American Health Security Act of 2013 (S. 1782) provides every American with affordable and comprehensive health care services through the establishment of a national American Health Security Program (the Program) that requires each participating state to set up and administer a state single payer health program.  The Program provides universal health care coverage for the comprehensive services required under S. 1782 and incorporates Medicare, Medicaid, the Children’s Health Insurance Program, the Federal Employees Health Benefits Program and TRICARE (the Department of Defense health care program), but maintains health care programs under the Veterans Affairs Administration.  Private health insurance sold by for-profit companies could only exist to provide supplemental coverage.
 
The cornerstones of the Program will be fixed, annual, and global budgets, public accountability, measures of quality based on outcomes data designed by providers and patients, a national data-collection system with uniform reporting by all providers, and a progressive financing system.  It will provide universal coverage, benefits emphasizing primary and preventive care, and free choice of providers.  Inpatient services, long term care, a broad range of services for mental illness and substance abuse, and care coordination services will also be covered. A seven-member national board (the Board) appointed by the President will establish a national health budget specifying the total federal and state expenditures to be made for covered health care services. The Board will work together with similar boards in each of the fifty states and the District of Columbia to administer the Program. A Quality Council will develop and disseminate practice guidelines based on outcomes research and will profile health care professionals’ patterns of practice to identify outliers.  It will also develop standards of quality, performance measures, and medical review criteria and develop minimum competence criteria. A new Office of Primary Care and Prevention Research will be created within the Office of the Director of the National Institutes of Health (NIH). The Program is designed to provide patient-centered care supported through adequate reimbursement for professionals, a wealth of evidence-based information, peer support, and financial incentives for better patient outcomes.  The Program seeks to ensure medical decisions are made by patients and their health care providers. The Program amends the tax code to create the American Health Security Trust Fund and appropriates to the Fund specified tax revenues, current health program receipts, and tax credits and subsidies under the Affordable Care Act.  While the final structure of the financing component is still under consideration and is subject to change, the tax revenues in the draft include a new health care income tax, an employer payroll tax, a surcharge on high income individuals, and a tax on securities transactions. The federal government would collect and distribute all funds to the states for the operation of the state programs to pay for the covered services. Budget increases would be limited to the rate of growth of the gross domestic product.  Each state’s budget for administrative expenses would be capped at three percent. Each state would have the choice to administer its own program or have the federal Board administer it.  The state program could negotiate with providers and consult with its advisory boards to allocate funds.  The state program could also contract with private companies to provide administrative functions, as Medicare currently does through its administrative regions.  State programs could negotiate with providers to pay outpatient facilities and individual practitioners on a capitated, salaried, or other prospective basis or on a fee-for service basis according to a rate schedule.  Rates would be designed to incentivize primary and preventive care while maintaining a global budget, bringing provider, patients, and all stakeholders to the table to best determine value and reimbursement. Finally, the Program also relieves businesses from the heavy administrative burdens of providing health care coverage, puts all businesses on an even playing field in terms of healthcare coverage, and increases the competitiveness of American companies in the global marketplace.  Every other industrialized nation has been able to use the power of a public authority to provide universal health care.  The American Health Security Act of 2013 seeks to do just that for all Americans and their businesses. S. 1782, The American Health Security Act of 2013 (189 pages): http://www.sanders.senate.gov/download/american-health-security-act-of-2013?inline=file

Comment:

By Don McCanne, M.D. Introduction of another single payer bill – S. 1782, The American Health Security Act of 2013 – is very timely. Here’s why. Implementation of the Affordable Care Act is proceeding, and a handful of citizens are pleased to finally gain entrance to an insurance market that they’ve been locked out of. Nevertheless, dissatisfaction is widespread because of a mandate to purchase insurance products that are expensive, that leaves individuals exposed to excessive out-of-pocket costs should they need health care, and that reduces health care choices by reducing the number of providers allowed in the insurance networks. Those with employer-sponsored plans are beginning to see the same changes that reduce both financial security and choices of physicians and hospitals. People are not happy. The rocky rollout of the exchanges created more smoke than fire, but it did cause people to think more about whether Obamacare is a wise solution to the problems with our health care financing system. On the left, there is a loud and clear call to move forward with enactment of a single payer system – an improved Medicare for all. On the right, there is a loud clamor that Obamacare is so bad that we might end up with a single payer system. By some on the right, that’s posed as a threat, but by others it seems to be a dispirited acknowledgement that Obamacare is so bad, and the proposed Republican reforms are so ineffective, that people will demand a system that works – single payer. Because increased awareness of the flaws in Obamacare, and because of the intensification of the national dialogue on single payer, along with the recent endorsement of respected thought leaders, now is the perfect time to introduce a new single payer bill. Sen. Bernie Sanders has introduced S. 1782 in the Senate, and Rep. Jim McDermott is sponsoring the sister bill in the House. Some might be concerned that introduction of another single payer bill into Congress when we already have Rep. John Conyers’ single payer bill – H.R. 676 – could muddle the politics by diverting attention of potential supporters to the two bills, with a contest to decide which is the better legislation. There are differences in the bills, but it is crucial to understand that they are simply two expressions of the one single payer concept. The differences that we should be discussing in public are not the differences in these two bills, but rather the differences between an effective and efficient single payer model that achieves our goals, and our current highly inefficient, dysfunctional multi-payer model that falls far so short – the flawed model that Obamacare perpetuates. When it becomes time to move the legislation forward, the details can be worked out. Proven single payer policies would be inviolate, but the markup would be direct ed more to crafting appropriate legislative language rather than to sabotaging beneficial single payer principles. While there is a lot of noise and dissatisfaction, now is the time to push the single payer message. When we have people like Colin Powell, John Podesta, Steven Nissen and Donald Berwick willing to speak up, then we know it’s time for us to get to work.

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