‘Sorry for your loss — here’s your bill’

By Robert Remington
Calgary Herald, January 20, 2012
With the family of deceased Canadian skier Sarah Burke facing a U.S. medical bill topping the value of an average Calgary home, I was reminded Friday of a quote by the late Justice Emmett Hall, a crusader for Canada’s public health-care system.
“We as a society are aware that the trauma of illness, the pain of surgery, the slow decline to death are burdens enough for the human being to bear without the added burden of medical or hospital bills penalizing the patient at the moment of vulnerability,” Hall wrote in a 1979 review of publicly funded health insurance.
To help Burke’s husband Rory Bushfield pay an expected $550,000 medical bill for nine days of intensive care in Utah, a website was set up by Burke’s agent asking for donations. The site had reached nearly $200,000 as of this writing Friday afternoon, prompting the Canadian Freestyle Ski Association to announce that the amount was enough that her family “will not have any financial burden related to her care.”
The association’s statement seemed odd, considering that the website was $350,000 short of its intended goal, but not if you understand the vagaries of a private health system dominated by big private insurers.
In the U.S. health system, “nobody pays the sticker price, except for those who are squeezed, which is normally the uninsured,” says Steve Morgan, a health policy analyst with the University of British Columbia’s Centre for Health Services and Policy Research.
“Big insurance doesn’t pay retail,” Morgan says of the U.S. health system. Typically, he says a hospital will present a bill big enough to choke a horse and the insurance company will negotiate it down. Individuals without insurance, or those who are under-insured, have little or no negotiating power and often end up paying bills that are financially devastating, Morgan said.
Burke was apparently not adequately insured in the U.S. Her ski association only covers sanctioned events. Because the event at which she was injured and subsequently died was an unsanctioned competition put on by her sponsor, Monster Energy Company, the ski association’s insurance did not cover her.
It was not clear if Burke’s family thought she was adequately covered, or if Monster had insurance for her. The company did not say if it would help cover her medical bills, which Morgan says is not surprising.
Monster, he said, could have negotiated behind the scenes to get the price down. The Canadian Freestyle Ski Association said the family had not yet received a final bill for her hospitalization, but that it is expected to be approximately $200,000, roughly the amount that had already been collected.
Morgan says Burke’s case should be a sobering reminder to Canadians of what could happen in a privately-insured market, rather than a public system where everyone is insured against a catastrophic event.
In 2000, the U.S. health policy journal Health Affairs wrote about the issue under the heading “Gouging the Medically Uninsured: A Tale of Two Bills.”
“Overcharging the uninsured is one of the many unintended and largely overlooked results of our decade-long obsession with curbing health-care costs,” it said. “Powerful interest groups — government, employers, insurers, hospitals, medical equipment vendors, and health care professionals — have fought vigorously to protect their interests. The uninsured, with no organized voice, emerge as losers.”
Since 2001, family health insurance premiums in the U.S. have increased 113 per cent, according to the Kaiser Family Foundation, with annual premiums for employer-sponsored family health coverage growing to $15,073 in 2011. Due to the economic downturn, the number of Americans going without insurance has grown by one million to 49.9 million people.
We complain of health-care costs and outcomes in Canada, but the U.S. ranks behind Australia, Canada, Germany, the Netherlands, New Zealand and the U.K. in five areas of health system performance: quality, efficiency, access to care, equity and mortality, according to a report by the Commonwealth Fund.
“Our failure as a country to ensure basic health care for all of its citizens is in part to blame,” Glenn D. Braunstein, chairman of the Department of Medicine at Cedars-Sinai Medical Center in Los Angeles, wrote Friday in the Huffington Post.
It is, indeed, a sobering reminder to Canadians how lucky we are. As one commentator wrote of the Burke family’s experience with the U.S. system: “We are sorry for your loss. Here’s your bill.”
http://www.calgaryherald.com/opinion/Remington+Sorry+your+loss+here+your+bill/6029293/story.html

Instead of commenting on the cruel and inhumane health care financing system we have in the United States, let’s remember Sarah by spending a moment with her:

http://www.youtube.com/watch?v=O4tQJAl4tYM

By Uwe E. Reinhardt
The New York Times, January 20, 2012

“Growth in U.S. health spending remains slow in 2010” was the headline of a news release on Jan. 9 by the Centers for Medicare and Medicaid Services, part of the Department of Health and Human Services. At an increase of 3.9 percent over national health spending in 2009, “the rates of health spending growth in 2009 and 2010 marked the lowest rate in the 51-year history of the National Health Expenditure Accounts,” the release said.

The $64,000 question is how soon the excess growth of health spending will descend from its historical average of 1.5 to 2.5 percent first to, say, 1 percent or so, and eventually to 0 percent.

It is tempting to view the relatively lower cost growth in recent years as a first step in that direction. But nothing in the history of health spending in the United States suggests that this is the time to break out the Champagne to celebrate that victory.

After all, low rates of spending increases in 2009-10 could just be the lagged effect of the deep recession in 2008-9. There is evidence in the literature that health spending does not completely march to its own drummer, regardless of what happens in the rest of the economy, but instead tends to rise and fall somewhat with the rest of the G.D.P., albeit with a lag of one to two years. The safest bet is that on the long road to eventual zero excess growth in health spending, we will ride up and down quite a few more times on the health-spending roller coaster.

Now why is it reasonable to assume that excess cost growth will just have to decline to zero in the long run – that is, to assume that health spending will not eventually grow faster than G.D.P. and perhaps even more slowly?

Economists would explain such a trend as follows: as the fraction of G.D.P. devoted to health care increases, the added satisfaction, or utility, that people derive from added health care is likely to diminish relative to the added satisfaction derived from consuming more of other things. It could explain a gradual decline in the excess growth of health care spending.

Finally, economists retreat here to the one law on which they all agree, namely, Stein’s Law, named for the late economist Herbert Stein: “If something cannot go on forever, it will stop.” Trust us. It will, in the long run.

http://economix.blogs.nytimes.com/2012/01/20/is-u-s-health-spending-finally-under-control/

Published Comment:

Don McCanne
San Juan Capistrano, CA

How close we already are to meeting the limits of Stein’s Law is exemplified by 1) the current cost of health care for a family of four with an employer-sponsored PPO – $19,393 (Milliman), and 2) median household income – $49,445 (2010).

Although these are not measures of identical family units, they do provide enough of a perspective to show that we have run out of space in family budgets to pay for health care. The forgoing of wages to pay for employer-sponsored health benefits has crimped family budgets to the extent that frugality has become, by necessity, the norm.

We can continue as we are, allowing personal hardship to increase, or we can have our public stewards take control, as they have in other nations. They have been successful in ensuring that everyone has health care at costs averaging only half of those in the U.S.

A properly designed Medicare for all would work just fine for all of us.

Is U.S. Health Spending Finally Under Control?

By Uwe E. Reinhardt
The New York Times, January 20, 2012
“Growth in U.S. health spending remains slow in 2010” was the headline of a news release on Jan. 9 by the Centers for Medicare and Medicaid Services, part of the Department of Health and Human Services. At an increase of 3.9 percent over national health spending in 2009, “the rates of health spending growth in 2009 and 2010 marked the lowest rate in the 51-year history of the National Health Expenditure Accounts,” the release said.
The $64,000 question is how soon the excess growth of health spending will descend from its historical average of 1.5 to 2.5 percent first to, say, 1 percent or so, and eventually to 0 percent.
It is tempting to view the relatively lower cost growth in recent years as a first step in that direction. But nothing in the history of health spending in the United States suggests that this is the time to break out the Champagne to celebrate that victory.
After all, low rates of spending increases in 2009-10 could just be the lagged effect of the deep recession in 2008-9. There is evidence in the literature that health spending does not completely march to its own drummer, regardless of what happens in the rest of the economy, but instead tends to rise and fall somewhat with the rest of the G.D.P., albeit with a lag of one to two years. The safest bet is that on the long road to eventual zero excess growth in health spending, we will ride up and down quite a few more times on the health-spending roller coaster.
Now why is it reasonable to assume that excess cost growth will just have to decline to zero in the long run – that is, to assume that health spending will not eventually grow faster than G.D.P. and perhaps even more slowly?
Economists would explain such a trend as follows: as the fraction of G.D.P. devoted to health care increases, the added satisfaction, or utility, that people derive from added health care is likely to diminish relative to the added satisfaction derived from consuming more of other things. It could explain a gradual decline in the excess growth of health care spending.
Finally, economists retreat here to the one law on which they all agree, namely, Stein’s Law, named for the late economist Herbert Stein: “If something cannot go on forever, it will stop.” Trust us. It will, in the long run.
http://economix.blogs.nytimes.com/2012/01/20/is-u-s-health-spending-finally-under-control/

Published Comment:

Don McCanne
San Juan Capistrano, CA
How close we already are to meeting the limits of Stein’s Law is exemplified by 1) the current cost of health care for a family of four with an employer-sponsored PPO – $19,393 (Milliman), and 2) median household income – $49,445 (2010).
Although these are not measures of identical family units, they do provide enough of a perspective to show that we have run out of space in family budgets to pay for health care. The forgoing of wages to pay for employer-sponsored health benefits has crimped family budgets to the extent that frugality has become, by necessity, the norm.
We can continue as we are, allowing personal hardship to increase, or we can have our public stewards take control, as they have in other nations. They have been successful in ensuring that everyone has health care at costs averaging only half of those in the U.S.
A properly designed Medicare for all would work just fine for all of us.

Congressional Budget Office
January 2012

In the past two decades, CMS has conducted two broad categories of demonstrations aimed at enhancing the quality of health care and improving the efficiency of health care delivery in Medicare’s fee-for-service program.

* Disease management and care coordination demonstrations have sought to improve the quality of care of beneficiaries with chronic illnesses and those whose health care is expected to be particularly costly.

* Value-based payment demonstrations have given health care providers financial incentives to improve the quality and efficiency of care rather than payments based strictly on the volume and intensity of services delivered.

The evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered. Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs, but on average even those programs did not achieve enough savings to offset their fees.

Results from demonstrations of value-based payment systems were mixed. In one of the four demonstrations examined, Medicare made bundled payments that covered all hospital and physician services for heart bypass surgeries; Medicare’s spending for those services was reduced by about 10 percent under the demonstration. Other demonstrations of value-based payment appear to have produced little or no savings for Medicare.

The results of those Medicare demonstrations suggest that substantial changes to payment and delivery systems will probably be necessary for programs involving disease management and care coordination or value-based payment to significantly reduce spending and either maintain or improve the quality of care provided to patients.

http://www.cbo.gov/ftpdocs/126xx/doc12663/01-18-12-MedicareDemoBrief.pdf

Comment: 

By Don McCanne, MD

Recognizing the need to slow the increase in health care spending, much hope has been placed on disease management, care coordination, and value-based payments such as pay-for-performance. Medicare has authorized numerous demonstration projects to prove that these programs are effective. They aren’t.

The results of these demonstrations have shown that they have not reduced spending because the costs of the interventions were not offset by the savings, and frequently the costs were greater, resulting in a net loss.

The one exception in the report – bundled payments – doesn’t really belong in this list anyway. The demonstration study negotiated a single fee for coronary bypass surgeries, covering both the hospitals and the in-hospital treating physicians. The negotiated fee was about 10 percent less than the itemized fees had been previously. Thus the savings for Medicare was about 10 percent for these bypass surgeries. There was no attempt to determine if this reduction resulted in efforts to recover the difference from other patients or payers, which makes it difficult to know whether or not bundling actually reduced total health care costs.

On the other hand, imagine a system in which all payments are negotiated, as with a single payer system. Hospitals negotiate an annual global budget. That budget includes their costs of services, such as coronary bypass surgeries, without the need to itemize each single item for the services, nor the need to bundle payments in some sort of pretense that global costs are reduced. The hospital already has incentives to improve efficiencies to stay within budget.

Likewise, physicians collectively negotiate their payments, whether fee-for-service, capitation, or salary, as appropriate to their clinical circumstances. Payments are adequate to ensure a very comfortable net income.

Other nations have proven that negotiated, administered payment is effective in obtaining greater value for health care spending. We’ve now proven that intrusion of market-model games players such as outside disease managers, or pay-for-performance administrators, have failed to improve value. So we should go with a system that really does work – a single payer national health program.

Lessons from Medicare’s Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

Congressional Budget Office
January 2012

In the past two decades, CMS has conducted two broad categories of demonstrations aimed at enhancing the quality of health care and improving the efficiency of health care delivery in Medicare’s fee-for-service program.

* Disease management and care coordination demonstrations have sought to improve the quality of care of beneficiaries with chronic illnesses and those whose health care is expected to be particularly costly.

* Value-based payment demonstrations have given health care providers financial incentives to improve the quality and efficiency of care rather than payments based strictly on the volume and intensity of services delivered.

The evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered. Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs, but on average even those programs did not achieve enough savings to offset their fees.

Results from demonstrations of value-based payment systems were mixed. In one of the four demonstrations examined, Medicare made bundled payments that covered all hospital and physician services for heart bypass surgeries; Medicare’s spending for those services was reduced by about 10 percent under the demonstration. Other demonstrations of value-based payment appear to have produced little or no savings for Medicare.

The results of those Medicare demonstrations suggest that substantial changes to payment and delivery systems will probably be necessary for programs involving disease management and care coordination or value-based payment to significantly reduce spending and either maintain or improve the quality of care provided to patients.

http://www.cbo.gov/ftpdocs/126xx/doc12663/01-18-12-MedicareDemoBrief.pdf

Comment: 

By Don McCanne, MD

Recognizing the need to slow the increase in health care spending, much hope has been placed on disease management, care coordination, and value-based payments such as pay-for-performance. Medicare has authorized numerous demonstration projects to prove that these programs are effective. They aren’t.

The results of these demonstrations have shown that they have not reduced spending because the costs of the interventions were not offset by the savings, and frequently the costs were greater, resulting in a net loss.

The one exception in the report – bundled payments – doesn’t really belong in this list anyway. The demonstration study negotiated a single fee for coronary bypass surgeries, covering both the hospitals and the in-hospital treating physicians. The negotiated fee was about 10 percent less than the itemized fees had been previously. Thus the savings for Medicare was about 10 percent for these bypass surgeries. There was no attempt to determine if this reduction resulted in efforts to recover the difference from other patients or payers, which makes it difficult to know whether or not bundling actually reduced total health care costs.

On the other hand, imagine a system in which all payments are negotiated, as with a single payer system. Hospitals negotiate an annual global budget. That budget includes their costs of services, such as coronary bypass surgeries, without the need to itemize each single item for the services, nor the need to bundle payments in some sort of pretense that global costs are reduced. The hospital already has incentives to improve efficiencies to stay within budget.

Likewise, physicians collectively negotiate their payments, whether fee-for-service, capitation, or salary, as appropriate to their clinical circumstances. Payments are adequate to ensure a very comfortable net income.

Other nations have proven that negotiated, administered payment is effective in obtaining greater value for health care spending. We’ve now proven that intrusion of market-model games players such as outside disease managers, or pay-for-performance administrators, have failed to improve value. So we should go with a system that really does work – a single payer national health program.

Lessons from Medicare’s Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

Congressional Budget Office
January 2012
In the past two decades, CMS has conducted two broad categories of demonstrations aimed at enhancing the quality of health care and improving the efficiency of health care delivery in Medicare’s fee-for-service program.
* Disease management and care coordination demonstrations have sought to improve the quality of care of beneficiaries with chronic illnesses and those whose health care is expected to be particularly costly.
* Value-based payment demonstrations have given health care providers financial incentives to improve the quality and efficiency of care rather than payments based strictly on the volume and intensity of services delivered.
The evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered. Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs, but on average even those programs did not achieve enough savings to offset their fees.
Results from demonstrations of value-based payment systems were mixed. In one of the four demonstrations examined, Medicare made bundled payments that covered all hospital and physician services for heart bypass surgeries; Medicare’s spending for those services was reduced by about 10 percent under the demonstration. Other demonstrations of value-based payment appear to have produced little or no savings for Medicare.
The results of those Medicare demonstrations suggest that substantial changes to payment and delivery systems will probably be necessary for programs involving disease management and care coordination or value-based payment to significantly reduce spending and either maintain or improve the quality of care provided to patients.
http://www.cbo.gov/ftpdocs/126xx/doc12663/01-18-12-MedicareDemoBrief.pdf

Recognizing the need to slow the increase in health care spending, much hope has been placed on disease management, care coordination, and value-based payments such as pay-for-performance. Medicare has authorized numerous demonstration projects to prove that these programs are effective. They aren’t.
The results of these demonstrations have shown that they have not reduced spending because the costs of the interventions were not offset by the savings, and frequently the costs were greater, resulting in a net loss.
The one exception in the report – bundled payments – doesn’t really belong in this list anyway. The demonstration study negotiated a single fee for coronary bypass surgeries, covering both the hospitals and the in-hospital treating physicians. The negotiated fee was about 10 percent less than the itemized fees had been previously. Thus the savings for Medicare was about 10 percent for these bypass surgeries. There was no attempt to determine if this reduction resulted in efforts to recover the difference from other patients or payers, which makes it difficult to know whether or not bundling actually reduced total health care costs.
On the other hand, imagine a system in which all payments are negotiated, as with a single payer system. Hospitals negotiate an annual global budget. That budget includes their costs of services, such as coronary bypass surgeries, without the need to itemize each single item for the services, nor the need to bundle payments in some sort of pretense that global costs are reduced. The hospital already has incentives to improve efficiencies to stay within budget.
Likewise, physicians collectively negotiate their payments, whether fee-for-service, capitation, or salary, as appropriate to their clinical circumstances. Payments are adequate to ensure a very comfortable net income.
Other nations have proven that negotiated, administered payment is effective in obtaining greater value for health care spending. We’ve now proven that intrusion of market-model games players such as outside disease managers, or pay-for-performance administrators, have failed to improve value. So we should go with a system that really does work – a single payer national health program.