PNHP

Taiwan to move towards more equitable financing

Taiwan to move towards more equitable financing

Talk of the day -- Health insurance overhaul nearly ready

By Sofia Wu
Focus Taiwan News Channel
March 30, 2010

The health insurance premium rate will be raised from the current 4.55 percent to 5.17 percent April 1, but Department of Health (DOH) Minister Yaung Chih-liang said Monday the public could end up paying less in premiums when a second-generation health care system is adopted in two years.

Earlier Monday, Yaung briefed Premier Wu Den-yih on draft amendments to the National Health Insurance Act that will pave the way for the introduction of a new generation of health care insurance.

After listening to Yaung’s briefing, Wu said the executive branch will lobby lawmakers to pass the draft package during its current session to allow for an early implementation of the second-generation system.

Under the new system, premiums will be paid by the insured, employers and the central government. At present, the government’s contribution is financed by both central and local governments.

The new system will calculate premiums based on total household income (including wages, stock dividends, rental income and other unearned income) instead of the current model that considers only the insureds’ salaries or earned income.

Yaung said the new system will be more equitable, as wealthy households whose income does not mainly rely on earned income will have to pay higher premiums.

http://focustaiwan.tw/ShowNews/WebNews_Detail.aspx?Type=aALL&ID=201003300010

Comment: 

By Don McCanne, MD

Taiwan’s single payer system has been phenomenally successful, though they, like all other nations, have had to confront increases in health care costs. Under the current financing system it has become necessary to increase the percent of income paid as insurance premiums, to the displeasure of the citizens of Taiwan. That has prompted recommendations to improve the financing system.

The most important change is to shift from a premium based on a percentage of earned income to a percentage of all household income, including wages, stock dividends, rental income and other unearned income. The obvious impact of this is to make the contribution more equitable by increasing the progressive nature of the health care tax. This acknowledges the necessity of instituting a transfer not only from the healthy to the sick, but also from the wealthy to those with more modest incomes. Costs are too high to do otherwise.

Another change is to eliminate the contribution of local governments, which frequently struggle with their budgets, and to shift the full responsibility for the government contribution to the central government.

When you think about, we’ve already adopted these principles for our Medicare program. The program was established as a federally funded program, unlike Medicaid which depends on state funding as well. Also, the reconciliation bill just signed by President Obama includes a Medicare tax on the unearned income of wealthier individuals.

But there is one glaring difference between the approaches of Taiwan and the United States. Taiwan uses an exceptionally efficient single payer system that covers everyone, whereas we lose almost all of the advantages of the single payer model by limiting our Medicare program to less than 15 percent of our population.

It’s great that we’ve accepted the principle of equitable financing of health care, but wouldn’t you think that our government stewards would be smart enough to know that we also need a stable, efficient financing infrastructure, if for no other reason than to ensure that everyone benefits from equitable financing? The Taiwanese stewards have already figured that one out.

Taiwan to move towards more equitable financing

Talk of the day — Health insurance overhaul nearly ready

By Sofia Wu
Focus Taiwan News Channel
March 30, 2010
The health insurance premium rate will be raised from the current 4.55 percent to 5.17 percent April 1, but Department of Health (DOH) Minister Yaung Chih-liang said Monday the public could end up paying less in premiums when a second-generation health care system is adopted in two years.
Earlier Monday, Yaung briefed Premier Wu Den-yih on draft amendments to the National Health Insurance Act that will pave the way for the introduction of a new generation of health care insurance.
After listening to Yaung’s briefing, Wu said the executive branch will lobby lawmakers to pass the draft package during its current session to allow for an early implementation of the second-generation system.
Under the new system, premiums will be paid by the insured, employers and the central government. At present, the government’s contribution is financed by both central and local governments.
The new system will calculate premiums based on total household income (including wages, stock dividends, rental income and other unearned income) instead of the current model that considers only the insureds’ salaries or earned income.
Yaung said the new system will be more equitable, as wealthy households whose income does not mainly rely on earned income will have to pay higher premiums.
http://focustaiwan.tw/ShowNews/WebNews_Detail.aspx?Type=aALL&ID=201003300010

Taiwan’s single payer system has been phenomenally successful, though they, like all other nations, have had to confront increases in health care costs. Under the current financing system it has become necessary to increase the percent of income paid as insurance premiums, to the displeasure of the citizens of Taiwan. That has prompted recommendations to improve the financing system.
The most important change is to shift from a premium based on a percentage of earned income to a percentage of all household income, including wages, stock dividends, rental income and other unearned income. The obvious impact of this is to make the contribution more equitable by increasing the progressive nature of the health care tax. This acknowledges the necessity of instituting a transfer not only from the healthy to the sick, but also from the wealthy to those with more modest incomes. Costs are too high to do otherwise.
Another change is to eliminate the contribution of local governments, which frequently struggle with their budgets, and to shift the full responsibility for the government contribution to the central government.
When you think about, we’ve already adopted these principles for our Medicare program. The program was established as a federally funded program, unlike Medicaid which depends on state funding as well. Also, the reconciliation bill just signed by President Obama includes a Medicare tax on the unearned income of wealthier individuals.
But there is one glaring difference between the approaches of Taiwan and the United States. Taiwan uses an exceptionally efficient single payer system that covers everyone, whereas we lose almost all of the advantages of the single payer model by limiting our Medicare program to less than 15 percent of our population.
It’s great that we’ve accepted the principle of equitable financing of health care, but wouldn’t you think that our government stewards would be smart enough to know that we also need a stable, efficient financing infrastructure, if for no other reason than to ensure that everyone benefits from equitable financing? The Taiwanese stewards have already figured that one out.

Cerberus Capital provides another Massachusetts lesson for U.S.

Seeking lower-cost care

By Steven Syre and Robert Gavin
The Boston Globe
March 30, 2010

The New York private equity firm that last week struck a deal to buy Caritas Christi Health Care could build the chain of six Catholic community hospitals into a competitive lower-cost provider of medical services in Massachusetts, touting it as a profitable national business model in the age of health care reform, analysts say.

Caritas, which also includes a physicians network, could become a new cost-conscious option for more patients under such a system.

Cerberus Capital Management plans to invest $830 million to acquire Caritas Christi and turn the charity into a for-profit venture. The investment, which includes money to reduce debt and invest in renovations and upgrades, would appear to be a steep price for the Caritas business as it exists today.

But the hospitals could emerge as an attractive lower-cost alternative to Boston’s big teaching hospitals as health care reform moves forward soon in Massachusetts and later across the country. And, as reforms aimed at controlling costs take effect, an increasing number of health insurance policies may well offer patients a choice: Go to a famous teaching hospital and pay more or go elsewhere and spend less.

If the ambitious plan works, it could eventually mean a sizable payoff for Cerberus and its investors, said Howard Anderson, senior lecturer at MIT’s Sloan School of Management. With a successful health care business, Cerberus could cash out by taking the company public and selling stock to investors, or by selling the chain to another for-profit health care firm.

http://www.boston.com/business/healthcare/articles/2010/03/30/caritas_christi_could_carve_out_a_lower_cost_niche_under_new_owner/

Comment: 

By Don McCanne, MD

Massachusetts has been held up as a model on which our new federal health financing program is based. The purchase of Caritas Christi Health Care by Cerberus Capital Management may give us a hint as to what efforts under such a reform model might be made to slow the growth in health care costs.

Cerberus Capital Management plans to convert Caritas Christi into “an attractive lower-cost alternative” to Boston’s expensive teaching hospitals.

Their concept of lowering costs is right out of the book on the promised rewards of free markets. They are going to take a chain of low-cost charity hospitals and convert it into a for-profit venture. Then they are going to reap a “sizable payoff” by cashing out, either by taking the company public and selling stock to investors, or by selling the chain to another for-profit health care firm.

The model of reform that has just been enacted expands the lucrative health care marketplace for opportunists such as these venture capitalists. These entities will be crawling out of the woodwork to try to glom on to a share of the massive infusion of tax dollars to be redistributed by the private insurance companies. Should we really have expected anything else?

It’s not too late to regroup and do it right.

Cerberus Capital provides another Massachusetts lesson for U.S.

Seeking lower-cost care

By Steven Syre and Robert Gavin
The Boston Globe
March 30, 2010
The New York private equity firm that last week struck a deal to buy Caritas Christi Health Care could build the chain of six Catholic community hospitals into a competitive lower-cost provider of medical services in Massachusetts, touting it as a profitable national business model in the age of health care reform, analysts say.
Caritas, which also includes a physicians network, could become a new cost-conscious option for more patients under such a system.
Cerberus Capital Management plans to invest $830 million to acquire Caritas Christi and turn the charity into a for-profit venture. The investment, which includes money to reduce debt and invest in renovations and upgrades, would appear to be a steep price for the Caritas business as it exists today.
But the hospitals could emerge as an attractive lower-cost alternative to Boston’s big teaching hospitals as health care reform moves forward soon in Massachusetts and later across the country. And, as reforms aimed at controlling costs take effect, an increasing number of health insurance policies may well offer patients a choice: Go to a famous teaching hospital and pay more or go elsewhere and spend less.
If the ambitious plan works, it could eventually mean a sizable payoff for Cerberus and its investors, said Howard Anderson, senior lecturer at MIT’s Sloan School of Management. With a successful health care business, Cerberus could cash out by taking the company public and selling stock to investors, or by selling the chain to another for-profit health care firm.
http://www.boston.com/business/healthcare/articles/2010/03/30/caritas_christi_could_carve_out_a_lower_cost_niche_under_new_owner/

Massachusetts has been held up as a model on which our new federal health financing program is based. The purchase of Caritas Christi Health Care by Cerberus Capital Management may give us a hint as to what efforts under such a reform model might be made to slow the growth in health care costs.
Cerberus Capital Management plans to convert Caritas Christi into “an attractive lower-cost alternative” to Boston’s expensive teaching hospitals.
Their concept of lowering costs is right out of the book on the promised rewards of free markets. They are going to take a chain of low-cost charity hospitals and convert it into a for-profit venture. Then they are going to reap a “sizable payoff” by cashing out, either by taking the company public and selling stock to investors, or by selling the chain to another for-profit health care firm.
The model of reform that has just been enacted expands the lucrative health care marketplace for opportunists such as these venture capitalists. These entities will be crawling out of the woodwork to try to glom on to a share of the massive infusion of tax dollars to be redistributed by the private insurance companies. Should we really have expected anything else?
It’s not too late to regroup and do it right.

Where We Are Now on Health Reform

Dr. Quentin Young
The Huffington Post
March 30, 2010

With the passage of the Democrats’ health bill, Congress and President Obama have created a new (and not so new) legislative framework for health care finance in the United States. Now that we’ve officially entered the post-legislative period, it’s worth noting how we got to where we are.

The for-profit insurers and their health industry allies sunk their claws into the legislative process early and hung on to the very end. The new bill largely reflects their handiwork. Stock prices for virtually all the leading private insurers remain high and have been trending upward. Investors are also bullish on the promising prospects for the drug companies and for-profit hospitals in the wake of the bill’s passage.

The attacks on the Democrats’ bill from the right-wing Republicans and their proto-fascist allies, including many so-called tea-baggers, were fierce, sometimes absurd and frequently despicable. The racist and homophobic assaults on supporters of the bill set a disturbing, new low for contemporary U.S. politics.

Politically, it can be argued that Obama and his administration squeaked through a highly significant victory, made so by the shameful strategies of the Republicans and their allies. It’s a fact that a defeat for Obama engineered by these reactionary forces would have poisoned the climate of political discourse seriously. Nevertheless, the bill is full of pitfalls that harbinger ill for the American public as patients.

Blue Dog and anti-abortion Democrats held out for their agenda until the very last minute, wresting still more restrictions from their party’s leadership (at the expense of millions of women and ordinary working people) and making the final vote very close. The bill’s curtailment of reproductive choice prompted an appropriately stinging response from the National Organization for Women.

For those of us who wanted to see more fundamental and progressive reform – specifically, those of us who called for sharply reducing the role of the profit-driven insurance companies and Big Pharma in our health system – it’s fair to say that virtually no gains were made.

The systemic cause of our universally judged “broken” health care system – the role of the private insurance industry – was not substantively addressed. In fact, the role of that industry was actually strengthened with the passage of this bill.

So what did we end up with?

There are a number of qualified virtues in the bill. Among these are certain restrictions on the ability of insurers to deny coverage to persons with pre-existing conditions, the allowance of children up to the age of 26 to be covered under their family’s insurance plan, the expansion of Medicaid by approximately 16 million additional people (although it must be noted that the Medicaid remains badly underfunded and therefore provides substandard care), and new appropriations for community health centers and the training of primary care doctors.

It’s worth noting that all of these modestly positive measures could have been enacted separately. Instead, they were linked with measures like a burdensome individual mandate on middle-income uninsured people to buy health insurance (a defective product, as many who use their insurance quickly find out), the handing over of about $450 billion in taxpayer money to the insurers in the form of subsidies, an excise tax on workers’ health plans exceeding a certain threshold, and new restrictions on women’s reproductive rights, to name just a few. At least 23 million people will still be uninsured by 2019.

Given the big role the insurers played in writing the new law, it’s safe to assume they’ve created sufficient loopholes to protect their interests over both the short and long term. One example: only a few days after the bill was passed, insurers denied that they were obligated to issue coverage to children with pre-existing conditions, a key pro-reform talking point of the president. Under pressure, they’ve apparently retreated from this stance. But it’s only a symptom of a larger problem.

The main cause of our dysfunctional health system, the for-profit private insurance industry, remains in the driver’s seat, as the statement of Physicians for a National Health Program stresses.

The bill will do little if anything to check the runaway health system costs and their ability to visit bankruptcy and other forms of penury on the American people.

Simply put, the one rational remedy for all of this, single-payer national health insurance, is more urgent than ever. It’s critical to our nation’s health and well-being. It has been noted, accurately, that our persistent health care mess is threatening our economic status domestically and in global competition.

We have learned bitterly that the unlimited lobbying resources of the health industry giants can prevail in both chambers of Congress. Where, for instance, was the serious challenge from the 90 representatives on record in favor of H.R. 676, the single-payer proposal?

While the raucous and dangerous right-wing assault was unmitigated throughout the campaign, virtually no serious demand came from the progressive wing of the Congress.

Our work is cut out for us. We have the same important challenge faced by the civil rights advocates of the 1950s and ’60s, which ended victoriously. The same steady expansion of popular awareness and demand to the level of a movement is the requirement to end the current corporate control of our health system.

http://www.huffingtonpost.com/dr-quentin-young/where-we-are-now-on-healt_b_518930.html

Obama’s reform: no cure for what ails us

Observations: U.S. Health Reform

By David U. Himmelstein and Steffie Woolhandler
British Medical Journal, March 30, 2010

As the applause fades for President Obama’s health reform, David Himmelstein and Steffie Woolhandler fear that the new law will simply pump funds into a dysfunctional, market driven system

It was a stirring scene: President Obama signing the new health reform law before a cheering crowd, and a beaming vice president whispering in his ear, “This is a big fucking deal.” As doctors who have labored for universal health care we’d like to join the celebration, but we can’t. Morphine has been dispensed for the treatment of cancer – the reform may offer a bit of temporary relief, but it is certainly no cure.

The new law will pump additional funds into the currently dysfunctional, market driven system, pushing up health costs that are already twice those in most other wealthy nations. The Medicaid public insurance program for poor people will expand to cover an additional 16 million poor Americans, while a similar number of uninsured people with higher incomes will be forced to buy private policies. For the “near poor” the government will pay part of these private premiums, channeling $447 billion in taxpayer funds to private insurers over the next decade.

Unfortunately, private insurers win in the marketplace not through efficiency or quality but by maximizing revenues from premiums while minimizing outlays. They pursue this goal by avoiding the sick and forcing doctors and patients to navigate a byzantine payment bureaucracy that currently consumes 31 percent of total health spending. The health reform bill’s requirement that uninsured people buy insurers’ defective products will fortify these firms financially and politically.

Meanwhile insurers will exploit loopholes to dodge the law’s restrictions on their misbehaviors. For instance, the limit on administrative overheads will predictably elicit accounting gimmickry, for example by relabeling some insurance personnel as “clinical care managers.” While insurers are prohibited from “cherry picking” – selectively enrolling healthy, profitable patients – they’ve circumvented similar prohibitions in the Medicare health maintenance organizations (HMOs). The ban on revoking policies after an individual falls ill similarly replicates existing but ineffective state bans.

Sadly, even if the reform works as planned, 23 million people will remain uninsured in 2019. Meanwhile the public and other safety net hospitals that uninsured people rely on will have to endure a $36 billion cut in federal government funding.

Moreover, many Americans will be left with coverage so skimpy that a serious illness could lead to financial ruin. At present, illness and medical bills contribute to 62 percent of all bankruptcies, with three-quarters of the medically bankrupt being insured. The reform does little to upgrade this inadequate coverage; it mandates that private policies need cover only 70 percent of expected medical costs. The president has often promised that “if you like your current coverage you can keep it.” Yet Americans who now get job based insurance will be required to keep it – whether they like it or not. And many who receive full coverage from an employer will face a steep tax on their health benefits from 2018.

Soaring costs and rising financial strains seem inevitable, despite claims that the reform will “bend the cost curve.” Computer vendors have trumpeted imminent cost savings for half a century (see, for instance, a video made by IBM in the 1960s, available at http://bit.ly/cckdtB). Prevention, though laudable, does not generally reduce costs. Windfalls from prosecuting fraud and abuse have been promised before. The new Medicare advisory board merely tweaks an existing panel. Without an enforcement mechanism, stepping up comparative effectiveness research cannot overcome drug and equipment makers’ promotion of profligate care. Existing insurance exchanges where patients can compare and shop among private plans haven’t slowed growth in costs for public workers nationally or in California. And the mandated experiments with capitated payment systems are warmed-over versions of President Nixon’s pro-HMO policies and subsequent failed initiatives to fix America’s health cost crisis through managed care.

Experience with reforms in Massachusetts in 2006 – the template for the national bill – is instructive. Our state’s costs, already the highest of any state, grew by 15 percent in the first two years after reform, twice the national rate. Moreover, capitated physician groups had costs at least as high as those who were paid on a fee for service basis. Meanwhile, after initial improvements in the state, access to care has begun to deteriorate, and the state has begun to cut back coverage.

Overall, President Obama’s is a conservative bill, drafted in close consultation with the drug and insurance industries. Its modest salutary provisions – such as an extra $1 billion a year for community health centers and the expansion of Medicaid – mirror measures that have been passed even under Republican regimes. Its central tenet, that the government should force citizens to buy coverage from a for-profit firm, was first proposed by Richard Nixon when faced with the seeming inevitability of national health insurance in 1972. Similarly, Mitt Romney, a favorite of conservatives, embraced the Nixon approach as Massachusetts governor in 2006, a stance he has now abandoned. Democrats, having retreated from their traditional push for national health insurance, freed Republicans to move still further to the right.

Throughout the reform debate we, and the 17 000 others who’ve joined Physicians for a National Health Program, advocated for a far more thoroughgoing reform: a non-profit, single payer national health insurance program. We will continue to do so. Our health care system has not been cured or even stabilized. For now, we will continue to practice under a financing system that obstructs good patient care and squanders vast resources on profit and bureaucracy.

Passage of the health reform law was a major political event. But for most doctors and patients it’s no “big fucking deal.”

David U. Himmelstein, M.D., is associate professor of medicine at Harvard Medical School and Steffie Woolhandler, M.D., M.P.H., is professor of medicine at Harvard Medical School. They are also co-founders of Physicians for a National Health Program.

Cite this as: BMJ 2010;340:c1778

Houston retirees face 50 percent premium increase

Parker increases insurance premiums of city retirees

By Bradley Olson
Houston Chronicle
March 29, 2010

Working to close a looming $100 million budget shortfall projected for next year, Mayor Annise Parker has sharply increased the monthly insurance premiums that thousands of retired city of Houston employees must pay, prompting outrage from retirees.

Beginning May 1, more than 4,000 retirees under 65 will face a nearly 50 percent increase in their insurance premiums, a budget fix the mayor imposed without consulting City Council.

Parker said the city decided to restructure the benefit payments because retirees under 65 have far higher use of insurance claims than active employees or retirees over 65, whose insurance is subsidized by Medicare.

“People are being priced out of benefits. I’m hoping City Council will take another look at this thing,” said (Bill Elkin, executive director of the Houston Police Retired Officers Association)

http://www.chron.com/disp/story.mpl/front/6935520.html

Comment: 

By Don McCanne, MD

So paraphrasing Mayor Annise Parker of Houston, the greater health care needs of the retirees made it important to restructure their premiums to make them even more unaffordable.

Now think about how the new health reform legislation would address this problem. It looks like these retirees under 65 would have to keep the insurance they have, without the choice of other options, and pay 50 percent higher premiums.

What if everyone were covered by an improved Medicare program? There would not be an issue here.

The point is that we have not reformed our health care financing system; we’ve only tweaked it. We have to keep working to be sure that people understand what didn’t happen this time around.

Houston retirees face 50 percent premium increase

Parker increases insurance premiums of city retirees

By Bradley Olson
Houston Chronicle
March 29, 2010
Working to close a looming $100 million budget shortfall projected for next year, Mayor Annise Parker has sharply increased the monthly insurance premiums that thousands of retired city of Houston employees must pay, prompting outrage from retirees.
Beginning May 1, more than 4,000 retirees under 65 will face a nearly 50 percent increase in their insurance premiums, a budget fix the mayor imposed without consulting City Council.
Parker said the city decided to restructure the benefit payments because retirees under 65 have far higher use of insurance claims than active employees or retirees over 65, whose insurance is subsidized by Medicare.
“People are being priced out of benefits. I’m hoping City Council will take another look at this thing,” said (Bill Elkin, executive director of the Houston Police Retired Officers Association)
http://www.chron.com/disp/story.mpl/front/6935520.html

So paraphrasing Mayor Annise Parker of Houston, the greater health care needs of the retirees made it important to restructure their premiums to make them even more unaffordable.
Now think about how the new health reform legislation would address this problem. It looks like these retirees under 65 would have to keep the insurance they have, without the choice of other options, and pay 50 percent higher premiums.
What if everyone were covered by an improved Medicare program? There would not be an issue here.
The point is that we have not reformed our health care financing system; we’ve only tweaked it. We have to keep working to be sure that people understand what didn’t happen this time around.

Who is Donald Berwick?

Obama to nominate Berwick to head CMS

By the Associated Press
ModernHealthcare.com
March 28, 2010

An administration official says President Barack Obama will nominate healthcare scholar Donald Berwick to be CMS administrator.

Berwick, a pediatrician and noted health policy expert, is president and CEO of the not-for-profit Institute for Healthcare Improvement in Cambridge, Mass.

Berwick is also a professor of pediatrics and healthcare policy at the Harvard Medical School and a professor of health policy and management at the Harvard School of Public Health.

An elected member of the Institute of Medicine of the National Academy of Sciences, Berwick served as a member of the IOM’s Committee on Quality of Health Care in America, which launched the slowly building revolution in healthcare quality improvement. The committee published in November 1999 To Err is Human: Building a Safer Health System, which gave the healthcare industry one of its most totemic phrases: “At least 44,000, and perhaps as many as 98,000 Americans, die in hospitals each year as the result of medical errors.”

http://www.modernhealthcare.com/article/20100328/NEWS/303279991/-1

And…

Donald Berwick speaks up

Quote of the Day
November 18, 2005

‘A Deficiency Of Will And Ambition’: A Conversation With Donald Berwick

By Robert Galvin
Health Affairs
January 12, 2005

Donald Berwick is president and chief executive officer of the Institute for Healthcare Improvement (IHI) in Boston, Massachusetts. Bob Galvin is director, Global Health Care, at the General Electric Company in Fairfield, Connecticut.

Excerpts

Galvin: I’m interested in your thoughts on the impact of the Leapfrog Group, an effort organized by the purchasers of health care, both private-sector employers and public purchasers. The Leapfrog agenda has focused on… benefit incentives that engage consumers and patients in the quality and cost of care…

Berwick: The one part of the (Leapfrog) plan that I am absolutely against at the moment is the shifting of burden to individual patients. I do not believe that making the individual American patient more “cost-sensitive” has any rationale in science, ethics, or evidence. It will fail, and it will fail miserably. It will result in a shifting of care away from the people who need it the most. It is a displacement of responsibility for changing the system. You know, if CalPERS or Xerox or GE can’t change care through using its purchasing power, then I absolutely promise you that Mrs. Jones can’t. The idea that she will now be more sensitive because she pays an extra ten bucks out of pocket is, to me, nearly stupid. So I really disagree with that element of the agenda.

Internationally, when one looks at high-performing systems around the world – and ours is nowhere near the highest-performing one – it is almost a routine characteristic of the best systems that they have first-dollar coverage, and there is no attempt to make patients pay more when they’re sick, which is a stupid thing to do.

****

Galvin: The conceptual basis of this is – as unsettling as it may be to “dangle money” to increase motivation-grounded in personality and motivation theory. In private industry, we would simply call it understanding what makes people tick. People respond to incentives. So part of the pay-for-performance movement is based on this idea that clinicians are really no different than other people and that they’ll respond to incentives.

Berwick: At the individual level, I don’t trust incentives at all. I do not think it’s true that the way to get better doctoring and better nursing is to put money on the table in front of doctors and nurses. I think that’s a fundamental misunderstanding of human motivation. I think people respond to joy and work and love and achievement and learning and appreciation and gratitude-and a sense of a job well done. I think that it feels good to be a good doctor and better to be a better doctor. When we begin to attach dollar amounts to throughputs and to individual pay, we are playing with fire. The first and most important effect of that may be to begin to dissociate people from their work. That’s really where we’ve come to, and we’ve done it by pay-for-performance in terms of throughput measurements and manipulating payment schemes.

****

Galvin: Let me move to another issue, and that is the explosion that’s about to play out in biomedical innovation. If you talk to patients… they are also interested in innovations that can cure them or their loved ones. They speak about it with pride and passion…

Berwick: I do think this: We have a learning disability in this country with respect to the difference between technologies that really do help and technologies that are only adding money to the margins of the companies that make them, without essentially paying their way in value. One of the drivers of low value in health care today is the continuous entrance of new technologies, devices, and drugs that add no value to care. If we had strong national policy, it would allow us to know the difference, and I would more fully support what I think you’re correctly proposing, which is an innovations value. We need to help the public know the difference. There’s a big agenda here, possibly for government, to help create a public awareness that more is not necessarily better. Frequently it’s worse. So we can be smart about what we buy and what we choose not to buy.

****

Galvin: Many of us on the purchaser side see radically improving the efficiency of the system as a way to free up capital to cover the uninsured and to fund innovation. How do you think efficiency fits into the quality agenda?

Berwick: Let’s define efficiency as making sure that every dollar you spend gets a dollar of value back, so that efficiency is the opposite of waste. Right from the start, it has been one of the great illusions in the reign of quality that quality and cost go in opposite directions. There remains very little evidence of that. There may be some innovations that raise cost while raising quality, but many, many improvements reduce costs.

What puzzles me is how to access efficiency as a social agenda in health care. There are couple of problems. The first is that a lot of people make a lot of money on inefficiency – on production of things that have no value. So the minute you try to become truly efficient, you’re going to run into stakeholders who are going to tell you that you’re harming care, and the knee-jerk reactions of doctors and others will be to reinforce that idea. And they include you. I mean, GE pays out of one pocket and then makes money on products and services that do not add real value.

****

Galvin: There’s a threshold issue with most purchasers when you talk about getting a patient financially engaged. That is that no one ends up paying more because they’re sick. The only option would be to pay less. Let me give you an example: Many employer-sponsored benefit plans across the country have hospital copays as part of their cost sharing. This means that there is a fee of a hundred or several hundred dollars when one is admitted to a hospital. In these benefit designs, while most people have pretty free choice of what hospital they go to, going to the one that objective data demonstrate is of superior quality and efficiency would result in a waiver of the copay.

Berwick: Well, I can be an empiricist about it. Go ahead and try it. I shudder to think about what may happen, because in the end, that s
ick patient arriving at that hospital is in the absolutely weakest position at that particular point to decide, “Aha, I’m going to save a hundred dollars and go elsewhere.” That person is more likely to be poor, more likely to be black, more likely to be a low-wage earner. I think it’s regressive social policy, and I predict that it won’t work. It’s a displacement of responsibility from the stewards who actually have the job of crafting systems to meet the needs of the people who come to them for help. I think it’s a bad, bad policy, and I don’t see it playing out productively in other countries, either.

Full interview:
http://content.healthaffairs.org/cgi/content/full/hlthaff.w5.1/DC1

https://pnhp.org/news/2005/november/donald-berwick-speaks-up

And…

Checking in with Donald Berwick, President and CEO, Institute for Healthcare Improvement

Kaiser Health News
November 12, 2009

An interview of Donald Berwick (video 8:39)

http://www.kaiserhealthnews.org/Multimedia/2009/November/111209Berwick.aspx

And…

Video Segments of Dr. Donald Berwick from the Documentary “Money Driven Medicine”

Health Beat by Maggie Mahar
The Century Foundation
March 26, 2010

Nine video clips (total 9:38)

http://www.healthbeatblog.com/2010/03/video-segments-of-dr-donald-berwick-from-the-documentary-money-driven-medicine.html

Comment: 

By Don McCanne, MD

Soon everyone will know what Donald Berwick is – a Harvard professor and head of the Institute for Healthcare Improvement, about to become the administrator of CMS (Centers for Medicare and Medicaid Services), assuming that he survives the acrimonious vetting process in our highly politicized Congress.

More importantly than what, today’s message tries to show who he is by repeating a prior Quote of the Day extracted from an interview of him published in Health Affairs five years ago. Also included are links to more recent video interviews of him (total less than 20 minutes).

The state’s single-payer solution

By Benjamin Day and Peter Hiam
The Boston Globe, March 29, 2010

NOW THAT Congress has passed a national health reform bill that will not fully kick in until 2014, attention will focus again on this state’s effort to make a success of near-universal coverage.

Governor Patrick and the Legislature are moving forward with plans to control health care costs here. They are the highest in the nation and crippling state, municipal, business, and household budgets. The effort is desperately needed, but the proposals under consideration will not work because they don’t go far enough.

We know because we’ve already tried them in Massachusetts. Overwhelming evidence suggests that nothing will work short of adopting a “single payer’’ system — under which all residents are covered by a public, comprehensive plan — or regulating the private health insurance system under a uniform set of rules and an effective budget that allows public control over the resources allocated to the health care industry.

Patrick has proposed regulating the rates that hospitals can charge for services, as well as scrutinizing health care premium hikes for small businesses. This was essentially the state’s policy from 1975 to 1991, when the Massachusetts Rate Setting Commission set rates for the state’s purchase of health care services and products, placed budget constraints on hospitals, and gave the Division of Insurance the power to deny premium increases in some cases. Two legislative task forces have recently recommended paying providers on an annual per patient basis (capitation) instead of per service (fee-for-service) to control costs. This was a hallmark of early managed care — the practice legislators hoped would control costs when they abandoned rate setting during the 1990s, but which generated significant backlash from doctors and patients. Rate setting was neither bad nor completely ineffective when we had it, but neither rate setting nor capitation addressed the root causes of our rising health care costs, and both allowed costs to continue climbing at unsustainable rates.

The United States spends almost twice as much per person on health care as any other country in the world, and yet has some of the worst health outcomes of all developed nations. This means we spend a lot on care that does not contribute to better care, and there is extraordinary room for cost control that does not reduce access to or quality of care. However, we often pursue cost control strategies that are not based on evidence, and are designed to limit political opposition from the health care industry, for which our high costs are its high income. These efforts either don’t work at all, or don’t work on a scale that will have a noticeable impact on a system with double-digit premium inflation.

To a large extent, our high spending is due to a fragmented system where providers deal with hundreds of different insurers, all with different rules. This drives up administrative costs in the system, and means we lack what other jurisdictions have to effectively control costs: the ability to budget the health care system and publicly plan the allocation of limited resources to the communities and areas of care that need them most. This is why only nations with uniform payment systems and an extraordinary level of public oversight have been able to “bend the cost curve’’ without hurting health outcomes.

Effective cost control has proven to be politically impossible, particularly in Massachusetts. However, another failed attempt at cost control is unaffordable for the state, our municipalities, businesses, and households. If Patrick and the Legislature hope to avoid joining the company of their predecessors, they must do more than rehash the state’s cost control programs of the last 30 years.

Benjamin Day is the executive director of Mass-Care: The Massachusetts Campaign for Single Payer Health Care. Peter Hiam was chairman of the Rate Setting Commission from 1978 to 1982 and commissioner of insurance for Massachusetts from 1983 to 1987. 

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2010/03/29/the_states_single_payer_solution/

In Big Pharma's grasp

Physicians first in line to be manipulated

By ROB KIEFNER
Letter to the editor, Concord (N.H.) Monitor
March 28, 2010

While the unholy and enigmatic alliances between lobbyists, insurance companies and their friends in Congress are responsible in large part for the unsettling vicissitudes of health care reform, Big Pharma must surely share in the blame game as well.

No doubt we have all been beneficiaries of research and development, which has led to major breakthroughs in all fields of medicine. We are living longer and, some would argue, healthier lives as a result of medications that forestall the damage due to age-related illness and self-neglect, or bail us out of situations that would have knocked off our grandparents.

But these days Big Pharma is throwing billions of dollars into marketing drugs that really don’t do anything new or exciting. In a disturbing trend, pharmaceutical companies are in the business of manufacturing a diagnosis to their drug, rather than working on a new drug for an existing condition. From a physician’s point of view, we’re seeing resources shifting from the development of important new drugs to the marketing of “me too” variants of existing drugs. In an effort to gain or expand upon patent protection, an existing drug might be tweaked or repackaged ever so slightly, at great cost but relatively little benefit to the public.

So how do drug companies manage to sell drugs we don’t need for conditions we don’t have? Ah, the power of multilevel marketing.

Sadly, physicians are first in line to be manipulated. Our medical journals consist almost entirely of glossy pharmaceutical ads, with an occasional scientific article thrown in to justify their publication. And there are always those cozy and questionable relationships between physician researchers in academic medical centers who run the “objective” clinical trials for the drug companies. In the marketing world, a minor improvement in outcomes for an expensive “me too” drug is tantamount to the discovery of penicillin.

How does this information of dubious value make its way to the office-based physician? At times, the message is transported on the wings of angels – willowy twentysomething supermodels turned drug reps who ordinarily wouldn’t talk to a frumpy old guy like me. The trouble is, after meeting with them, I can’t remember which drug they were promoting. But there’s a drug for that, too.

The next level of marketing involves the lavish spending by pharmaceutical companies upon members of Congress, which amounted to approximately $275 million last year. Lots of money can coax our elected representatives to feign horror at the prospect of decreasing the duration of patents, or importing cheaper drugs from elsewhere in the

world. A lobbyist’s dream come true was the provision in the Medicare drug benefit (Part D) that has prohibited the government from negotiating pricing on drugs for Medicare recipients.

Finally, and perhaps most flagrantly, drug companies are able to convey their convoluted messages to the public with direct-to-consumer advertising. The United States and New Zealand are the only countries that permit DTC advertising of prescription drugs.

At an estimated cost of $4 billion in the United States last year, DTC advertising is another colossal waste of money in our health care system.

During a recent 30-minute evening network news program, I counted 10 separate pharmaceutical commercials, all with happy people cured of their depression, high cholesterol, peripheral vascular disease and asthma. These smiling and confident folks don’t even break stride as the narrator rattles off a few dozen potentially fatal side effects in the last half of the commercials.

Patients then bring their requests to the doctor’s office. With little time, and less energy to object, doctors take the path of least resistance and write the costly prescription. Mission accomplished.

No wonder physicians who have been practicing for a while are suffering from therapeutic nihilism.

A more comprehensive cure for all the aforementioned conditions is to get off the couch and stop watching TV.

It’s a bitter pill to swallow, but Big Pharma has us all in its grasp.

And, by the way, gentlemen, if widely advertised medications do what they are supposed to do for more than four hours, please don’t call your doctor. Dust off the Rolodex or dig out the little black book and see if any of those old girlfriends want to hear about it.

(Rob Kiefner is a family physician in Concord.)

http://www.concordmonitor.com/apps/pbcs.dll/article?AID=/20100328/OPINION/3280323&template=single

In Big Pharma’s grasp

Physicians first in line to be manipulated

By ROB KIEFNER
Letter to the editor, Concord (N.H.) Monitor
March 28, 2010

While the unholy and enigmatic alliances between lobbyists, insurance companies and their friends in Congress are responsible in large part for the unsettling vicissitudes of health care reform, Big Pharma must surely share in the blame game as well.

No doubt we have all been beneficiaries of research and development, which has led to major breakthroughs in all fields of medicine. We are living longer and, some would argue, healthier lives as a result of medications that forestall the damage due to age-related illness and self-neglect, or bail us out of situations that would have knocked off our grandparents.

But these days Big Pharma is throwing billions of dollars into marketing drugs that really don’t do anything new or exciting. In a disturbing trend, pharmaceutical companies are in the business of manufacturing a diagnosis to their drug, rather than working on a new drug for an existing condition. From a physician’s point of view, we’re seeing resources shifting from the development of important new drugs to the marketing of “me too” variants of existing drugs. In an effort to gain or expand upon patent protection, an existing drug might be tweaked or repackaged ever so slightly, at great cost but relatively little benefit to the public.

So how do drug companies manage to sell drugs we don’t need for conditions we don’t have? Ah, the power of multilevel marketing.

Sadly, physicians are first in line to be manipulated. Our medical journals consist almost entirely of glossy pharmaceutical ads, with an occasional scientific article thrown in to justify their publication. And there are always those cozy and questionable relationships between physician researchers in academic medical centers who run the “objective” clinical trials for the drug companies. In the marketing world, a minor improvement in outcomes for an expensive “me too” drug is tantamount to the discovery of penicillin.

How does this information of dubious value make its way to the office-based physician? At times, the message is transported on the wings of angels – willowy twentysomething supermodels turned drug reps who ordinarily wouldn’t talk to a frumpy old guy like me. The trouble is, after meeting with them, I can’t remember which drug they were promoting. But there’s a drug for that, too.

The next level of marketing involves the lavish spending by pharmaceutical companies upon members of Congress, which amounted to approximately $275 million last year. Lots of money can coax our elected representatives to feign horror at the prospect of decreasing the duration of patents, or importing cheaper drugs from elsewhere in the

world. A lobbyist’s dream come true was the provision in the Medicare drug benefit (Part D) that has prohibited the government from negotiating pricing on drugs for Medicare recipients.

Finally, and perhaps most flagrantly, drug companies are able to convey their convoluted messages to the public with direct-to-consumer advertising. The United States and New Zealand are the only countries that permit DTC advertising of prescription drugs.

At an estimated cost of $4 billion in the United States last year, DTC advertising is another colossal waste of money in our health care system.

During a recent 30-minute evening network news program, I counted 10 separate pharmaceutical commercials, all with happy people cured of their depression, high cholesterol, peripheral vascular disease and asthma. These smiling and confident folks don’t even break stride as the narrator rattles off a few dozen potentially fatal side effects in the last half of the commercials.

Patients then bring their requests to the doctor’s office. With little time, and less energy to object, doctors take the path of least resistance and write the costly prescription. Mission accomplished.

No wonder physicians who have been practicing for a while are suffering from therapeutic nihilism.

A more comprehensive cure for all the aforementioned conditions is to get off the couch and stop watching TV.

It’s a bitter pill to swallow, but Big Pharma has us all in its grasp.

And, by the way, gentlemen, if widely advertised medications do what they are supposed to do for more than four hours, please don’t call your doctor. Dust off the Rolodex or dig out the little black book and see if any of those old girlfriends want to hear about it.

(Rob Kiefner is a family physician in Concord.)

http://www.concordmonitor.com/apps/pbcs.dll/article?AID=/20100328/OPINION/3280323&template=single