Tuesday, February 17, 2009

On Offer They Couldn’t Refuse?

On Monday, May 11, representatives of five national organizations representing providers of health care went to the White House and declared their intention to implement measures that would result in savings of $2 trillion over the next ten years. The declaration was announced by President Obama in front of the television cameras with representatives of the organizations lined up behind him.

The organizations making the declaration represented doctors, hospitals, pharmaceutical companies, health insurance companies, and organized labor.

It would be hard to overstate the significance of that event as a step along the way to reform of health care. Up until now, almost all of the public discussion of health care reform has focused on the uninsured and universal coverage. Little attention has been paid to the high and rising cost of care.

Now, for the first time, a national political leader in the person of President Obama is pointing out that the first priority of health care reform is to get cost under control, the implication being that unless we do that, we can’t afford to address the coverage issue.

In his remarks, the President has mentioned some cost control measures like prevention and information technology. However, the May 11 event indicates his understanding that in the end it is the providers of health care that have to do it.

Of course, the providers don’t want to do it. Lower cost means less income for them, not exactly something to which they look forward with joy.

There were no smiles on the faces of the people standing behind the President during his announcements. Somebody had made them an offer they couldn’t refuse. My own suspicion is that they were given to understand that their only hope of preventing the government from going into the health insurance business was to get serious about cost control.
Going to Plan B

It looks as though those who advocate single-payer (the euphemism for national health insurance) may have to settle for Plan B.

On Wednesday, May 6, Kathleen Sebelius, Secretary of Health and Human Services in the Obama administration, appeared before Congress and “flatly rejected the idea of the government taking over the nation’s medical insurance system.”

That statement was reported in a syndicated Tribune article that appeared in the May 7 edition of the Omaha World Herald.

Sebelius went on to affirm the desire of the administration “to create a so-called ‘public plan option’ to encourage competition, not a monopoly.” Such a plan would “compete with private insurers – both to help cover the more than 46 million currently without insurance and to encourage cost containment and better programs.”

Single-payer advocates may want to believe that the public plan option really reflects the intention of the administration to achieve single-payer by the back door. I wouldn’t count on it. It is possible, I think, that the intention is to use it as a bargaining chip in the effort to persuade providers to get serious about cost reduction.

So those who are seriously concerned about the uninsured ought to be thinking about ways to address that issue that do not include single payer.
A New Approach to Health Care Reform

An April 27 posting to the American Hospital Association’s blog hospitalconnect.com reported on a speech by Nancy-Ann DeParle, the newly appointed director of the White House Office of Health Reform. In the speech, Ms. DeParle described eight simple principles that will guide the administration’s health reform efforts. I list them below together with my comments.

1. Any plan must address ways to control long-term growth in health care costs. “Reform that does not control costs is no reform at all.”

Comment: Right. I think it noteworthy that this principle appears first.

2. Families must be protected against bankruptcy or crushing debt from health care costs.

Comment: Agreed. This principle might be interpreted to imply universal health insurance coverage. It could have said that, but it doesn’t.

3. Americans must be allowed to choose their own doctors, hospitals and health plans. “The Obama administration will not force patients to change providers or plans.”

Comment: Perhaps a politically necessary statement but, as I have pointed out in previous postings, it is not consistent with the cost control called for by principle 1. Note, however, the careful parsing. It doesn’t say that patients won’t be forced to change. What it says is that the Obama administration won’t do it.

4. The nation must make a real investment in prevention and wellness.

Comment: A platitude with unclear implications. Does “the nation” mean the federal government?

5. Any reform measures must take significant steps to ensure safety and improve quality of care.

Comment: Another platitude. One wonders what kinds of “steps” are being considered and why they have to wait for “reform.”

6. The nation must ensure affordable, quality health care for all Americans.

Comment: A clear gesture towards those plumping for universal coverage but I note that, again, it puts the responsibility on “the nation,” not the government.

7. Health care coverage must be maintained for Americans even when they lose or change jobs.

Comment: An appealing thought, but as a practical matter, what can be done beyond COBRA, the current program that lets employees who leave their jobs keep their health insurance for a period at their own expense?

8. Insurers must end barriers to coverage for people with pre-existing medical conditions. “This is rationing health care, plain and simple, and it will not be tolerated.”

Comment: Another appealing thought, but if anyone knew how to do it, it would probably have been done already. The remark about rationing is gratuitous. Health care has always been rationed and always will be. The question is who should do it?

My final comment is this: Although these principles are carefully designed to touch the political bases, they comprise a new and potentially potent approach to health care reform. Up to now, the focus has been on “universal coverage” and “the uninsured,” words that do not appear in this list of principles. As I have pointed out previously, it would be good if everyone had health insurance, but we can’t afford it until and unless we get cost under control.
Changing the Agenda

As executive head of the American Hospital Association (AHA), Richard Umbdenstock attended two recent conferences at the White House. The first was the Fiscal Responsibility Summit that dealt with the current economic crisis. The second was on Health Care Reform.

He reported on those conferences in the April 9 issue of H&HN, the journal of the AHA.

I believe this is the first commentary on health care reform by Umbdenstock that I have seen that did not mention the uninsured, except as a financial burden for hospitals. Instead, his report focused on the Obama administration’s emphasis on the theme of containing the cost of care.

Apparently, President Obama’s efforts to move the health care reform agenda away from a sole fixation on the uninsured and in the direction of containing cost are beginning to have an effect.
Obama Doesn’t Get It Yet

Last week, President Obama gave a major speech on economics at Georgetown University. He discussed five “pillars” on which our recovered economy should be built, one of which included reducing the cost of health care.

The strategies he mentioned for achieving cost reduction were investments in prevention and information technology.

Unfortunately, both of those will increase the cost of health care, not reduce it.

As this blog has pointed out before, prevention improves life by allowing people to live longer and be more active. But living longer exposes them to the chronic diseases associated with aging, such as arthritis and diabetes. The great bulk of the cost of health care arises out of the treatment of chronic diseases. Thus, investing in prevention, if successful, will increase cost in two ways: first, by the cost of the investment and second by the need to treat the increase in chronic disease that would result from the longer lives that result from prevention.

When information technology is applied to existing practices, the usual result is to add the cost of the technology to the ongoing costs being incurred. That is pretty much what has happened in health care up to now. Information technology will be instrumental in reducing the cost of health care when it is used to support new and less costly ways of providing care that would not be possible without it. But that is not what President Obama called for.

I voted for President Obama and think that he is doing a good job, generally speaking.

But when it comes to doing something about the cost of health care, he doesn’t get it yet.
Our National Delusion

The lead editorial in the March 8 Sunday New York Times and the responding letters to the editor comprise a vivid illustration of our state of national delusion about health care reform.

The editorial mildly praises President Obama for his health care reform initiative and for his emphasizing both the cost and access issues. It then gently chides him for not being more specific about solutions for either one.

Of course, The New York Times doesn’t offer any solutions, either.

Then last Sunday the Times published five letters to the editor responding to the March 8 editorial.

The following are quotations from the letters and my comments:

Quotation: “….any plan that retains the private, multipayer insurance system that is the source of our out-of-control costs cannot possibly work.”

Comment: Insurance may be a source of cost, but it is not the source. The continually rising cost of providing services is more important.

Quotation: “The Congressional Budget Office has shown that a mandate to purchase insurance will not lead to universal coverage. It has shown, as well, that neither information technology nor chronic disease management nor comparative effectiveness analysis — all of which the administration is counting on — will significantly curb costs. Only a unified public plan, based on our successful experience with Medicare, can truly address the problems of the health care system.”

Comment: I agree with the first two sentences. I note that the third sentence does not specify how Medicare for all will fix the system.

Quotation: The “hard choices” called for in the editorial will include “….that quality of care and cost control are the prime responsibilities of the doctor, not the insurer or payer; that the doctor should be accountable for the desired indices and rewarded for their achievement.”

Comment: This quote comes from old (in both senses) friend Mitch Rabkin, long-time CEO of Beth Israel Hospital in Boston, now retired. Doctors play a key role, but only institutions – not individual physicians – can be effectively held accountable.

Quotation: “If we want to cut costs, we can eliminate the cumbersome bureaucracy of private insurance by turning to a single-payer system. If we want to help businesses like General Motors, single-payer would eliminate the cost of providing coverage for employees and retirees. And unlike the current system, single-payer would let patients choose their own doctors, instead of forcing them to pay extra for ‘out-of-network providers.’”

Comment: Eliminating the administrative cost of private insurance would be a one-time saving. It would not affect the underlying escalation in the cost of providing services. General Motors would be helped only if the extra taxes required to fund single payer were less than it now pays for insurance. Freedom of choice of physician is an important source of cost escalation. Requiring health insurance to pay whatever doctor the patient picks neutralizes the accountability called for by Rabkin.

Quotation: “If we want to have health care that is both universal and affordable, instead of letting people go without coverage or requiring them to buy insurance they can’t afford, a single-payer system is the only answer.”

Comment: Single payer is obviously a way to provide universal coverage, but it is by no means clear how it relates to the cost issue, other than for the one-time saving mentioned above.

Like everyone else, nobody wants to recognize that providers are the only ones that can get cost under control and that nobody, including The New York Times, has asked them to do so. Instead, they go merrily along spending the added revenue from the windfalls of Massachusetts-style health care reform programs, SCHIP expansion and stimulus appropriations, increasing cost still further as they do so.

Neither does anyone want to accept the truth that until we get the cost of health care under control, we can’t afford universal coverage.
My NYT Letter

The March 6 issue of The New York Times carried an Op-Ed piece by pediatrician Anne Armstrong-Cohen, M.D.. It was titled The Computer Will See You Now. Its theme, in essence, was a complaint by the doctor that she had been required to use a computer in her practice and that she found it less than helpful.

I responded with a letter to the Editor, which was accepted for publication and appeared today (March 11) in the Web version of the Times along with several others on the same subject. (I don’t know if it appeared in the print version.)

The text of the letter as it appeared in the Times is as follows:

“Dr. Anne Armstrong-Cohen’s story is a cautionary tale. It illustrates why most of the $17 billion in President Obama’s stimulus package for promoting electronic medical records will add to the cost of care, not reduce it.

Dr. Armstrong-Cohen is applying the computer to a method of pediatric practice that has been in effect from time immemorial. The cost of computers has been added to the cost of her practice without, it seems, improving her efficiency.

What she ought to be doing is thinking up a new, better and less expensive way to provide health care to children that is practical only with computers and then get someone to develop a program to support it. Not being a pediatrician, I would not presume to suggest what that way might be, but I’m sure it is out there waiting to be discovered.”
Preserving the Domestic Tranquility

It seems that the federal government is about to undertake an initiative to evaluate the effectiveness of various modes of treatment. The example used in the article on the subject in The Boston Globe (March 2, 2009) was that of the use of proton beam therapy in the treatment of prostate cancer. The article said that while proton beam therapy is five times as expensive as other forms of radiation, there was no evidence that it is any more effective.

The economic stimulus package contains $1.1 billion for “comparative effectiveness research.” Thanks to heavy lobbying by drug and medical device manufacturers, the law avoids suggesting that the results of the research could be used to reduce the cost of health care.

But, of course, there are suspicious people everywhere. Given the cost pressures being experienced by health care insurers, both public and private, it is not hard to imagine that if proton beam therapy does not prove to be more effective, or even if it turns out to be just a little more so, some of them will refuse to pay for it.

But research is seldom completely conclusive and there will be those who attribute such decision to “putting money over people.” The makers of the equipment will hire special lobbyists and perhaps even take out big ads to promote the therapy. Representatives and Senators from the area in which the equipment is made will introduce legislation requiring health insurance to pay for it.

It’s an example of the implications of national health care financing schemes that make it necessary for decisions like this to be made at the national level and applicable to everyone. The domestic tranquility would seem to be enhanced by decentralizing the matter somewhat so that the resolution reached in Oklahoma might be a little different than it is in Vermont. There will be unhappy people in both places, but it will not be a divisive national issue.
The Costly IT Fad Continues

The costly information technology (IT) fad continues on in health care.

In its February 16, 2009 edition, the magazine Modern Healthcare, in cooperation with the Healthcare Information and Management Systems Society, announced its 2009 CEO IT Achievement Awards. Three hospital CEO’s were named with a one and a half page write-up about each.

I read all three, searching for evidence of quantifiable accomplishments in the areas of quality and cost. I would have liked to see a statement like “The hospital achieved its goal of reducing the cost of ICU care by 25%, with an investment in IT that will be paid back in five years.”

I didn’t find one. The write-ups mentioned the hospitals’ annual investment in IT, which in each case ran into the tens of millions of dollars. Some savings in specific amounts were claimed, but in most cases neither the method of calculating them nor the cost of achieving them was explained.

I found one of the claims to be of particular interest. An investment of $87,000 in an e-mail spam-blocking program was said to save $697,000 on the assumption that employees would spend five seconds erasing each spam e-mail that had been blocked.

It occurred to me that the employees wouldn’t be getting any spam at all if they didn’t have computers connected to the Internet. So I would put all of the $87,000 on the cost side of the hospital’s IT program.

No doubt the day will come when all this investment in IT pays off. But we are not there yet.
An Antiquated, Useless Right

Free patient choice of physician is an antiquated “right” that adds to cost, compromises quality, inhibits reform, and needs to be given up.

Last November, wife Marilyn and I both had medical episodes that involved hospitalizations. The bills that continue to dribble in are a reminder that between us we were probably served by something like a dozen physicians, if you count hospital-based specialties like radiology and anesthesiology.

Of that dozen, we “freely” chose only one – our primary care physician – and we first saw her at the suggestion of a neighbor when we moved to our current residence and needed to have a prescription written (she proved to be excellent!!).

We got Marilyn’s orthopedist some years ago when one of her knees needed attention and we called the hospital for a referral.

All the rest of the doctors we got because they were the ones on hospital duty at the time.

I have suggested before that in matters of health care, we need to learn to put our faith in institutions rather than in individuals. Actually, as our experience shows, we usually don’t have a lot of choice in the matter.

We ought to be able to believe that the hospital we choose has taken responsibility for the competence of any doctor related to it. In practice, we often do.

But here’s the problem. To the extent that we maintain and exercise the “right” to choose our own physicians, the hospital can get our business only by maintaining a relationship with the physicians we choose. That potentially puts the hospital in a bind. Severing the relationship with a marginally competent physician means losing the business the physician brings.

It shouldn’t be like that. Doctors ought to depend on hospitals for their patients rather than the other way round, and hospitals ought to be fully accountable for the competence of their physicians.

Of course, if a patient and a particular physician prove for some reason to be incompatible, the hospitals should without hesitation cooperate in arranging a change to a physician more suitable.

But the patient’s basic choice should be the hospital. That means forgetting about the increasingly useless “right” to choose our physicians.

Monday, February 09, 2009

Orszag’s Dilemma

In my last posting I mentioned Peter Orszag, President Obama’s budget director. According to an article in the New York Times Magazine of February 1, 2009, Orszag, while director of the Congressional Budget Office, had expressed the view that the cost of health care was “…far more important to the future of the [federal] budget than any other issue in front of Congress.”

Orszag had also discussed the importance of the ability of the federal government to borrow money, going on to observe that “Absent a health care overhaul, the federal government’s lenders around the world may eventually grow nervous about the ability to repay its debt.” That would result in higher interest rates that “….will also depress economic growth, aggravating every other problem.” Not a pretty picture.

Orszag hasn’t had a good week. Last Wednesday, President Obama signed into law an extension of the State Children’s Health Insurance Program (SCHIP). This is a program which allows the states to offer Medicaid to children with families of modest income but above the regular level of eligibility. The new law loosens eligibility rules so that four million children can be added to the seven million covered under the program as originally enacted in 1997.

Orszag, like all the rest of us, no doubt thinks it good that children should be covered by health insurance. But he would also know that what his boss did dug the health care cost hole a little deeper by pumping more money - $32 billion over the next 4.5 years - into a health care system that already spends at levels that threaten the country’s economic well-being.

One wonders if the health care cost issue will end up something like the subprime home mortgage problem – a ticking bomb that many recognized but that people were unwilling to tackle until it blew up.

Tuesday, February 03, 2009

More about President Obama and the Cost of Health Care

The feature article in last Sunday’s New York Times Magazine was about fixing the current economic crisis. One section of the article dealt with the cost problem in health care. It referred to health care as a “fabulously inefficient” sector of the economy and indicated that its cost had to be brought under control to avoid serious economic difficulties.

Much of the discussion referred to Peter Orszag, President Obama’s selection as budget director. Orszag had previously served a term as director of the Congressional Budget Office, during which he “devoted himself to studying health care, believing that it was far more important to the future of the budget than any other issue in front of Congress.”

When dealing with this topic in past speeches and statements, Orszag has focused on the variation is Medicare spending by region. It seems that expenditures in some areas, like Southern New Jersey and Texas, are much higher than in areas like Minnesota, New Mexico and Virginia. No explanation can be found other than the way doctors practice medicine. Patients in the high spending areas aren’t sicker, don’t do better, and, in fact, may do somewhat worse due to the risks involved in invasive care.

The first step Orszag proposes is the electronic medical record, for which money has been included in the administration’s stimulus bill. The idea is that standard electronic medical records would make it possible for Medicare to discourage unnecessary care by not paying for it.

In other words, Medicare would refuse to pay for tests and treatments that it considered to be unnecessary. As the article recognized, that would not be popular among doctors and patients who believed otherwise.

The reluctance of politicians to make their constituents unhappy would pose a serious, possibly fatal, barrier to carrying out Orszag’s idea. For that reason some other approach may need to be found.

But it all supports the notion that President Obama may be serious about the cost issue.

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