Wednesday, September 19, 2012

No Cost Control Yet 

We now seem to be at the point at which everyone agrees that something should be done about the cost of health care but few are ready to do it. 

I say few because the Massachusetts legislature has enacted a law that purports to deal with the issue.  But by my reading it is more appropriately classified as wishful thinking than as potent policy.  It says that the rate of cost increase should not exceed the rate at which the state’s economy grows, but is very vague about what happens if it does. 

I was reminded of all this by a Robert J. Samuelson Op-Ed column that appeared in the September 16 issue of the Omaha World Herald.  The headline over the column was “How to curb costs of care.”   I read it through to the end, but without finding the answer.   

The main subject of the column was the recently issued Institute of Medicine report which claimed that some 30%  of health care expenditures were wasted, identified a number of contributing factors, but, in Samuelson’s words, “lacks any strategy to promote change.” 

The problem, I suppose, is that despite all the criticisms, most people are happy with the health care they are receiving - particularly when employers or government are paying for it – and are therefore resistant to proposals for change. 

Consciousness of the problem is growing and a few remedial things are happening, but when it comes to meaningful reforms, we’re not there yet.



Sunday, September 09, 2012

Cost and Culture 

In order to do something meaningful about the cost of health care, it is necessary for the culture to change first.   

A vivid example is provided by the feature article on the front page of the August 8 issue of the Omaha World Herald. 

The Nebraska Medical Center is the teaching hospital for the University of Nebraska’s medical school, both located in Omaha.  The Medical Center wants to build a new $323 million cancer center and wants Omaha and the local county (Douglas) to contribute $40 million of that.  One suggestion is to fund part of the city’s portion with a new tax on cigarettes.  Another is for the county to devote its share of inheritance taxes to the project. 

Advocates of the project talk about economic development, jobs, benefits to the community, and the need for the Medical Center to remain competitively strong.  Opponents suggest that there are other, more pressing needs for public funds, like paying down the city’s $500 million of debt and financing its pension plan which is underfunded by $600 million, an upcoming $2 billion sewer project, and roads in need of repair. 

But the cultural imperative of financial support for health care is so strong that the project looks likely to be done.  County board chairman Marc Kraft is quoted as calling it a “fantastic project” and indicates that he will vote for it.  Board member Clare Duda was quoted as saying “I think I have to vote for it, even though it really bothers me to put inheritance tax dollars toward economic development.  The county does not do economic development.”  

Given the national alarm about the subject, one would think that someone might ask how the project would affect the  high and rising cost of health care.  Or how the new facility would allow better care to be provided at lower cost.  Some curious soul might also ask about the adequacy of existing cancer care facilities and whether new ones are needed.

We may get there some day, but we’re not there yet.

Saturday, September 08, 2012

Counting Blessings 

Providers of health care have reason to count their blessings. 

The September 7 issue of the Omaha World Herald carried an AP story headlined “30¢ per health care dollar wasted.” 

The story was about a statement issued by the prestigious Institute of Medicine which estimated the amount of waste in health care due to unnecessary services, inefficiency in the delivery of care, excess administrative costs, inflated prices, prevention failures and fraud. 

In any other line of endeavor, such a report would produce an explosion of protest and viewing with alarm. 

But this story appeared on page 6 and there was no reference to in on the editorial page. 

The story quoted Dr. Mark Smith of the California HealthCare Foundation, chairman of the IOM panel issuing the report, as saying that the remedies included payment reform by the government, less cost shifting to workers by employers, and a demand (by whom was not stated) for accountability from hospitals and medical groups.  He also said that doctors had to get beyond the “bubble of solo practice and do more collaborating with peers and other clinicians.  He called it all “a huge hill to climb.” 

He said that the good news was that cost could be reduced without harm to quality of care. 

As to the hill to be climbed, the biggest one, I think, is getting the public exercised enough to force reforms.  Health care providers continue to be venerated and nobody wants to push them very hard. 

As I said, they should count their blessings.

Wednesday, September 05, 2012

More on Competition 

The subject of economic competition among the providers of health care apparently remains too delicate for anyone – even right-wing Republicans - to take on directly. 

The Op-Ed page of the September 4 issue of the Omaha World-Herald carried a column by Bill Keller of the New York Times commenting on the predicament of Democratic Congressman Ron Wyden (Oregon) who co-sponsored what is now known as the Paul Ryan budget proposals.  Those proposals include an option in Medicare that would allow beneficiaries to decline traditional benefits in favor of a voucher to be applied to health insurance purchased in the private market. 

Midway in the piece, Keller says that “By introducing a measure of choice and competition, Wyden hoped to prod health care providers toward more efficient practices….” 

Missing from all this is a description of just how the Medicare voucher would cause providers to become more efficient while preserving choice. 

The only kind of economically effective competition in health care that I have been able to imagine is one in which patients gravitate to providers that offer the highest quality of care at the lowest cost.  Patients conceivably could do that themselves as individuals, but under the Medicare voucher proposal they would have to do it through an insurance company.  The obvious way for the insurance company to do it is by contracting with the best providers and not with the others.  But that limits choice. 

Maybe some day the advocates of Medicare vouchers will explain how all that would work, but they haven’t done so yet. 

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