Bartlett on Health Care in the Financial Times

Posted on April 4, 2012 by markinaustin

Lapsed R Bruce Bartlett says government can do it better.  Hmmm.

 

America
The folly at the heart of the US healthcare debate

America is the only developed country that does not offer some form of national health insurance to all its citizens.

Those over the age of 65 have coverage through Medicare and the poor are covered through Medicaid, both established in 1965. Those who are neither poor nor old are expected to obtain their own health insurance or get a job that provides coverage. The federal government does subsidise private insurance through the tax code by allowing its cost to be excluded or deducted from taxable income. This reduces federal revenues by some $180bn per year.

In 2009, the Obama administration put forward a plan for extending health insurance to those who did not have it through an employer, those who could not afford it and those who could not obtain coverage due to a pre-existing medical condition. A complex system of subsidies was established to make coverage affordable to everyone and a mandate was put into place requiring people to get coverage or else pay a fine.

The mandate is by far the most controversial element of the Affordable Care Act. Its rationale is that insurance companies cannot be forced to cover those with pre-existing conditions without it, or else people will simply wait until they are sick before buying health insurance. Nevertheless, many Republicans view the mandate as an unconstitutional intrusion into the economy and they have brought a case before the Supreme Court to declare the legislation null and void for that reason. Court watchers believe the case could go either way, with a final decision expected just before the election in November.

Exactly what would replace the Affordable Care Act if it is found unconstitutional is a mystery. The Obama administration appears to have no back-up plan and Republicans have steadfastly refused to offer any proposal for expanding health coverage. One problem is that before Barack Obama became president, Republicans were the primary supporters of an individual mandate, viewing it is as a more market-oriented way of expanding health coverage without a completely government-run health system. Indeed, Mitt Romney, the likely Republican presidential nominee, established a healthcare system in Massachusetts, where he was governor, that is virtually identical to the national system created by Mr Obama.

Simultaneously, Republicans are keen to cut spending for Medicare and Medicaid, because they are among the most rapidly expanding government spending programmes. A plan supported by Republicans in the House of Representatives would effectively privatise Medicare, giving the elderly a government voucher to buy insurance or health services, in lieu of the pay-for-service system that exists now. Medicaid would be devolved to the states.

What neither party has made any effort to grapple with is the extraordinarily high cost of health, public and private. According to the Organisation for Economic Cooperation and Development, the US spends more of its gross domestic product on health than any other country by a large margin. Americans spent 17.4 per cent of gross domestic product on health in 2009 – almost half of it came from government – versus 12 per cent of GDP or less in other major economies. Britain spends 9.8 per cent of GDP on health, almost all of it through the public sector. The total government outlay is almost exactly the same in the US and the UK at 8.2 per cent of GDP. This suggests that for no more than the US government spends on health now, Americans could have universal coverage and a healthcare system no worse than the British.

However, the option of a completely government-run health system was never seriously considered in the US when the Affordable Care Act was debated in 2009. Americans are too convinced that everything government does is less efficient and costs more than if the private sector does it. The fact that this is obviously wrong in the case of healthcare has never penetrated the public consciousness.

At the moment, everyone is waiting for the Supreme Court to speak before moving forward on any serious new health reform plan. Whichever way the court rules, it is likely to give some push to further action next year regardless of the election outcome. Moreover, the growing governmental cost of Medicare and Medicaid is something that has to be addressed if there is any hope of stabilising the national finances. That alone would be an impetus for action even if the Affordable Care Act had never been enacted.

The writer is a former senior economist at the White House, US Congress and Treasury. He is author of ‘The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take’

Filed under: aca, health insurance, healthcare, politics | 29 Comments »

Faux Health Care Update

Posted on March 16, 2012 by Mike

Better publish this before I forget.

Bunch of links from the NEJM on Medicare reform.

On the whole, we do not believe that the recent slowdown in Medicare spending growth is a fluke. There has been a long-term trend toward tighter Medicare payment policy, and policy changes that began in the middle of the 2000s have continued that tightening (see graph).2 The Deficit Reduction Act of 2005 (DRA) reduced payment rates for imaging, home health services, and durable medical equipment, and the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) made substantial cuts to Medicare Advantage plans. Even though Congress has overridden payment cuts dictated by the sustainable growth rate formula (SGR) each year, the resulting physician-fee increases have fallen further and further below the relevant index of inflation. All these specific constraints on payment rates probably also slowed growth trends in the volume of services provided, leading to a larger slowdown in spending growth.3

Slower growth in Medicare Spending

On December 15, 2011, Senator Ron Wyden (D-OR) and Representative Paul Ryan (R-WI) released a Medicare reform proposal based on the concept of premium support.1 Under their proposal, Medicare would be converted from a defined-benefit to a defined-contribution program. Instead of guaranteeing to pay for services as they are rendered, as fee-for-service Medicare does, the program would give beneficiaries a subsidy (“premium support”) to purchase coverage from one of multiple competing health plans. The motivation behind the approach is to give plans a clear incentive to provide necessary services in a cost-effective manner, which can result in lower premiums or other beneficiary costs, attracting enrollees and increasing the plan’s share of the market.

Wyden-Ryan Proposal

These proposals would offer Medicare beneficiaries vouchers toward the purchase of private insurance or traditional Medicare. Private-plan offerings could vary, but the actuarial value of these alternatives would have to be at least equal to that of traditional Medicare. Increases in the amount of the voucher would be capped by an index that is expected to rise more slowly than health care costs. Advocates claim that cost-conscious enrollees and competition among profit-seeking insurers would hold down program costs. But if they didn’t, the growth cap would do so by shifting costs to the elderly and disabled.

Is premium support along the lines now being proposed a good idea? Is now the time to be making fundamental changes in Medicare? We believe that the answer to both questions is no.

Now is not the time for premium support

Before Senator Ron Wyden (D-OR) and Representative Paul Ryan (R-WI) introduced their “Bipartisan Options for the Future” on December 15, 2011, the notion that Democrats and Republicans agreed about certain aspects of Medicare might have seemed unthinkable.1 But the pairing of a liberal Democrat who has long worked on health care reforms and a fiscally conservative Republican primarily known for work on budget issues suggests that it might be possible for the parties to reach a compromise on Medicare reform. Of course, meaningful reform is not likely to occur in 2012: any significant reform probably won’t happen until the public sends a clearer signal about the kinds of change it will tolerate, which won’t be possible until after the fall elections. Yet some Republicans and Democrats appear to be in substantial agreement about some changes that might make Medicare more efficient, effective, and fiscally sustainable — even if none of these changes are universally accepted by either party as desirable or even tolerable.

Bipartisan Medicare Reform

A surgeon writes at Reason on medical ethics, cost controls and therapeutic guidelines.

Trends in US health care spending

Filed under: healthcare | 6 Comments »

NOT ENOUGH MDs

Posted on February 13, 2012 by markinaustin

We here have been educated to understand the supply problem in American health care, thanks to NoVAH, Mike, and Michigoose, although many, if not all, of us understood the general outlines of this basic issue before we got here. This morning we read this:

http://www.washingtonpost.com/blogs/ezra-klein/post/the-health-reform-laws-biggest-threat-30000-too-few-doctors/2012/02/10/gIQALEQp4Q_blog.html?wpisrc=nl_wonk

What I did not know, until I read this article, is that Medicare covers the lion’s share of the cost of training medical residents.  Further, in order to make ACA’s package politically marketable, in the negotiations, there was no increase in the funding for residents.  Thus ACA built into itself the seeds of its own failure, and this is what NoVAH has been saying to us, although I don’t recall his having pointed to the failure to increase funding for residents.

When I read ACA in detail for my clients, I looked at it from the POV of the effect on small biz, which I decided was actually nil, for my clients.  A myopic view, I admit, but it fit my assignment.  A shortfall of 30000 new doctors in a near time frame will greatly increase health care costs above what they would have been if 30000 new docs had been trained.

Filed under: Affordable Care Act, healthcare | 12 Comments »

Health Care Headlines

Posted on January 4, 2012 by ashot

I wanted to put this post up last week, but got distracted by work and my one month old son (he’s great by the way). So some of this is a week or two old and I don’t have much time to add a bunch of analysis, but I thought some of these may provoke some discussion or just be informative to those who are interested.

The American College of Physicians encourages physicians to take into account the cost-effectiveness of their treatment decisions. In their ethics manual (which you can access for free), the ACP does more than just argue that physicians should take into cost effectiveness with regard to exposing patients to excessive, unnecessary or potentially harmful treatments. The manual encourages physicians to think about how cost effective care can increase the availability of health care to more people. Now I’m all for more cost-effective health care, but I’m not sure I want my physicians worrying about how a treatment they are ordering for me may somehow reduce health care resources available to the community as a whole.

USA Today recaps some of the provisions of the ACA that have already had an impact. It’s not exactly a critical look at the law (OK, it’s pretty much a puff piece), but the government’s success in fighting fraud has gotten more attention lately and the article leads with that aspect of the ACA. While the Obama Administration deserves some credit for the crackdown on fraud, I would also point to the increased use of electronic medical records as a reason for the increase in fraud prosecutions.

The Washington Post has a depressingly humorous article about doctors complaining that the Medicare “doc fix” was closer to becoming a reality than ever. So they’re complaining that the perpetually scheduled reimbursement cut that they know Congress will never pass was closer to passing this time than in the past. Boo-freaking-hoo. The refusal of Congress to pass the cut in physician reimbursement under Medicare is of great amusement to me and NoVa, but it’s emblematic of why we need to fundamentally change our health care system.

The Detroit Free Pressdiscusses all the merger activity between solo hospitals and larger health systems. One of the criticisms of the ACA and programs like ACOs was that they would lead to mergers which would lead to less competition and higher prices. To a large extent mergers were occurring before the ACA so it’s a bit difficult to determine to what extent the ACA increased that activity. It’s also difficult to determine whether or not the mergers will lead to higher prices. The argument that they won’t is that consolidation will lead to increased efficiency which will lower health care spending. It remains to be seen whether or not one or both of those theories will be true.

Lastly, here’s a link to the government’s anti-trust complaint against Blue Cross Blue Shield of Michigan (BCBS). It provides an interesting (albeit one-sided) read. As a brief summary, BCBS entered into most favored nation (MFN) agreements with hospitals throughout Michigan that required the hospitals to charge other insurers as much or more than they charged BCBS. Since BCBS has such a large share of the insurance market here in Michigan that made it hard, if not impossible, for some insurers to compete. And obviously it drove prices up for everyone, including BCBS. Both Michigan and the Feds are in on the suit and several private insurers have filed similar suits.

Filed under: health insurance, healthcare | 20 Comments »

A Tribute to My Sister

Posted on November 2, 2011 by okiegirl

”[E]nd of life is where a huge chunk of our health care dollars are spent. We could probably take a big chunk out of our deficit if we made inroads there even if we left the rest of health care alone.” H/T NoVAHockey, et al.

What kinds of inroads? So why aren’t we doing something about this? What should we do about this? Is it in fact a slippery slope?

I know something about the personal reasons for end-of-life-decisions, as do others here, and they are not always against the economic interests of society. But sometimes they are and maybe should be. My sister is probably a classic example. After her diagnosis with a rare blood disorder, she far exceeded (by 5+ years) life expectation . . . with excellent quality of life but very high Medicare cost. Her last six months, as treatments became less effective and more debilitating in and of themselves, her quality of life decreased significantly and she made the decision to go with grace and dignity. She made that decision at the right time IMHO. I admire her both for her tenacity and survival instinct as well as her uncomplaining departure. And I agree with a comment by lms to the effect that many people facing such decisions at some point have no hesitation about refusing further treatment if their families do not influence (or outright make) the decision.

I don’t perceive my sister’s situation to be at all unique and maybe it’s quite common. So how does this work out? What are the documented economics of end-of-life health care costs in the overall scheme of things? I’ve got the “touchy feely” part of this, but the societal economics of it are waaaay far out of my area of expertise. Help! Can we in fact arrive at a solution that is both compassionate and economically feasible?

Filed under: healthcare | 75 Comments »

Tort Reform Shmort Reform

Posted on October 13, 2011 by ashot

One of the problems in discussing tort reform is that there seems to be a lack of agreement on what we are trying to accomplish. Evaluating the success, or lack thereof, of tort reform varies depending on whether you think the goal is to lower malpractice premiums for physicians (not very good at it), stop frivolous lawsuits (OK at it), lower the cost of health care (not very good at it), prevent outrageous verdicts (good at it but other reform could do this too), line the pockets of insurance companies (pretty good at it), promote justice (bad at it) or all of the above. The evaluation process is further complicated by the many variables that cause health care costs and insurance rates to increase and the near impossibility of isolating the role tort reform and law suits play in such trends. Overall, I think tort reform is red herring…well, unless you’re a medical practice attorney (plaintiff or defendant) then it’s a big deal.

For clarification, I am simply going to discuss tort reform as it applies to medical malpractice claims. There are two reasons for that, one is because I can speak knowledgeably about the topic and the second is that it is the sort of tort reform that is discussed when addressing health care reform. Maybe we can goad Quarterback into posting on class action reform at some point in the future (I think that would be worthwhile). I am also going to focus mostly on Michigan because I have personal experience with tort reform in Michigan and because they actually have adopted pretty comprehensive tort reform measures that have been in place since 1986.

Frivolous Lawsuits

Most attorneys can tell a story or two about dealing with a frivolous case and preventing or deterring them is something that should be pursued. Even if the case is quickly dismissed it will cost a party a couple grand in attorney fees (wait, why am I complaining about this?). In Michigan, one of the ways frivolous medical malpractice suits are deterred is through the requirement that plaintiffs file an Affidavit of Merit (“AOM”) signed by a qualified physician with their complaint. The AOM must contain specific things, but basically it’s a physician saying the claim is not frivolous. I’m not sure this is quite the deterrent tort reform proponents think it is. I knew of at least two law firms that had physicians who actually had offices at law firms. That isn’t to say it doesn’t work at all. Statistics show the number of medical malpractice claims filed have declined over the last 10-20 years. I just think the drop in malpractice suits is due to damage caps, which I’ll get into later, rather than fewer frivolous claims.

Another measure aimed at deterring frivolous claims is a loser pays system. I’m dubious of such a system since I think it promotes settlement more than anything and therefore does not particularly promote justice, a criticism that can be aimed at most tort reform measures. Michigan has a tame version of the loser pays system enforced through a requirement that all cases go to “Case Evaluation”, a form of mediation. Case Evaluation involves each party writing a summary of their case and making a presentation to a 3 member panel of attorneys. The panel values the case and each party can accept or reject the panel’s recommendation. Basically, if you reject the recommendation and it ends up a better deal than an eventual jury verdict, you are on the hook for the other side’s legal fees (possibly in addition to whatever the verdict is). Again, I think this mostly promotes settlement which isn’t inherently bad, but isn’t inherently good either.

Damage Caps

While ostensibly aimed at preventing runaway jury verdicts like the infamous $2.7 million verdict (later reduced to $480,000) in the McDonalds coffee case, damage caps are probably best at reducing the number of lawsuits in general. The reason for this is simple; lawyers, unlike more altruistic professional like doctors (I kid), like to make money. In Michigan, punitive damages are not allowed (goodbye $2.7 million) and non-economic (read pain and suffering) damages are limited at two different levels. The first level is currently $411,300 and the second is $734,500. Basically the first level applies unless you have a brain or spinal injury or lose a limb. To show how this deters filing a case, take a 70 year-old retiree who was relatively healthy, goes to the hospital and dies during surgery. Since she wasn’t working, her damages are basically limited to the lower cap amount plus medical bills. So the most an attorney could get is one-third of $411,300 minus expenses. However, most cases aren’t open and shut so the settlement is likely to be much lower. Add the expenses of an expert witness, depositions etc and that cases take 2 years or so to get to trial and it’s easy to see why an attorney would turn down a perfectly legitimate case (this is where a loser pays system may actually increase litigation expenses since an attorney may take on that case if the other side is scared of having to pay attorney fees). Perversely, the 70 year-old’s case is worth a lot more if she ends up alive and brain damaged, paralyzed or missing a limb. It’s pretty easy to see that while this saves money it doesn’t promote justice which is why some states have found caps to be unconstitutional (see Georgia and Illinois).

Health Care Costs

Most recently, tort reform has been talked about in the context of reducing health care costs. The CBO said the money saved would be a drop in the bucket and I tend to think that is true, particularly with respect to decreasing malpractice premiums and the amount paid out in settlements and verdicts. However, that doesn’t really address the cost of defensive medicine which is nearly impossible to measure. To be blunt, I think defensive medicine is largely nonsense. First, the cost of defensive medicine is almost always derived from polls or surveys of physicians who would most benefit from tort reform so color me skeptical. Second, when a doctor submits a bill for a service to Medicare, Medicaid or a private payer they essentially swear the services were medically necessary. So if a test was performed simply to avoid a lawsuit and it was not medically indicated they are committing fraud. Lastly, I think the motivation of being paid for the test is stronger motivation than the less likely scenario of being sued as a result of not performing a particular test.

Are You Done Yet?

This is already too long so a few more thoughts. First, after Texas passed tort reform, doctors rushed to practice there (wait, I thought they were altruistic) which led to more money being spent on health care, not less. Second, there are Constitutional concerns with Congress telling juries all over the country how much cases are worth. Since, tort reform is generally supported by Republicans and opposed by trial lawyer loving Democrats you get a lovely situation where small government conservatives support this big government intrusion and big government liberals (like me) get to point that fact out (yes, I realize this makes me a hypocrite, too). Lastly, there are other measure out there like joint and several liability and the collateral source rule among others, but they involve more legalese and would make this post even longer. I am happy to discuss those in another post or in the comments.

Filed under: health insurance, healthcare, tort reform | 13 Comments »

Speaking of Health Insurance . . . .

Posted on September 29, 2011 by Kevin S. Willis

Health insurance premiums burst upwards.

Ack! The ACA! It does nothing! Nothing!


The average employer-sponsored, single-person health plan premium rose by 8 percent to $5,429 from 2010 to 2011. Meanwhile, the average cost of family coverage rose by 9 percent to $15,073. By contrast, inflation rose by just 3.2 percent, while wages increased just 2.1 percent, the foundation said.

“This year’s 9 percent increase in premiums is especially painful for workers and employers struggling through a weak recovery,” said Kaiser President and CEO Drew Altman.

Everywhere you look, it’s good news!

Sheesh.

Filed under: health insurance, healthcare | Tagged: | 1 Comment »

Taking it to the SCOTUS

Posted on September 29, 2011 by ashot

It looks like the SCOTUS will be weighing in on the Constitutionality of the ACA sooner rather than later. The Obama administration could have tried to delay the issue but they went the other route
. The administration has said they are confident they will win but there has to be a political reason they are choosing to have the fight during the election season rather than attempt to delay a decision until after next November.

On one hand, it makes sense for Obama to stand up for what is widely seen as his signature piece of legislation. If he tried to delay a decision, it seems likely his opponents would point to it as weakness and liberals may see it as yet another sign of poor leadership. On the other hand, the law is unpopular among liberals and conservatives so I am not sure appearing to strongly support the bill does Obama a whole lot of good.

Is it possible that Obama may actually be better off if the SCOTUS finds the mandate unconstitutional and the ACA begins to unravel? That may motivate the liberal base a bit because a Republican plan signed by a Republican President would scare the bejesus out of them. Such a ruling may also force Obama to come out with a plan that includes a public option.

I’m headed for a babymoon with my wife and am swamped at work the rest of the day. Then I have a firm retreat Monday and Tuesday, so I may be scarce until later next week. I promise to put up a tort reform post next week though.

Filed under: healthcare, law, Supreme Court | 7 Comments »

She is a disturbed child

Posted on September 28, 2011 by Arcanaut

Why do doctors make so much? Why is medical care so expensive?

It is the law of supply and demand: The AMA restricts the supply of doctors. 

The best article that I came across is: old.  More recent and an established history of the practice..

But, why? Why on earth would you restrict access to health care, a necessity for all people; young, old, middle-aged, fat, thin, tall, short……..WHY?

I don’t buy that medical practioners are that much smarter than the rest of us.

So, is it to make it more simple to regulate practitioners? Or just up the salary? Or is an ego thing?

Does it disturb you? Why?

Filed under: aca, health insurance, healthcare | Tagged: , | 62 Comments »

Monday Morning Opening (or, Ramblings From a Tired Mind)

Posted on September 26, 2011 by Michigoose

She’s baaaa-aaaack!

I’m going to throw this up as a somewhat rambling morning thread, since I’ve spent bits and pieces of the last 24 hours going through PL and ATiM threads to get caught up. I’ll just throw out there that moving is the pits, but it does tend to clear out the rubble!

What a weekend! Starting on Thursday, when I went offline due to moving and associated intertubes interuptions, I’d like to make a few quick hits to get up to speed:

NoVA: An absolutely wonderful post that I’m going to re-read and comment on later. I really appreciate the time and effort you put into writing this, and I just wish that 12BB would get her fourth point of contact over here to read it. Does anybody know why she seems to be boycotting us?

lms: I can’t make a direct connection, but it really burns me up that healthcare insurance works the way it does. It’s one of the few perks that we (state) government lackeys have, and one of my last bills for my ex came in at $17K for a less than 72 hour stay in a hospital. I’m not paying it for several reasons, but part of it is that they don’t seem to be able/willing to break it down. . . you can’t convince me that they provided $17K of care to a man who didn’t need divine intervention to make him better (I’ve seen what they do: stick an IV in his arm, pump him up with vitamins and let him sleep it off. For $17K??????) And because I’ve got such great insurance that’s what they’d “bill” me. . . except I don’t have to pay anything other than the deductible, because they’re passing the cost on to people like you. It doesn’t make any sense to me.

Troll: Your PT was done at a physician-owned practice, which goes against many ethical guidelines in the PT world (my ex spent several years working at the Federal level on practice guidelines and scope of practice rules.) While it isn’t illegal, it’s considered unethical in many ways for PTs to work directly for orthopods, so it doesn’t surprise me that you were less than happy with your tennis elbow rehab. Having said that, I had a similar injury that just couldn’t be rehabbed, no matter what was tried. About five years later it spontaneously got better. . . so I hope that happens for you!

okie: Sounds like you ran a marvelous event–congrats! If it makes you feel any better, I failed to get the starting pistol to the Honorary Chair who was starting our Race For the Cure last May because I was trying to figure out why our trash cans hadn’t been delivered. There he was (County Mayor), reduced to saying “Bang!” at the start. . .

Who is Mike? And I see that shrink has changed his name again (to mdash?).

And, finally, I have to say that these people strike me as idiots.

What else is happening this morning?

— Michigoose

Filed under: healthcare, Libertarians, religion | Tagged: , | 40 Comments »

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