CHRTLines Blog

Poverty and Health: A Connection We Can't Ignore

Mon, 14 May 2012 11:41:09 -0400

In a New York Times op-ed last December, Elizabeth Bradley and Lauren Taylor wrote about the study of global health spending published they published in the journal BMJ Quality and Safety. Their analysis broadened the concept of international health care spending to include spending on social services.

Their findings were significant and ought to help us all think about health care in a different way.

When we look at health care spending in isolation, as we often do in the U.S., we conclude—completely accurately—that the U.S. spends far more per capita on health care than any other country in the world (40+ percent more than our nearest neighbors).

But Bradley and Taylor looked at combined spending on health and social services. By this measure, the U.S. was no longer at the top. The U.S. spent 29 percent of GDP on combined health and social services, while many Organisation for Economic Co-operation & Development (OECD) countries spent from 33 to 38 percent of GDP on the same set of services. In America, for every dollar spent on health care, we spend $.90 on social services; in the other OECD countries, the ratio is more like $1 on health care to $2 on social services.

Of course, these data don’t tell us anything absolute about cause and effect. We don’t know from the data if higher spending on social services resulted in lower health spending, or was caused by it. But it is telling that the countries used in this comparison all have better life expectancy and infant mortality statistics than the United States.

I was reminded about this while reading some recent articles, including Maurice Isserman’s op-ed in the New York Times, triggered by Charles Murray’s writings on the “culture of poverty” and critiques leveled at Michael Harrington (who was first to use that phrase in his book The Other America: Poverty in the United States, published 30 years ago this month).

The critiques have been compelling—and somewhat sad—about the use of the phrase “culture of poverty,” and how it has contributed to our disinvestment in poverty programs. As Maurice Isserman wrote in the Times, Harrington thought the term would spark investment in housing, medical care, education and jobs—and it did, to some degree, in Lyndon Johnson’s Great Society programs (though the programs were never as fully executed as Harrington had hoped). Harrington didn’t anticipate, however, that the behaviors he described as symptoms of poverty would come to be seen as causes.

As a result—and, perhaps because the description “war on poverty” implied the war would eventually end—we have disinvested in poverty programs over time. With under-investment come inevitable program failures, leading some to the conclusion the programs and ideas themselves don’t work. These conclusions are most unfortunate, because we know many of these programs do indeed work—when investments are appropriately targeted and focused (e.g., investments in high quality early childhood programs).

Perhaps the global data on combined health and social services spending can help policy makers rethink our investments in medical care. Wouldn’t it be exciting to discuss ways to reduce medical spending by reducing poverty, rather than chipping away at medical spending itself?

Maybe after the acrimonious debate and Supreme Court decision about the Affordable Care Act we can begin to have a broader discussion about health care in America. After all, the act is really mostly about our medical care system. And based on global data, when it comes to cost and health, medical care spending is clearly only part of the equation.

Cardiac Care - A Case Study in Practice Variation

Mon, 30 Apr 2012 08:38:41 -0400

In 2010, when we published our study on healthcare variation in Michigan, we were able to show considerable geographic variation around the state of Michigan on a variety of procedures and services. We intentionally chose services where the research indicated either a tendency toward over-utilization (relative to evidence-based guidelines) or where the guidelines were unclear.

While we adjusted for age, gender, and severity (to the extent possible) in that report, we did not look at outcomes or risk factors that might be influencing variation. So, although we were able to demonstrate considerable variation that seemed unrelated to any particular patient attribute, some wondered whether or not higher rates of utilization could be explained by other population-specific risk factors, and whether or not they might be producing better outcomes of care.

Our latest study, Variation in Interventional Cardiac Care, was designed to look more closely at variation and possible associated circumstances. And while we still cannot definitively answer questions about cause and effect, we do have more information about associations between various factors that have been attributed to practice variation by researchers, policy makers, and clinicians.

We decided to look at several specific questions about cardiac care. In particular, our focus was on regional variation in Michigan for percutaneous coronary intervention (PCI) - surgical stenting. Meta analyses of the clinical research on indications and outcomes for PCI have showed that for many with stable coronary artery disease, surgical intervention may not be necessary. Many people do just as well with a non-invasive approach: medical intervention. Given that research, we wanted to look at both supply-related questions and clinical issues that might be associated with higher rates of PCI in the population.

One theory about practice variation is that use rates tend to be higher in areas with more facilities, services, and/or specialty practitioners. That conclusion has spawned an adage in health care: supply creates demand (or, as an economist, Milton Roemer, put it many years ago: “a built bed is a filled bed is a billed bed”). We looked at this question in terms of the number of catheterization labs in communities, as well as the number of cardiovascular surgeons, compared to the rate of combined cardiac interventions in those communities (much of which is driven by elective PCI). While we did not find any association between the ratio of cardiovascular surgeons and the rate of elective PCI, we did find an association between the ratio of cath labs and rates of elective PCI. That is, regions with higher ratios of cath labs to population also tended to have higher rates of elective PCIs.

Also of great interest was the lack of association we found between higher regional rates of elective PCI (among patients with stable coronary artery disease) and either cardiac risk factors or cardiac mortality rates. That is, communities with higher rates of elective PCI did not have worse population health status than those with lower rates of elective PCI, nor did they have lower mortality rates. Again, we cannot determine cause and effect from these data, but the lack of any association between variation and cardiac risk factors or mortality rates is quite telling.

So, what are we to make of this latest contribution to the variation research? Our work certainly directionally supports the idea that practice variation is largely reflective of community-wide practice patterns rather than evidence-based, clinical guidelines. And, based on other research, we think these community-wide practice patterns tend to be driven by informal medical cultures rather than by patient preferences. If we are correct, and we really want to reduce unwarranted variation and have an impact on health care spending, then informing those practice communities and changing incentives to better align with the evidence will be fundamental to changing the picture we see today.

One Courageous Woman

Mon, 16 Apr 2012 15:21:03 -0400

Everyone should read this article in Health Affairs. It is the moving story of a woman diagnosed with terminal breast cancer who chose palliative treatment over interventionist strategies.

Amy Berman is one knowledgeable and connected patient. She is a nurse, works for a health foundation in New York, and is a long time policy leader in health care. She received a terrible diagnosis: stage IV inflammatory breast cancer that had already spread—incurable, even with aggressive treatment. And though she was only 51 years old when she received this diagnosis, she chose a path of palliative rather than aggressive care.

The April issue of Health Affairs is all about cancer: research on cancer; quality improvement in cancer, and the cost of cancer care. It is a rich issue and includes great examples of new and improving strategies for dealing with cancer, including an article about the Cancer Care Continuous Quality Improvement Initiative led by the University of Michigan and Blue Cross Blue Shield of Michigan.

But Amy’s story is the most powerful. It is powerful because it is personal and beautifully told. It is also powerful because in it, Amy reflects on what is important in life and counters the pressures so pervasive in medical care today—pressures that often cause patients to seek more care even when it seriously interferes with quality of life.

When she was diagnosed with inflammatory breast cancer, she went to see a specialist who told her what kind of treatment she should get without ever asking about her wishes. The specialist made it clear that he expected she would do everything possible—at whatever personal cost—to prolong her life, even if it meant just a few more months for her.

Those of us who have had friends who have died of cancer even after trying aggressive treatment approaches know what a cost those treatments exact on quality of life: nausea, pain, fatigue, disfigurement, and a pervasive feeling of always, always being sick. Amy chose another path: one of symptom management, to feel as good as possible for as long as possible, even if that might mean less time than possible with aggressive treatment.

In medical care today, we are bombarded with constant messages that more is better—more tests, more surgery, more visits to the doctor. But that isn’t really true. Indeed, nine leading physician groups have now come out with a list of procedures that should not be done on a routine basis—saving dollars, yes, but more importantly, saving people from diagnostic and other interventions they may not need. Physicians in this Choosing Wisely effort were goaded into action by Howard Brody, a physician and medical ethicist. Dr. Brody challenged the profession to lead an effort to recommend a more sensible use of medical resources. It is refreshing to see physician organizations begin to educate the public that more might not be better.

Similarly, the use of palliative care needs a different framework in our thinking about health care. Choosing palliative care is not “giving up,” as too many think it is. It is choosing to live life—and handle death—with dignity and quality.

Amy Berman, a knowledgeable and strong woman, chose her own path. Wouldn’t it be wonderful if millions more had the information and support to make a choice that reflected their personal values, as Amy did?

Can we speak the same language?

Mon, 02 Apr 2012 09:53:10 -0400

On April 13, 2012, CHRT is sponsoring a symposium geared to health policy-makers, funders and researchers, to ask this question: can individuals from these three worlds do a better job of working together?

I come from the health policy world at the state level, and more recently have a toe in the academic world, so I’ve had the chance to see the world from both vantage points. Throughout my career, I’ve been interested in translating research into policy, and I’ve always valued my public health education because it gave me the ability to understand research so I could apply it.

But I became particularly passionate about the need for policy makers and researchers to work better together when I was running the Michigan Department of Human Services. In that capacity, I could see that some academics were focused on producing information relevant to the problems we were facing, and some were not. I have long wanted to strengthen this connection and help policy makers (writ large, inclusive of those who make decisions for a population in the private sector as well) make better decisions on behalf of their constituents, because their decisions have real impact on individual lives.

Now that I’ve spent some time being hosted in an academic setting, I have a better understanding of the way incentives work in academia (tenure decisions and the like) and how funding priorities can affect researchers’ choices about what to study. Policy-makers rarely have time to wait for randomized control trials to shed light on their questions, but applied research is messy (at best) and messy research doesn’t always lead to publishable articles useful for tenure decisions.

As funding from the National Institutes of Health and others is reduced, however, it will be increasingly necessary for researchers to seek funding from sources that care more about speed and relevance to policy than the ability to publish in academic journals. So, the key question is: how can we bring these groups together in a way that helps them achieve their goals and leads to better decisions for all?

Because our symposium includes prominent speakers from all three perspectives, it should be a stimulating look at this question. We have health purchasers representing some of the largest payers in the country, as well as legislators and major funders from the state and national levels. And we have a panel of University of Michigan researchers, all of whom have managed not only to produce and publish top notch research, but also demonstrate real change in practice and policy with an impact on people's lives.

We expect a lively, interactive discussion between the panelists, the panelists and the audience, and within the audience itself. And most of all, we hope that real-life examples and ideas will emerge. As the University of Michigan’s new Institute of Health Policy and Innovation becomes operational, we all want to do whatever we can to realize the promise of its title. On April 13, some of the best thinkers around will help us achieve that goal.

After SCOTUS: The Status Quo is Not an Option

Mon, 19 Mar 2012 11:18:11 -0400

Everybody and their brother will be blogging about the Supreme Court arguments on health care reform over the next several weeks. I do not want to add to the noise by focusing on the arguments and/or who has the winning position: many others will offer that kind of analysis.

Instead, I want to focus on what will happen if the Supreme Court rules that the Affordable Care Act, in part or in its entirety, is unconstitutional.

Think about what happened in the 90s, when the Clinton administration proposed health care reform. At that time, the great political debate was around a proposal that would have implemented health care “purchasing alliances” and moved the country toward a model known as “managed competition,” where health plans would compete for members on a more level playing field than existed at the time—or today.

Opponents of the Clinton proposal were very effective at sowing fear in the minds of the public (remember Harry and Louise?) and creating a political climate that led to the overwhelming defeat of health reform. With the defeat of health reform at the federal level, most Americans assumed that the status quo would stay in place—but that is not what happened.

Instead, employers—concluding that they could not count on the federal government to help them rein in rising health insurance costs—tackled the issue themselves by making fundamental changes to the benefits they offered to employees: shifting most open-access, indemnity-type coverage plans into tight, managed-care approaches. Health maintenance organizations (HMOs) became predominant.

Consumers hated that shift, and thus was born the managed-care backlash. The failure to convince most Americans that managed care was a desirable way to deliver health benefits has, over time, resulted in more costs being shifted to consumers a decade or so later.

Fast forward to 2012 and the ACA. In this very political year, with all the rhetoric around “repeal and replace,” the real question is: if we are going to replace the ACA, what are we going to replace it with? What will really happen if the ACA is determined to be unconstitutional? Does anyone really believe the status quo will stay in place this time around, any more than it did after the failure of the last major attempt at health care reform?

Already we are seeing employers—beyond shifting costs to employees—dropping coverage at stunning rates. And, even with an economic recovery coming to life to some degree, small businesses and others who dropped coverage do not seem to be adding it back.

So, what is likely to happen if the Supreme Court strikes down the core coverage components of the ACA (or, if it gets repealed through the political process)? Well, despite what the rhetoric might lead one to believe, on this we have some pretty good clarity: Without the ACA, insurance costs will go up, coverage will decline, people will be paying more out-of-pocket for medical care, and providers will be paid less.

In other words, if the ACA does not stand (constitutionally or politically), the trends we've seen over the past few years will not only continue but get much worse, with no prospect for improvement in sight. And the chances that Congress will go out on a limb and pass a comprehensive approach to expanding coverage or dealing with the tough political issues around health care are slim and none in the near term.

In the longer term, the prospects for some form of a single-payer solution will actually increase, because every other compromise approach will have failed either politically (managed competition, ACA incrementalism) or practically (market-based solutions).

So, opponents and proponents of the ACA alike, you should all be hoping that the Supreme Court upholds the core provisions of the ACA. Because for both sides, the alternatives are worse.

Who Can Tell the Public the Truth About Health Care Costs?

Mon, 05 Mar 2012 10:52:13 -0500

The Feb. 16 issue of the New England Journal of Medicine had an excellent commentary by Peter Newman about how difficult it is to talk to the public about health care costs.

He captures the issue well:

“The problem is that no one in charge seems willing to acknowledge that getting a handle on cost growth will also involve uncomfortable trade-offs. We cannot as a society provide patients with unlimited access and unlimited choice. Providing better-quality care, though it is vital, won't change that reality.”

He goes on to note that our political discourse—one that has emphasized a shift to patient-centeredness—has further compounded the difficulty in this conversation. He says:

“Changing the conversation to emphasize patients and stakeholders also has unhelpful consequences that few are willing to acknowledge. Focusing on patients' own preferences to the exclusion of considerations of societal resources will only compound our cost problems. Engaging stakeholders is undoubtedly important, but one person's stakeholder is another person's interest group. Moreover, the only stakeholders seemingly not at the table are future taxpayers (our children and grandchildren).”

Newman’s commentary begins with a nod to the American College of Physicians’ (ACP's) new ethics guidelines, which speak to the need for physicians to use resources efficiently, and indeed, “parsimoniously,” to help assure that resources are used equitably. He applauds the ACP for its guidance, and mentions several other entities that have a role in dealing with this issue, but in the end he does not suggest an answer to this important question: Who can have this conversation with the public?

While I, too, applaud the ACP for the clarity and rightness of their guidelines, I am not convinced that resource trade-offs should be in the purview of physicians—at least not in their one-on-one interactions with patients.

After all, where does the physician’s duty lie? Is it society at large, or the individual patient before them? If a procedure is very expensive and raises premiums for a particular group, while at the same time benefitting one patient, is it the physician’s responsibility to look out for the group, or the patient? As a patient, I hope my physician is looking out for me. While I agree that physicians have a duty to be efficient, that doesn’t go to the depth of making “uncomfortable trade-off” decisions. And it certainly cannot be other providers of care, for the same reasons as for physicians.

Who else is involved and can speak to the issue credibly?

Well, health plans make decisions about trade-offs like these; can they be the ones to lead the dialog with the public? I can say from personal experience that this is not a role for health care payers. Some years back, a physician recommended my father undergo a medical procedure that I thought might not be needed. I raised the concern with my dad; he told me in no uncertain terms that he believed my concern was prompted by my job (at that time) with a health insurer and that I was just interested in saving money. This despite the fact that I didn’t work for the insurer who provided his coverage, lived in a different state, and most importantly—he was my father—not a stranger. If I couldn’t convince my own father that my concern was based on the fact that too much medical care carries risks and can cause harm; I certainly couldn’t be the one to convince others.

So, not providers or health plans; who else is there? Well, I think it is safe to say it won’t be those who stand to gain financially by increased use of services (e.g. drug and device makers).

What about consumer advocates—could they take on this role? Not really. Their role is specific—advocating for the consumer, not for society as a whole or future generations.

Again, I ask: who is left? Who can have this conversation with the public?

Public policy makers. They have been elected to look out for the public interest; they are the ones who ought to be concerned about future generations; they are the ones who have the bully pulpit and can use it to communicate hard truths.

Unfortunately, our current public discourse does not promote this kind of dialog. Either the public doesn’t want to hear hard truths, or policy makers are too fearful to speak them. But until we are honest in our public discourse, we will not be able to moderate the increase in health care spending to any significant degree.

Better quality, better health, and patient-centered care are all good. But, as Newman notes, in the end “hard” trade-offs are necessary if we are going to address health care spending as well. For the sake of our children and our grandchildren, let’s hope that someday, we will have policy makers who are willing to have that honest conversation, and that we are willing to listen.

The Death of Health Insurers? Don’t Start the Funeral Just Yet

Mon, 20 Feb 2012 10:24:03 -0500

In late January, just after my fellow instructors and I had led our students at the U-M School of Public Health in a discussion of the complexity of health coverage, and the difficulty of actually doing what health insurers do given the American system of financing health care, the New York times ran an opinion piece by Ezekiel Emanuel and Jeffrey Liebman that started like this:

“Here’s a bold prediction for the new year. By 2020, the American health insurance industry will be extinct. Insurance companies will be replaced by accountable care organizations — groups of doctors, hospitals and other health care providers who come together to provide the full range of medical care for patients.”

Now, maybe Emanuel and Liebman meant to simply be provocative. But the piece is based on some faulty logic, and it is concerning that these two esteemed policy makers would make such statements, especially in a publication like the New York Times.

The fundamental problem with the piece is that it both underestimates what health insurers do in the health care market place today and overestimates what providers of health care will likely be able to do in the health care market place post ACA coverage changes.

Just a few examples of their assertions:

“All that insurance companies do is process billing claims.”

This statement is simply not true when describing the majority of health plans in the market. All major health plans today—whether HMOs, for-profit national carriers, or non-profit plans like Blue Cross and Blue Shield—do more than process claims. Among other things, they negotiate contracts with providers of care, set payment rates and make medical policy coverage decisions, perform utilization review and quality oversight, monitor fraud and abuse, help set benefit designs and incentive structures for providers and consumers and answer inquiries on coverage from consumers.

Emanauel and Liebman may be referring to a minority of entities called “third party administrators,” who do perform limited functions; but these entities are a relatively small proportion of the health insurance market precisely because most employers or others do not want to take on the broader insurance functions that go beyond “processing billing claims.” Indeed, even when employers contract with third party administrators to administer their benefits, they often also contract with other network management organizations to do the kind of administration health plans otherwise do.

Another example:

“In addition to providing better and more efficient care, ACOs will also make health insurers superfluous. Because they will each be responsible for a large group of patients (typically more than 15,000), they will pool the risk of patients who have higher-than-average costs with those with lower costs.”

This statement reflects another significant misunderstanding of the health insurance market. While 15,000 individuals is a significant size to many providers, it is a small size to any health plan. ACOs by design are local in nature. They are made up of physicians and one or more hospitals, working together to coordinate the care of patients who come to see them. But, health purchasers generally are not so narrowly focused.

Think of auto companies as just one example. They have employees located across the country, and while they are self-funded, they expect uniform benefit delivery regardless of where their members go. Even mid-sized employers, who are more locally-based, have employees who go to more than one provider network.

And what happens to employers with employees in rural areas where there aren’t 15,000 patients in the population? How could one or even several ACOs serve to manage all the administrative and oversight functions that the diversity of employers expects?

And finally, Emanuel and Liebman make this point:

“Accountable care organizations will increase coordination of patient’s care and shift the focus of medicine away from treating sickness and toward keeping people healthy.”

We all certainly hope this will be true, but remember, that was the founding principal of HMOs in the 1930s and 40s, and only a few such plans—with much tighter structures than ACOs are likely to have—have shown the ability to do this, even for relatively small populations.

What magic will ACOs bring to the table that HMOs (who have been striving to meet this goal for 20, 30 or sometimes, 60 years) have not yet achieved? After all, HMOs have the same access to health IT today that ACOs will have, and working together, health plans and providers can integrate the clinical and billing data necessary to provide a complete picture of care.

There are relatively few certainties in life. But, I feel confident that I can say that despite what has been posited by Emanuel and Liebman, health insurers will not be replaced by ACOs by 2020.

And, indeed, unless we have a total change in political will and a sudden embrace of a British-style health care system, health insurers will remain a vital part of the health care landscape long into the future.

Perhaps the more relevant question for us is: what will these health plans of the future look like, and how can providers and health plans work better together to capitalize on the strengths of each for the betterment of all?

The Facts: Timing Matters

Mon, 06 Feb 2012 12:46:17 -0500

Earlier this year, the Wall Street Journal reported on some research that would make anyone who is trying to inform public policy lose sleep. The story described just how impervious to the facts people often are in their assessments of data relevant to public policy.

Case in point: immigration. The survey showed that people believe the percentage of U.S. residents born outside the country to be double what it actually is, and the percentage of illegal immigrants six or seven times higher than the real percentage.

Americans also vastly overestimate the amount of federal dollars spent on foreign aid, and at the same time, underestimate the amount of the federal budget that goes to Social Security, Medicaid, and Medicare.

The Wall Street Journal describes this lack of understanding of data about key public policy issues as “math illiteracy.” Sadly, that finding in and of itself isn’t very surprising: our public policy debate seems increasingly ill-informed, and rhetoric increases unmatched by facts. This problem has certainly been exacerbated by the decline in the number of objective news media outlets.

Indeed, civics seems to be an increasingly lost subject–with many surveys showing Americans evidencing considerable ignorance about a plethora of issues relevant to public life.

What was most concerning in the article, however, was the report on the studies showing how people (and not just Americans) stick to views formed based on false information even after they are given correct information. Indeed, it appears that even when given the facts of a situation, people somehow find a way to use those facts to justify the belief they initially developed based on a false understanding of the data.

Wow. That’s a tough conclusion for anyone working to illuminate data amidst the din of spin. And given that our goal at CHRT is do just that—to help policy makers and the public make better, more informed decisions about policy-related issues—we must pay close attention to these research findings.

So what does this information tell us? Should we just throw up our hands and give up? No, that's not the right conclusion—it will always be important to provide access to objective, nonpartisan information for policy-makers and the public.

What this research does tell us is that the timing of this information is very important: in particular, we should do everything we can to provide accurate information before false information becomes embedded in public opinion.

The Affordable Care Act could be a case study for this particular issue. Today, the public holds so many false beliefs about the ACA that it is very hard to get factual information through all the confusion. Unfortunately, insufficient attention was paid to communications when health reform was a bill. Actually, long before it was a bill, at town hall meetings in the summer and fall of 2009 more than six months before the law was passed, false information spread the idea that the bill would include “death panels.” And, while that view has been have been decried and debunked, negative views of the ACA took hold and have an indelible place in American views of health care reform. It is no wonder that polling done since then shows Americans are as confused today about health reform as they were when the law was passed.

So this is a lesson we must learn well; a lesson in human behavior and foibles. Whether we like it or not, once formed, views are hard to change. It is crucial to help form public opinion based on objective information in the first place. But, if that battle is lost, then efforts at communications must be more than redoubled. New efforts must be intensive, ongoing, and credible to counter our tendency to stick with our beliefs despite new evidence.

That is the challenge for those of us who are doing this work. Giving up is not the answer—communicating more, better, and sooner, is.

Federal Health Research Cuts: You Can’t Have it Both Ways

Mon, 23 Jan 2012 09:00:00 -0500

With lawmakers under increasing pressure to reduce overall federal spending, funding has been limited in many areas of health research and enforcement. Even before the recent focus on deficit reduction, funding for the National Institutes of Health (NIH) has been significantly constrained. In the 10 years prior to fiscal year 2008, the NIH budget grew by 31 percent, to $29 billion. From fiscal year 2008 through fiscal year 2011, the NIH budget grew by only 3%, to $30.6 billion (including a decline between FY 10 and FY 11 to $30.8 billion). In the most recent four-year period, competitive NIH grants were flat.

Cuts have occurred elsewhere in the public health arena as well. In FY 2011, the budget for the Centers for Disease Control was cut by $720 million and cuts look to be deeper in 2012. All predictions from federal budget watchers are for federal resources supporting health research to decline over the next 10 years.

These budget reductions have many implications, and leave us with much to consider. Everything from recent critiques of the FDA to challenges faced by HHS on implementing core functions can be connected to severely-constrained funding levels. In this post, I am focusing on one particular outcome of concern: the issue of conflicts of interest.

The New York Times ran an important and concerning article on the front page of its business section on November 3, 2011. The article described issues of conflict of interest facing several panels, which are developing guidelines for hypertension, cholesterol, and obesity. The Times reported that 20 of the 52 members of these panels—including co-chairs—have been instructed not to vote on crucial parts of the guidelines because of connections with industries affected by the guidelines. The connections include fees for speaking and consulting engagements, which have long been a source of concern in various federal health panels, and others involve industry funding for research.

These challenges are not new. There were scandals about this issue years ago, long before recent cuts in federal funding for research. And, the NIH goes to great lengths to identify conflicts of interest and minimize impact—through disclosure forms and other techniques designed to make the process transparent—but further limits to federal funding for health research will make it increasingly difficult to avoid conflicts of interest going forward.

Medical schools and schools of public health—institutions that have long relied on research dollars from NIH and other agencies to support core science and health innovations—won’t simply cut back on programs; they will look elsewhere for support. And with a shortage of public financing, it is likely they will turn to industry for funding. There simply aren’t a lot of other good alternatives. So, we shouldn’t be surprised to see candy makers or the soft drink industry becoming major sponsors of research on obesity at universities. Or to see the pharmaceutical industry funding guideline-connected research: research that then later causes concerns about the recommendations of federal panels on evidence based medicine.

In the end, we really can’t have it both ways. If we cut public financing, we have to understand the impact of that choice. With less public financing, other sources will be sought. And, just like in campaign financing, we might not like the end result we get.

The Latest (Not Greatest) on Essential Benefits

Mon, 09 Jan 2012 10:02:30 -0500

Well, the federal government has spoken about its intent with regard to defining essential benefits, and the answer is: leave it to the states. As Tim Jost notes in his latest blog post, there are some (probably, most) who assumed the Affordable Care Act would result in more uniformity in essential benefits across the country. But instead (no doubt bowing to a perceived political backlash at this time of difficult discourse in Washington, DC) the Obama administration decided to publish guidelines and establish broad parameters for essential benefits without going into the details.

As Politico noted, the reaction was muted even though there were many disappointed health reform advocates. So why wasn’t there a bigger outcry? Because even the most ardent activists understand what the administration is up against politically.

Had the administration decided to enumerate benefits, it would have opened itself to renewed charges of a government “takeover” of health care and “socialized” medicine. As noted in the New York Times, the administration clearly did not want to give that kind of ammunition to opponents of health reform—particularly in this political year.

During the 2008 presidential campaign, Democratic pollsters admonished the candidates to use certain words and phrases when talking about health reform. One of those phrases was “uniquely American solution.” In today’s political climate, this “uniquely American solution” seems to center around the idea of not telling people what to do: be they consumers with the individual mandate, or states setting up exchanges, choosing qualified health plans, and now, establishing essential benefits. Centralized decision-making (in health care, at least) seems to evoke terms like “socialism” and give fuel to the opponents of reform.

Like so much in today’s political discourse, the critique of centralized decision-making is most unfortunate. It seems to be made in a vacuum, independent of analysis and thoughtful dialogue. A serious discussion—in this case, about how much health policy should be carried out federally and how much at the state or local level—is an important precursor to informed public policy. These kinds of decisions include tradeoffs, and these tradeoffs are most evident when it comes to things like essential health benefits.

Today, Medicaid plans benefit plans vary—within some guidelines—from state to state. And most health plans tailor benefits for their largest customers and manage risk for smaller customers through benefit design. This means that, over time, health plans can end up with literally thousands of different benefit options for large customers to choose from.

The question is: what value does this benefit variation provide? Yes, it gives autonomy to different decision makers in the system (HR managers, state legislators, labor negotiators and the like) but does it meet any other goals? Does it improve the health of the population? Or the cost effectiveness of health care? The evidence would seem to indicate that it probably does not achieve either of these goals. It does reflect the coverage priorities of decision-makers and presumably represents how they might want to spend health benefit dollars. But, if anything, this plethora of benefit designs and benefit structures adds considerable administrative cost to the system without consideration of the value of the benefits provided with regard to health or wellness. The added cost comes at every level: from the health plans that must train benefit representatives to become familiar with thousands of benefit designs to the providers who have to remember each formulary or other scope of coverage questions before they prescribe care to their patients. Benefit variations add cost to the system.

In most other developed countries, benefits chosen centrally and are generally uniform across population groups. American health care reformers hoped the essential benefits component of the Affordable Care Act would do something similar: help lower administrative costs and clarify benefits for consumers. With the current decision on essential benefits, it does not appear that those goals will be met.

The ACA provisions on essential benefits do advance us from where we are today, but not as far as many hoped we would get. So, it would seem that for now, the “uniquely American solution” on essential benefits is politics-smart, but policy-weak.

Complexity and Confusion: The Challenge of Communicating About the Affordable Care Act

Mon, 19 Dec 2011 09:24:11 -0500

OK, I admit it: we made a mistake.

Earlier this year, we were asked if we had ever seen a one-page flow chart of the Affordable Care Act (ACA) from a consumer perspective. We hadn’t seen one—and after much looking, still didn’t—so we decided to create one ourselves.

It seemed like such a simple idea. Hmmm—not so simple in the end.

The reason it’s not so simple is illustrative of the Obama administration’s problem in communicating the ACA: it is, in fact, extremely complicated—but complicated for a reason (more on that later).

It took us several months and many review cycles to prepare our flow chart for publication. When we finally released it, the chart was shared widely via social media, stimulating some interesting discussions—and a very polite question from a financial policy analyst in California, who asked us if we meant to say “less than” rather than “more than” in one of the flow chart’s boxes.

That very good question caused us to review the whole document once more, and we realized the chart needed further clarification in several spots: in particular, areas relating to parts of the ACA that focus on “affordability tests” (where eligibility for subsidies is determined based on both whether or not an employer offers coverage and the cost of that coverage relative to the employee’s income). There are a number of moving parts in that formula, and our efforts to portray them in an understandable way caused us to short-circuit the clarity. In the corrected version, the employer coverage section goes from six boxes to twelve.

OK, so why is it so hard to depict the consumer perspective in a one-page flow chart? To answer that question, it is important to remember that the ACA is as complicated as it is because it builds on the existing system of financing and coverage rather than replacing it.

President Nixon proposed health care reform in 1971 and 1974 that would have fundamentally changed the structure of health care financing in the country, and President Clinton’s plan would also have made that kind of fundamental change. But both efforts failed to get the necessary political support. One of the lessons that President Obama and today’s Congressional leaders took from those past defeats (and subsequent polling data) was the importance of building on the current system rather than replacing it. After all, more than 70 percent of the U.S. population has private coverage and another 15 percent is covered by Medicare; both populations are generally satisfied with their coverage.

In an effort not to disrupt those happy with what they already had, but still meet the goals of expanding coverage and moderating costs, those who drafted the ACA tried to keep all major structures (public and private coverage) intact—with some “corrections”—but no outright replacement. There was also some early hope that Republicans would support the idea of an individual mandate because the idea had originated with the Heritage Foundation (a conservative think tank) during health reform debates under Clinton.

So, in the art of compromise that has characterized our political process (at least historically), the idea was to expand coverage by requiring everyone to have it, retaining a predominantly employment-linked coverage approach, and subsidizing those considered relatively low income but not low enough to be eligible for Medicaid. Making sure that coverage was affordable, while working within a predominantly employment-connected financing system, required a complex formula designed to let the market work—except when it wasn’t “affordable.”

Therein was the challenge. The current American structure of health care financing is not a straightforward system; in fact, it isn’t a system at all. The ACA doesn’t create a unified system either: it fills cracks in the existing structure to address key issues of coverage, cost and quality. As a result, the ACA does indeed create something similar to a Rube Goldberg machine.

But make no mistake: coverage under the ACA is complicated because it reflects what was politically possible. Americans said they did not want radical change. So in the end, the ACA is the system Americans asked for, even if they don’t understand it.

We could have had simple. We could have had a system that reduced complexity, increased coverage, and reduced administrative costs (and put many policy wonks and consultants out of business!). That system could have been called Medicare for All. If the goal was simple and clear and easy to understand, that would have been it. But, until America is ready for simple and clear, our now corrected (we hope!) flow chart is here.

The Unintended Consequences of Reimbursement Changes and Interplay with Practice Patterns

Mon, 05 Dec 2011 10:00:00 -0500

As we continue to focus on health care spending, it is important to look at the tools we’ve tried already and learn from our experience – especially our mistakes.

In health care, it seems that every action taken to reduce spending leads to an equal and opposite reaction elsewhere in the system. This issue has been well illustrated by the Congressional debate on the sustainable growth rate (SGR) formula since 1998 (for more on SGR see our 5/10/2010 blog post). While health policy analysts and people in both parties agree on the need for a fix—and have lots of ideas for it—every solution is fraught with major problems and creates winners and losers, and that makes the politics of change extremely difficult.

Another illustration of this type of a problem can be seen in payment changes made to oncology drugs. The issue of payment for oncology drugs delivered in physician offices has been a topic of much debate among health plans over the past 10 years. There was little doubt that the amount paid for these drugs by most payers was highly inflated relative to their cost, and that payments were providing “windfall” profits to oncologists who provided chemotherapy in their offices. In January of 2005, Medicare significantly lowered its payments for physician-administered drugs—a change that many private health plans followed. Specifically, the change lowered the amount paid for these drugs from the average wholesale price (AWP) to the average sales price (ASP) of the drugs, plus a 6 percent margin. The AWP was an artificially set price that was not what physicians were actually paying for the drugs. The ASP rate was intended to more than adequately cover the cost of the drug along with the cost to administer it. The ASP was significantly lower than the AWP—in some cases, quite dramatically so.

So, what happened as a result of this change? The November 2, 2011 New England Journal of Medicine reports on a fascinating study that describes some of the impacts of that change with regard to one disease – lung cancer. In the United States overall, the rates of chemotherapy treatment for lung cancer went up after the payment change, by 10 percent within 60 days of the payment change and about double that within six months of the change. That is, as rates for these drugs were cut, on average, physicians in the United States started providing more treatments to patients.

Clearly, this change is a concerning one from a patient care standpoint: one wonders about the impact on patient outcomes and care from this additional chemotherapy. But, perhaps unfortunately, the change is not entirely surprising—target income theory notes that as prices are cut, providers will seek to offset those cuts by providing more or different services (an experience quite in evidence with the SGR).

What was most surprising in the study reported on in the NEJM, however, is that this change was not uniform across the country—it varied quite significantly geographically. For example, use rates for chemotherapy went up quite significantly in New Hampshire, Minnesota, and the District of Columbia (and in many other states), but down in Idaho, South Dakota, and North Dakota. Indeed, there is no discernible pattern among the states that increased use considerably, modestly, or not at all. And, this change was certainly not driven by a change in patient characteristics between the states.

If we look just at the experience of the SGR, we can see that it is essential to think about the unintended consequences of reimbursement changes. But, looking more deeply at the example of these chemotherapy drugs helps us understand that the picture is even more complex than we might have thought. What do we learn when we add in this complexity? If nothing else, this study is a reaffirmation that local practice patterns are essential: geography is indeed destiny and all health care is local.

Looking at cost trends in broad averages isn’t enough. If we are going to have any sustained success at changing this cost picture, it will take aligned incentives that are not focused on price alone and that take human behavior into account. Anything less and we will be destined to repeat the mistakes we have made so brilliantly made in the past.

The Death of CLASS

Mon, 21 Nov 2011 08:59:05 -0500

Last spring when my colleagues and I were teaching a class on health insurance in America at the U-M Ford School of Public Policy, we asked our students to write their final papers on what they would change about the Affordable Care Act. Three of our earnest and committed students took on the task of trying to make the Community Living Assistance Services and Supports program (CLASS Act) workable. All three came up with approaches for increasing enrollment in CLASS and making it more financially sustainable over the long term.

As my colleagues and I talked about how to grade these papers, we considered to what degree the students’ solutions were workable. (One of my fellow instructors felt strongly there was simply no way to fix CLASS.) In the end, all the students who took on the challenge of fixing the CLASS Act earned grades in the “A” range because they demonstrated strong understanding of the Act and its pitfalls, proposed thoughtful solutions, and wrote extremely well.

But even so, we were not convinced that any of their solutions could fix the problems inherent in CLASS. And, as events have unfolded, they are at least in good company, since the Secretary of HHS was unable to find a solution for CLASS as well.

The CLASS Act was intended to avert a significant societal problem: increased demand for long term care due to the aging of the population. The cost of long term care causes many seniors to lose their assets and puts an increasing burden on many state Medicaid programs, since Medicaid is generally the only payer to provide coverage for long term care beyond skilled nursing.

The CLASS Act was included as Title 8 in the Patient Protection and Affordable Care Act passed in 2010, championed by Senator Ted Kennedy, who had long felt leaving long term care out of Medicare had been a major mistake. He knew the reality of the aging of the population in the U.S. and the growing need for long term care services. But, from the moment the CLASS Act was passed, it got particular focus from critics of the ACA who argued the program could not become sustainable and would be a cost burden on the federal government in the end.

Ironically, CLASS was included in the savings estimate by the CBO and supported the analysis that the ACA would reduce the deficit. How so? Because premiums would be collected to support long term care coverage long before expenses would be incurred. Congressional intent was for CLASS to be self-sustaining for at least 75 years.

But the Act was designed to be voluntary. That is, the idea was to require employers to offer long term care coverage—and employees to pay for it, in full—but also allow employees to opt out of the coverage if they did not want it. It was this voluntary aspect that made it so difficult to make CLASS financially workable. After 19 months of discussion and analysis, Kathleen Sibelius announced on October 14, 2011 that the Department had not figured out a way to make CLASS sustainable and they were therefore effectively “putting it on the shelf.”

This conclusion was reached based on an understanding of the way private long term care coverage performs over time. Even advocates for CLASS acknowledge that private long term care coverage offered by employers has had a low participation rate—about 2 percent—too low to make the coverage financially viable. The low rate means that only those who are pretty certain they are going to need the coverage purchase that coverage, leading to adverse risk. And while financial strategies could be employed to mitigate this risk, changes to the law would be required – changes not likely to pass in this political climate.

What does the untimely death of CLASS tell us? In some ways, it says more about us and the limits of market-based solutions than it does about federal politics or technical issues with the law. The death of CLASS is really about the unwillingness of Americans to plan for the future. Perhaps it is our boundless optimism that we will never be old or infirm—that technology will find the answer to longevity before we have to face our mortality. But the fundamental problem with CLASS is our low rate of purchase of long term care coverage when it is offered. In the end, a voluntary approach to long term coverage just won’t work. Insurance is all about spreading the risk and sharing the cost. Just like in health care more broadly, halfway measures don’t work. It is time to commit to long term care for all, if that is what we want.

Is a national health service really such a bad idea? The VA Example

Mon, 07 Nov 2011 09:30:00 -0500

Many Americans have an almost visceral reaction against what is sometimes called "socialized medicine." Socialized medicine is often discussed in the context of the British Health Service – where the government is both the payer and the employer of those delivering care. But the irony is, we have a superb example of a very similar approach here in America: the U.S. Department of Veterans Affairs.

With roots back to the 1600s, the modern Veterans Administration (VA) was formed in the 1930s to provide a range of services to returning veterans. In 1930 there were 54 VA hospitals; today there are 171 medical centers, more than 350 outpatient, community, and outreach clinics, and 126 nursing home care units. In 2006, the Veteran’s Health Administration employed more than 200,000 full-time equivalent employees and provided services to more than five million veterans and another 400,000 individuals throughout the country.

Recent analyses show the VA outperforming both Medicare and the private sector on overall quality and cost. Adjusting for the changing mix of patients, the Congressional Budget Office estimated the growth of VA budget authority per enrollee (in real terms) to be just 1.7 percent from 1999 to 2005 (0.3 percent per year), while Medicare’s real rate of growth was 29.4 percent in cost per capita (4.4 percent per year) and private health insurance premiums increased from a low of 5.3 percent (1999) to a high of 13.9 percent (2003). While private sector data were not adjusted for changes in benefit design, few would doubt that real cost growth in the private sector was higher than the VA’s for the same period.

Of course, the VA has certain inherent advantages over other health systems. For example, federal law enables the VA to purchase pharmaceuticals at lower prices than virtually any other payer, and because the VA is a single system with a defined set of benefits, it is less administratively complex than the highly pluralistic private sector.

In the 1990s, VA leadership began a concerted effort to improve quality. They adopted key tenets proposed by the Institute of Medicine and disseminated them throughout their facilities and programs. By the mid-2000s, the VA began to be recognized as a leader in health care quality and safety. A study in the New England Journal of Medicine showed VA patients receiving quality of care better than the Medicare fee-for-service system. And, a study reported in the Annals of Internal Medicine noted that 67 percent of VA patients received the care specified by key quality indicators, compared with 51 percent of the patients in the national sample.

While there are many potentially confounding variables when analyzing the VA’s performance compared to the private sector or Medicare (e.g., different benefit designs; different patient populations; different geographic distribution), there is little doubt that it supports the view that a fully federally funded and run entity can provide high-quality care at a lower cost than the private sector. In looking at the reasons behind this performance, the Congressional Budget Office concluded that the “VA’s structure as a vertically integrated system that operates on an appropriation may have helped the system to focus on providing the best quality of care possible for a given amount of funds.” This finding is consistent with what has been found with health care internationally: strong, centralized systems have generally outperformed the United States with both lower per capita health spending and better population health performance.

While some in the U.S. believe that a centralized, federally-run system could not work in this country, the VA is a clear, real life demonstration that that belief is simply not true.

Jumping to Conclusions: Employer Surveys and the Affordable Care Act

Mon, 24 Oct 2011 09:58:41 -0400

While there has been considerable attention of late focused on the Affordable Care Act and the courts, many states, health care providers, and employers are continuing to move forward on the assumption that the Affordable Care Act will stay in effect—at least in its broadest dimensions. While a Supreme Court decision is now expected by the end of the 2012 term, getting ready for implementation of the major provisions of the ACA that go into effect in 2014 cannot wait for that court decision.

Much has been made about provisions in the Affordable Care Act affecting employers: expansions of benefits, affordability provisions, automatic enrollment requirements, and limited penalties for not offering coverage. Surveys abound, predicting what employers will do as a result of the ACA, and they are wildly different: predicting everything from a significant decrease in the number of employers offering coverage post-reform to a significant increase.

The Affordable Care Act is complex, and many employers know only the well-publicized elements of the law. Most surveys to date have been conducted by asking employers about various future scenarios, and human resource directors have responded based on those scenarios. At best, these surveys are highly speculative. And, even with a deeper understanding of the law and its key provisions, we believe most employers won’t jump to decisions about whether or not to continue offering coverage but will rather take a wait and see approach to see how some of the new structures—like health insurance exchanges—develop over time.

When employers respond, for example, that they would likely drop health benefits as a result of the Affordable Care Act, they may be thinking about only one part of the equation: the current cost of premiums and the likelihood that direct penalties for dropping health coverage will be less than the premiums they pay. But that answer doesn’t take into account what the competition will do, how important health benefits are to attracting a skilled work force, and/or what wage pressure might develop if employers that are currently offering health coverage drop it and encourage employees to purchase their coverage on the Exchange. All of these issues are more complex and will take considerable sorting out by employers.

To help employers better understand the relevant provisions of the ACA, we developed and published a guide called The Affordable Care Act for Midsize and Large Employers. This guide highlights some of the nuances employers will need to consider when thinking about changes they might make to their health benefit plans: nuances such as—how many of their employees are part time, how rich are the benefits they offer today, and how health insurance benefits relate to the average compensation levels of their employees. Our hope is that this guide will inform employers and help them begin to think about the relevant questions as they determine their best future direction for employee health benefits.

The Affordable Care Act will set in place a whole series of changes to the health insurance market place that are interrelated and will lead to some fundamental differences from the ways health coverage is purchased today. How those changes affect the employer market will be an unfolding story over many years. Becoming educated on what those changes are is, however, something all employers can and should do starting right now.

E-Prescribing: Waiting for the tipping point

Tue, 11 Oct 2011 09:00:00 -0400

Many of those working to improve health care in America have advocated for the use of electronic prescribing as an important tool for improving patient safety and moderating health care cost trends. A recent report released by the U.S. Government Accountability Office (GAO) documents abuses in the Medicare drug benefit that underline the potential value of electronic prescribing tools. According to the GAO report, some beneficiaries were able to obtain more than a year’s worth of narcotics by “shopping” different doctors. Electronic prescribing tools can enable health plans, physicians, and pharmacists to detect doctor-shopping, and assure that multiple prescriptions are not filled for the same condition within a given time period. Such an approach can both protect the health of patients who may receive duplicate prescriptions in error, and prevent fraud and abuse by those who seek prescription drugs for non-medical purposes.

In a recent review of the literature on e-prescribing, our center noted that despite the evident potential of e-prescribing, use is still very low. In 2010, only 25 percent of eligible prescriptions were prescribed using electronic tools. Indeed, Michigan had the second highest rate of e-prescribing in the country in 2009 – 20 percent – up from 4 percent in 2007. But even though rates are increasing, they are still extremely low relative to the opportunity. In a recent issue brief, the Center for Studying Health Systems Change found that in 2008, 42 percent of physicians in the country had access to e-prescribing, but only one-third were routinely using the technology.

The American Recovery and Reinvestment Act (ARRA) included significant components to promote the use of electronic medical records (EMRs). Starting this year, there are incentives for physicians who document “meaningful use” of EMRs, and starting in 2015, there are disincentives for physicians who don’t. There is already evidence that physicians are responding to these incentives to some degree, and because e-prescribing is included as part of EMR meaningful use standards, these incentives/disincentives may provide impetus for a further increase in e-prescribing. However, there are many who believe that the uptake is too slow and the incentives and disincentives included in the ARRA won’t make a big enough difference in the use of these tools.

So, why is it we can know so well that something will improve quality and safety and yet don’t use it to its potential? One key reason: the increasing availability of information and technology often outstrips the speed at which human systems change. The meaningful use guidelines recognized this by providing not only incentive and disincentive funding but also technical assistance to help physicians make the needed changes. Aligning incentives between public and private payers such that physicians get consistent messages and consistent support to embrace technology will also help.

But technical assistance and aligned incentives will only help to the extent that physicians want that help and are open to change. There is a telling statistic in the study reported by the Center for Studying Health Systems Change: the degree of e-prescribing use by age of physician. Of physicians over age 60 with access to e-prescribing, 66.5 percent used it routinely, compared to 87.2% of physicians between the ages of 29 and 40.

It would be nice if the trend toward adoption of EMR/e-prescribing didn't rely on the retirement of older physicians. But it does appear that over time, one way or another, we will eventually reach a tipping point, and e-prescribing will become the norm, not the exception.

Health Care Quality and Cost Improvement: State-based approaches can’t go it alone

Mon, 26 Sep 2011 09:30:00 -0400

It is difficult to find an issue that is more politically contentious than health care; particularly the policy changes and programs that are needed to assure that Americans have access to needed care. The liberal position tends to see health care as a right, and seeks a strong centralized public role in assuring that all Americans have access to the same kinds of benefits and care. The conservative position sees fiscal and personal responsibility as the top priorities; tending to favor decentralized, private market solutions.

Most would agree central authority does a better job assuring equity of coverage to a defined set of benefits (best evidenced in Medicare, where there is a uniform, national benefit package). There is less agreement on whether centralized or decentralized authority is preferable in terms of health care quality improvement and effective cost control, but there is strong evidence in support of the need for centralized authority to accomplish these goals.

The case for central authority begins with a critique of state/local government authority. The problem with state based approaches is that a significant degree of decision making is delegated to each of the 50 states, making it extremely difficult to achieve uniformity unless there are strict and prescriptive federal guidelines. Most often it creates a situation where there is success based on anecdote: we hear about the innovation that occurred in Massachusetts through its health reform initiative, or the single payer system planned for Vermont, or Hawaii’s success in reducing its rate of uninsured. These glowing stories of success blithely gloss over the fact that these are truly exceptions, in aggregate affecting less than 5 percent of the U. S. population with little or no chance of adoption by other states.

Even when the federal government partners with the states to meet policy objectives, states tend to take advantage of any discretion, thereby creating state to state differences based more on fiscal ability and political priority than on variations in local need. Take Medicaid as an example. In 2009, 17 states set eligibility thresholds for working parents at less than 50 percent of the federal poverty line. Another 17 states set eligibility for working parents between 50 percent and 99 percent of the federal poverty line. Lastly, 16 states set their eligibility threshold at income greater than the poverty line. What is the policy justification for these differences? Are working families in Tennessee (greater than 100 percent of poverty) significantly different from working families in North Carolina (less than 50 percent of poverty)?

The differences from state to state in Medicaid are significant, impacting who is eligible, who gets access to care, and the quality of care they receive. A recent study from the Commonwealth Fund highlights this issue. The study looked at Medicaid managed care and compared the performance of publicly traded health plans with the performance of non-publicly traded plans (mostly provider owned). It found that publicly traded plans tended to devote a higher percentage of each premium dollar to administrative expense—including profit—and receive lower scores for quality related to preventive care, treatment of chronic conditions, and members’ access to care and customer service. Again, this leads to disparities among states because for-profit plans tend to be concentrated in certain states.

The major reasons for Medicaid’s profile on cost and quality performance involve two interrelated factors: states’ political culture and fiscal capacity. States with the largest poverty populations tend to have less fiscal capacity than more affluent states. So when these poorer states are asked to match federal dollars, they simply do not have the tax base to afford more generous benefits and higher eligibility thresholds.

Secondly, Medicaid is not a popular program in most states. Legislators would rather allocate incremental tax dollars to other purposes, such as elementary and secondary education, higher education, corrections and/or tax relief. Even though two-thirds of Medicaid dollars go to pay for care for the elderly and the disabled, these dollars are generally viewed as going into the pockets of providers, who are thought to be well off and not a priority for extra tax dollars. As a result, in most states there is not an effective political constituency to advocate for the Medicaid program.

In summary, state based accountability tends to result in programs with wide, and unjustified, disparities from state to state. There are some success stories, but these tend to occur in more progressive and affluent states and represent the exception and not the rule. Yes, state accountability is better than no accountability, but it is not the way to develop an equitable and effective coverage program for all Americans. State control can be effective in cost control, but when cost control becomes the overriding policy priority, that success can come at the expense of quality, coverage, and access to care.

Healthcare consultant Kevin Seitz, MSW, is the former executive vice president for Health Care Value Enhancement at Blue Cross Blue Shield of Michigan. Seitz was a founding member of CHRT's board of directors and served on the board from 2006 to 2010.

The Schizophrenia of Health Care Spending: Cost to Some and Revenue to Others

Tue, 06 Sep 2011 09:00:00 -0400

In early August, when the debt ceiling agreement was reached, many news reports noted the agreement did nothing to address core reasons for the debt, namely: Social Security, Medicaid and Medicare. Indeed, nearly every article written about the debt ceiling talked about the need to “deal with” (aka: cut) Medicare, Medicaid, and Social Security.

But every time there is a serious proposal on the table to cut federal spending for health care, health care stocks fall—and this is considered a bad thing.

Recent reports from the Office of Chief Actuary noted the rate of increase in health care spending was at a historic low (3.9 percent) in 2010. Now you would think the media would frame this as good news, especially in light the need to reduce health care spending to address the national debt.

Instead, news reports carried headlines like: “Health-Care Use is Sluggish.” These reports cited the “fragile recovery” as the reason fewer people went to the hospital, which had a negative impact on medical suppliers’ earnings reports (though, a positive impact on for-profit health plans). Indeed, the article profiled stock problems at Johnson and Johnson, noting (among other things) the “sluggish sales of replacement hips and knees.”

We rarely talk about the business of health care in those direct terms: “sluggish sales of hips and knees.” We prefer to think of health care in more altruistic terms: care that is patient-centered, care that helps people in need, care that improves population health. Indeed, in the 1990s, there was a brief, consultant-driven movement when patients were called “customers” with the idea that that would focus practitioners more on quality and service. That movement quickly died because those receiving health care services didn’t like being viewed as “customers” or “consumers,” and those providing services didn’t like being viewed as just any other business.

But the reality is, just as is exemplified in the Wall Street Journal article, today much of health care is developed by or delivered through the for-profit world. And, the for-profit world has different incentives than the federal government or, indeed, consumers at large. In fact, the interests of shareholders may require behaviors that are at cross purposes with the public interest as expressed during the debt ceiling debate. This is part of what makes any discussion about cutting Medicare in particular so difficult. After all, Medicare beneficiaries are among the biggest consumers of health care, based both on their demographics and their generally extensive health benefits. So, any cuts to Medicare means cuts to those whose income and returns are dependent on the use of health care services.

It is important to note that this issue is not just about for-profit health care. Though nonprofit providers do not have shareholders, they often develop a parallel goal to for-profit providers: survival of the entity itself, and not just the services they provide. And, as many of those in religious orders running hospitals came to understand, there is no mission without a margin.

So, though many in health care don’t like to view it as a medical-industrial complex with customers instead of patients, in the end, it truly is. And, until we understand the truth behind the financial structures of health care that create conflicting incentives, we really won’t be able to have a realistic conversation about the need to cut health care spending at all.

Medicaid and Block Grants: Social Justice and What the Great Welfare Experiment Can Teach Us

Mon, 22 Aug 2011 08:30:00 -0400

Recently, 29 Republican governors sent a letter to the President and Congress advocating for more flexibility in the Medicaid program and a full repeal of the Affordable Care Act. The principles endorsed by these 29 governors (which notably did not include Governor Snyder of Michigan) essentially supported the concept of a block grant for the Medicaid program.

Under a block grant, states get a fixed amount of money to spend for a defined purpose. In effect, they are at risk for achieving certain outcomes and implementing certain things within that fixed amount—but also stand to benefit if they achieve those goals more efficiently.

The block grant approach was implemented in a significant way in 1996 in the federal welfare program. The program's name change, from Aid to Families with Dependent Children (AFDC) to Temporary Assistance for Needy Families (TANF), was emblematic of the underlying philosophical shift from entitlement to temporary help for getting people from welfare to work.

There is much intuitive merit in that concept, and the theory behind it is instructive as we think about the future of all public assistance programs. The question is: has it worked as intended, and what can we learn as it relates to the Medicaid program?

In the early years of TANF, it could be viewed as a great success. The change occurred at a time when states had relatively high welfare caseloads, and shortly thereafter, the economy improved. As states were able to reduce welfare caseloads, block grant funding was a boon. Since the mid-1990s, welfare caseloads have fallen in every state, and early research indicated that more welfare recipients were working. Though recipients were working in extremely low wage jobs, it appeared they were no worse off than before the change. (However, the evidence did not show that the shift to TANF actually reduced poverty, and it is notable that policy makers today don’t seem to be asking that question.)

But the most telling question to ask about the great TANF experiment is not what happened in good economic times, but what happened in the midst of the deep recession of 2008 and beyond—how did the program perform then?

The answer: not so well. And, the evidence to date should give health care providers, health plans, and advocates serious concerns about block grants for Medicaid.

State budgets for 2012 are sorely challenged. 44 states are projecting shortfalls and governors in both parties are cutting human service programs. States all across the country (Michigan included) are cutting eligibility, tightening time limits, or reducing grants in their TANF programs in order to save money. Estimates are that 700,000 families—including 1.3 million low income children—will be affected by state cuts to TANF.

The problem with this, of course, is that these cuts are coming at the time of highest need for poor families and lowest availability of jobs in their communities—particularly for individuals with limited education and skills.

Cuts to these programs most often affect children, and that is particularly concerning as we look to the future. We know that when families have no economic safety net, children’s lives become even more disrupted. They fall even further behind in school, and are even less prepared to become productive members of society themselves.

A core problem with TANF is that block grants were never set up to be adjusted for economic conditions. The TANF block grant has been funded at the same level since its creation in 1996; there have been no adjustments for inflation or changes in caseload. This means that the actual value of the block grant in 2011 is just 72 percent of what it was in 1996. So, in effect, dollars have declined while the need has increased.

As governors and Congress talk about changes to the Medicaid program, all those who care about health care coverage should be cognizant of the real life example of the TANF program. As many have said, to be the safety net that they purport to be, public assistance programs need to be counter-cyclical. Static block grants for human services are the opposite: they provide excess funds in good times and are underfunded in lean times.

When talking about these kinds of block grants, the fundamental question we should ask is: what kind of society do we want to live in? Do we want to go back to the society we had at the turn of the century, when the poor were helped through “charity” or local government efforts? Do we want to see the poor treated differently depending on the state—or even city—in which they live? Those experiments have been tried. Do we really want to go back there?

The Changing World of Hospice Care

Mon, 08 Aug 2011 08:49:23 -0400

When I was in graduate school and early in my career, hospices were viewed as one of the most altruistic components of the health care system. With a philosophy of caring holistically for those at the end of life by controlling symptoms, supporting families, and providing a “good” death (preferably at home), hospices seemed to represent the vision of compassion that should be embodied in a caring profession. Hospice care was formalized in Great Britain in the late 1960s, and federally funded in the U.S. for the first time in a 1979 demonstration project. The hospice benefit became a part of the Medicare program in 1982 and fully incorporated in 1986.

Perhaps it was inevitable that, when formalized as an insurance benefit, the nature of hospice care would change. In every aspect of the health care system, as coverage makes it easier to make money by providing a given benefit, entrepreneurs enter the system. After all, this is the American way – with all of its pluses (creating incentives for innovation) and minuses (creating opportunities to make money in ways that don’t actually add value to patient care).

Even if it was inevitable, I find what has happened to the hospice movement to be a sad story in the journey of American health care.

In the early years, hospices saw themselves as part of a movement to give better, more compassionate care to the dying. The overwhelming majority of these organizations were non-profit, often led by charismatic leaders and community boards of directors.

In today’s environment, for-profit hospices are on the rise and non-profits on the decline. In 1990, for profit hospices cared for only 9 percent of hospice patients. By 2009, they cared for 35 percent. In 1986, Medicare reimbursement for hospice care totaled $68.3 million; by 2009, that number had grown to $12 billion. As baby boomers become senior citizens, these numbers will go nowhere but up.

While there is nothing inherently wrong with for-profit hospices, an increasing body of research says their care is less comprehensive and admission criteria more selective (to focus on more profitable patients). Indeed, in 2007, profit margins of for-profit hospices ranged from 12-14 percent while that of non-profit hospices ranged from -2.9 to -4.4 percent.

Recently, the New York Times ran an article about the changing profile of hospices and increasing concerns about the cost of hospice care. An aging population and increases in Alzheimer’s and other forms of dementia account for part of the increase in hospice spending. But the Times article also reported on abusive practices by some hospice providers, and large financial settlements resulting from whistle blower and other lawsuits. As a result of ballooning costs, Congress is now considering a change in the reimbursement methodology for hospice providers.

There is no question that hospice care can improve the end of life journey for many individuals and families—but it is still under-utilized by many who could benefit. The shift from a “movement” to an “industry,” –and publicity around industry abuses—have the potential to discourage patients from seeking the care they need.

Too many times in the history of American health care the “medical-industrial complex” has overrun patient interests. Let’s hope this is one time when Congress can reverse a dangerous trend. Returning to the values of “the movement” would be a truly beneficial “back to the future” moment.