Employers and Massachusetts Health Care Reform

The Center for Study of Health System Change published a brief report today suggesting that the lack of progress on lowering health care inflation combined with greater availability of both subsidized and nonsubsidized individual insurance has lessened employer commitment to continuing to offer health insurance, especially to low wage workers. This is in contrast to information published last week in Health Affairs, where a survey by the National Opinion Research Center (NORC) showed that there was little "crowd out" of employer health insurance by the new state program.

If employer-based health insurance declines, it will be hard to tell whether this is due to the state Connector program or due to the severe decline of financial fortunes in many Massachusetts industries, especially the financial services industry.

For readers in HPM 235, we'll be talking about health care reform on Wednesday, November 5 (and slides are posted at the end of class 2)

Cost Saving vs. Cost Effective

In Wednesday's class, we talked about cost effectiveness compared to cost saving.  For instance, it is cost EFFECTIVE to do mammography to prevent premature deaths from breast cancer -- in that it costs less than $40,000 per quality adjusted life year saved. (This depends a bit on context -- how old the woman is, pretest probability, and previous mammogram).   The good news about doing more mammograms is that fewer women will die prematurely of breast cancer.   However, there are no savings available - we're just spending our resources to buy something of real value.

There are very few things we do in the "medical industrial complex" that are cost SAVING.  I mentioned that from my perspective it was hard to name anything beyond childhood immunization and antiretrovirals for patients with full-blown AIDS.   Class member Ben Geisler has pointed me to the Tufts cost effectiveness registry. 

Ben has found a number of other medical approaches that do seem to be cost saving:

- Hip pads to prevent fractures in high risk nursing home residents
-TB testing and treatment for chinese immigrants to US in year 2000
- Gemfibrozole (cholesterol agent) for men with known  cardiac disease
-Antiosteoporosis treatment for older women at VERY high risk
- Alpha interferon for hep C in 45 year old man (I am dubious on this one myself)
- Acyclovir therapy for herpes zoster and chickenpox in limited populations(I'm dubious here too)
-Leg angioplasty for a very specific population to relieve rest pain in legs

Note that in all instances these are VERY limited populations!

Remember you always have to ask "cost saving compared to what?"  For instance, it might be cost effective to use Viagra instead of a penile implant -- but Viagra can never be cost saving within the health care system compared to no therapy at all!  

Women Pay More for Insurance Than Men

Abby Ruettgers of our class points out that the NYTimes published data today showing that women are charged more than men for health insurance in the individual insurance market.  This is especially prominent for young adults.  

This isn't a real surprise.  In fact, I think this represents childbirth as opposed to gender discrimination.

This is one more example of the problems of the individual market.  While many will say that the individual market eliminates "moral hazard" and makes people pay for their own poor health decisions -- it's not clear we want to penalize women of childbearing age for the chance they might decide to have a child!  

New Technology and Medical Costs

There is widespread agreement that new technology is a substantial cause of increased health care costs.  Of course, new technology brings us good things (like Gleevac for patients with certain types of previously-fatal leukemia, and laparoscopic devices to allow for minimally invasive therapy) and things that are not so good (like bone marrow transplantation for metastatic breast cancer - which looked like it would be helpful, but wasn't when a study was belatedly completed.

The 10/27 New York Times has an excellent article by Reed Abelson about FDA approval of medical devices.  The FDA approves devices after only brief trials, and longer term data on outcomes is almost always lacking.  Furthermore, the FDA is not concerned with "cost effectiveness" for either devices or drugs.  This issue is compounded when Medicare sets high prices for new (unproven) innovation, which speeds dissemination of this innovation.

Breaking the Cycle of Waste in Health Care

Jim Roosevelt, CEO of Tufts Health Plan, had an op-ed in yesterday's Boston Globe entitled "Breaking the Cycle of Waste in Health Care" .  This references a report released by the New England Health Institute earlier this year.   This report is especially helpful because it clearly distinguishes between increasing cost-effective care (which increases costs, but it's worth it) and actual cost saving.   

It's become somewhat of a standard refrain that 30% of all health care dollars are wasted.  Obviously, eliminating that waste is much less painful than eliminating necessary care.   Of course, all waste represents someone's income  - which is why we haven't made progress on lowering medical inflation.  

By the way, the Mass Medical Society commissioned Amy Lischko of Tufts School of Public Health to develop a thought paper on the root causes of health care inflation.  The report is available at this link.

Health Care Cost Woes in Massachusetts

The Boston Globe today reports on a poll of Massachusetts residents on the cost of health care.  In Massachusetts, where the percentage of residents insured is among the highest in the nation, almost one in 7 report that they owe money for health services they found unaffordable. The same percentage reported not filling a prescription because of out-of-pocket cost.  One in 11 reported that they avoided medical care because of money they already owed.  No surprise - the problem is worst for those with the lowest income.  

Should We Believe Economists on Health Care?

Nice article in today's NY Times  contrasting the economists behind the Obama and McCain campaigns.  Uwe Reinhardt of Princeton gets the last word.

Economics practiced in the political arena is often just "ideology marketed in the guise of science."     

"I give a lecture on whether you can trust economist, and I tell them no... I tell them if at  the end of the year I tell you the time of day and you trust me, I have failed."

More Patients Foregoing Prescriptions

More evidence that patients are cutting back on their health care spending.  Again, as in the previous post, patients are cutting back on very effective medicine (statins to lower cholesterol) as well as medicine of marginal benefit (Alzheimer disease medications).    Interestingly, a focus of this article is patients choosing to cut back on Lipitor.   Lipitor, for a 3o day supply of 10mg, costs $86 (Drugstore.com).  Simvastatin, 20mg, which is of equal equivalence, costs $28 per month (Drugstore.com) or $4 per month (Walmart, Walgreens, and others).   There is a better way clinically to get more value from our drug spend.  The question is whether patients with "skin in the game" end up getting higher value, or just have preventable heart attacks and strokes. 

What's A Governor to Do?

Budget Woes and the Cost of Health Care

Massachusetts is in a terrible financial pickle, like many other states.  Tax revenues have plummeted, and Governor Deval Patrick has identified more than a billion dollars of budget cuts.  There is genuine worry that this might not be enough.

I’ve done an informal review of state budget cuts, and I identified about $380 million of cuts that are health related.  That’s about a 4% cut in the $10 billion the state spends on health care.  (My spreadsheet is available on request -- I am having trouble posting it at this point.)   I find the openness of the state government heartening, and I’m surprised these details have not been reported in greater detail in the Globe and the Herald. 

These budget cuts will be painful.  State employees and contractors will lose their jobs, and patients and clients will lose services they have depended upon.  In this post, I’d like to review what these cuts might mean for health care costs in Massachusetts? 

1.       Some cuts in state spending trigger similar cuts in federal matching (such as Medicaid). So, for instance, decreasing Medicaid spending by $152 million will lead to a loss of provider income of about twice that amount. If providers can cut their capacity and costs, this could lower overall spending.   Many times, decreases in public reimbursement lead to higher bills rendered to private payers.  In addition, the $2.5 million on Medicaid enrollment (71% budget cut) can lead to far fewer federal dollars coming into Massachusetts, although the Patrick administration intends to get funds for enrollment programs from other "off budget" state agencies (The Connector and the Mass Health and Education Facilities Authority).

2.       Some cuts in state spending shift cost to other payers.  For instance, childhood immunizations are one of the few medical interventions that actually save money – but the state will cut its funding by $6 million, or 12%.  This is especially worrisome at a time where newer vaccines are pricey (especially chickenpox and HPV vaccines).  If the state cuts mean that private insurers pick up the tab, this should mean higher health insurance premiums going forward.  The state also benefits from its bulk purchasing and substantially less billing transactional infrastructure – so it might be more expensive to deliver vaccinations paid for by private insurance.  Massachusetts historically has the highest childhood immunization rate in the country.  If our immunization rates go down, this is likely to raise overall costs.

3.       Other budget cuts are take-backs from state employees, such as the $31.7 million decrease in benefits offered to state employees through the Group Insurance Commission. (4%)  This could lower overall health care costs if state employees, now more price sensitive, decrease  their utilization of health cars. See my last post for evidence this is happening in the DC area. 

4.       With the overall financial meltdown, there is increasing interest in the social benefit of regulation.  The budget necessarily diminishes resources for state employees and consultants who regulate the medical, nursing, and pharmacy professions, and cuts staff from state agencies tasked with improving accountability in health care delivery.   

5.       Some programs can actually lower costs – such as an academic detailing program to counter the pharmaceutical representatives who encourage use of expensive brand name medications. This program was cut by $200,000 (40%).  I don’t know if the state has current data on the cost effectiveness of the  Massachusetts program.

6.       The state is prioritizing programs it just can’t stop – and there are many casualties among newer programs or those with a less active constituency.    For instance, there will be painful cuts in senior home care case management ($28 million, 69%) and secure treatment for opiate abuse ($5 million, 100%).  A demonstration project for elderly and disabled will lose $13.5 million (68%). 

7.       There’s been a laudable effort to cut out specific earmarks that seem more related to a legislator’s influence than a dispassionate review of community needs .

This is a painful time.  The state must balance its budget each year, and decreased state revenue means less opportunity to make investments in the health of our commonwealth.  There are times when state budget cuts could paradoxically lead to higher overall health care costs in the future.

As Budgets Tighten, More People Decide Medical Care Can Wait

There's a good article in the Washington Post today about patients deferring care due to the recession.  The article shows that advocates for high deductible health plans are right - with higher deductibles, patients are far more reticent to incur significant costs.  However, consumers are deciding against both discretionary care (twice a year ultrasound of fibroids) and necessary evidence-based care ( annual mammogram in light of strong family history of breast cancer). And physicians are spending more of their time doing financial, not clinical, triage.

Health care inflation as a cause of future budget deficit: "worse than the bailout"

David Leonhardt, an economics columnist in the NYTimes, notes that the Congressional Budget Office's estimates of the future cost of Medicare and Medicaid given current medical inflation would add $900 billion to the federal budget every year.  Note that the presidential candidates continue to have no serious plan that will lower health care inflation, although both have suggested that prevention can save big dollars in the future.  A guest op-ed, also in the NY Times, points out the fallacy of this argument. 

Bad economic times and health

Interesting article by Tara Parker-Pope in today's NY Times  suggesting that bad economic times might lead to improved health.  As our time is worth less in monetary terms, and we have less discretionary income, we eat fast food and prepared food less, we spend more time at home, and we exercise more.   

Of course, it all depends on how bad the times are, and how well you were living beforehand.  When the Russian economy sank after the dissolution of the Soviet Union, there was a dramatic contraction in the GDP, and a shocking decrease in the health care "spend."  There was also a five year drop in the average life expectancy for Russian men, from 69 to 64.  

We might all want a little more time off.  And the decrease in the rate of health care inflation over the last few years is good news.    None of us want a Great Depression!