The Alternative To Health Care Reform

The Robert Wood Johnson Foundation just published a report by the Urban Institute using a simulation model to show what would happen to insurance and cost of health care assuming that there is no meaningful health care reform.  More to the point, the report shows what would happen if unbridled cost increases continue.   The simulation includes assumptions about unemployment (varying from 5.1-7.1% until 2014, and stable at 5.1% form 2015-2019) inflation (varying from 1-2.5%), changes in consumer price index (low at 2%) and increase in a variety of types of health care spending (ranging from 5%-8%).  

The results are not pretty.  Even the rosiest scenario shows decrease in employer sponsored health insurance (below 50% in the worse scenario), and all 50 states show an increase in the uninsured under all scenarios.   Uncompensated care goes up, and Medicaid and SCHIP  (children's health insurance) costs skyrocket.  

This is the study to support Obama's contention that "When it comes to the cost of our health care, then, the status quo is unsustainable" (AMA speech, 6/15/09).  

Smoking Bans Associated with Decrease in Heart Attacks

Last month's Journal of the American College of Cardiology has a meta analysis of 11 studies (10 geographic sites) where cigarette bans were implemented and researchers used this natural experiment to determine the impact on heart attacks.

Harvard full-text link (requires HU login)

The impact is impressive!  In the ten communities, rate of MI decreased by 17% (confidence interval from 8% to 25%), and the decline continued with subsequent years of observation. The impact was most pronounced for the young (which means more averted years of life lost) and nonsmokers.

This is strong evidence indeed -- and a good example of a community-wide intervention that can save lives (and costs) AND improve care.

How inexpensive is the Mayo Clinic (and Pervasive Fear of Financial Ruin from Medical Costs)

Dennis Cortese, CEO of Mayo Clinic, has been making the rounds talking about the cost-effectiveness of the Mayo Clinic model.  He has a Perspective piece to be published in NEJM next week.   The Mayo model has a lot going for it, including
            - Salaried physicians
            - Integrated systems, including full electronic medical records
            - Multidisciplinary teams of clinicians
            - Impressive evidence from the Dartmouth Atlas of cost-effectiveness of care
            - Excellent quality numbers
            - Excellent reputation
 I'm personally convinced that multispecialty group practice can provide excellent care and excellent value. 

- Population of Olmstead County, MN is overwhelmingly white and relative prosperous
- Mayo charges additional fees to Medicare beneficiaries coming from outside of its area.  This is important because it means the Dartmouth data understates full cost of care.  It’s also important because it means that patients in poverty are highly unlikely to travel to Rochester for care.  The well-off have impressive social support networks and other resources – and honestly cost less to care for.

Here's a link to a past blog on some of the potential flaws of using Medicare claims data to infer total cost-effectiveness 

Mayo offers great care – and its teams of physicians are known for their quality and innovation.   It’s pretty likely that Mayo offers good value.  It’s just not as inexpensive as it might appear.

The Washington Post today ran a frightening article about how the uncertainty of health care coverage hovers over the middle class in Gaithersburg, MD.  The health care debate in Washington can appear sterile and clinical –but you don’t have to probe deeply to discover pervasive fear of financial ruin associated with medical care in America.

If Everyone Hates Baucus' Plan, Does That Mean It's Good?

Howls of complaints from the left and the right might make you believe that the Baucus health plan is downright good.  I mean, if it aggravates both sides that much – it must be good, right?
The Congressional Budget Office has already weighed in –and there are some surprises here.  The Baucus plans lowers (that’s right, lowers!) the federal deficit over the next 10 years – while cutting the number of uninsured by over half.  How does it do this?

The Baucus plan does not offer especially rich subsidies for the middle class, and includes a flawed employer mandate (maximum penalty, $400, framed so that employers who hire low wage workers might be disproportionately penalized) and a robust individual mandate (penalties up to $3800 per family, which could scare many supporters off). 
What does the Baucus bill say about managing health care costs?
Here is the CBO ten year estimate of impacts of the Baucus bill. As always, the CBO’s focus is the impact on the federal deficit.
New costs (subsidies, etc)                                    $774 billion             
Excise taxes on high premium plans                 $215 billion
Other revenue                                                     $59 billion
Spending changes                                              $409 billion
Other taxes                                                         $139 billion           

That $409 billion is the actual decrease in federal spending on health care – whereas all the other changes represent only shifts of costs.

The CBO estimates cuts of $182 in fee schedule payment updates, $123 billion in cuts to Medicare Advantage programs, $48 billion in cuts to hospitals that care for a disproportionate share of the poor, $23 billion in cuts based on recommendations of a future Medicare Commission, and $33 billion in other spending cuts. 

The Washington Post estimated that the total cuts to hospitals are $155 billion, to nursing homes is $40 billion, and cuts to other providers are smaller.  

How would this work?

The Massachusetts experience with cuts to “disproportionate share” hospitals is troubling – the government subsidies evaporated more quickly than insurance for the impoverished kicked in.  The insurance industry  has been vilified by the Obama administration in recent weeks, and it’s likely that pushback against Medicare Advantage cuts will continue.   Hospitals, as I’ve mentioned before,  are the largest employer in most communities –and these kind of cuts will really hurt.  I see a lot of community nonprofit trustees making a pilgrimage to talk to their congressional representatives.

There is a lot of good in this bill - including consumer protections, a pool for those difficult to insure, and value-based Medicare purchasing for starters.   There is a lot that’s mediocre in the bill too – such as support to start up health cooperatives – which is unlikely to make much difference in the insurance market. There are some real worries - like the potential that cross-state health plans could undermine meaningful consumer protections currently available in states like Massachusetts which have had activist consumer-friently Divisions of Insurance.

The Baucus plan (with 0/3 Republican cosponsors) is off to a rocky start in Washington today.   Hopefully, the ultimate bill will include more provisions that are likely to actually diminish the rate of health care inflation.

Retail Clinics Save Money; Patient Centered Medical Home....Does Not (But Improves Quality)

Two studies about innovation in health care delivery were published in the last week.

An excellent study in the September 1 Annals of Internal Medicine examined 700 matched patients seen in retail clinics, physician offices, urgent care centers, and emergency departments who had ear infections, sore throats, and urinary tract infections.  The study showed that retail clinics were substantially less expensive ($110 total cost compared to $156-166 in urgent care and physician offices and $570 in emergency departments).  Three critical concerns about retail clinics are elegantly addressed in this study.

1) Rates of prescribing antibiotics was no higher in the retail clinics. Because these clinics are usually housed in pharmacies, some had worried that nurse practitioners would overprescribe.   This problem is in any event no worse than in conventional medical settings.

2) Quality appeared equivalent (using standardized RAND measures).

3) Patients were no LESS likely to have a preventive service in the following 90 days (and a bit more likely, not reaching statistical significance).  Some physicians have worried that retail clinics will disrupt continuity of care; this article refutes that concern.

This study covered three diagnoses that represent about half of all visits to retail clinics -- and the results are unequivocal.  Retail clinics, a "disruptive innovation" in health care delivery, save money with no sacrifice in quality or continuity.   

Reports on another innovation in health care delivery, the Patient Centered Medical Home, show improved quality with no increase in cost (but without the decrease in costs promised by advocates of patient centered medical homes.)  Group Health Cooperative designated one of its centers as a "patient centered medical home," and determined that compared to other centers, this center had
- Lower staff burnout
- Better patient satisfaction
- More specialist visits
- Fewer emergency department visits
- More web and telephonic visits
- Increased composite quality score
There was no substantial difference in cost of caring for patient; higher costs of primary and specialty care were about equivalent to savings in emergency department.

It's possible that this is a premature report -- we're only looking at a year of data.  This study was performed at Group Health Cooperative, an excellent and progressive group where the 19 control clinics were pretty advanced, and  showed large quality improvements during the study period.  However, GHC chose one of its best clinics as the trial site - so it's disappointing not to see any cost savings.   Reading the case, it's also clear just how much work and investment went into setting up this patient-centered medical home.

We need innovations in health care delivery. Retail clinics save money, with no significant loss of quality, and medical home improves quality without increased cost (but a lot of increased effort).  The hope is to define interventions that will raise quality and lower costs simultaneously.

President Obama and the Price of Health Care Reform

Barack Obama addressed Congress this evening; the full text of his speech is available at this link. 

It was a long speech – setting the historical stage and rebutting many of the arguments against health care reform.  Obama delivered some real specifics, including an endorsement of individual and employer mandates (like Massachusetts’ system), tax credits to help lower income Americans afford coverage, a public option for those ineligible for private health insurance and increasing insurance regulation to protect consumers.

Obama promises that health care reform will meet three objectives:
(1) Provide more security and stability to those who have health insurance.
(2) Provide insurance to those who don't.
(3) Slow the growth of health care costs

Many others will be commenting on the first two objectives;  this blog addresses the third.

Obama spends a few paragraphs talking about paying for this expansion of coverage.  A few key quotes:

“Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan.”

Waste and inefficiency are rampant in health care.  Some have commented that 30% of all medical dollars are wasted. While I don’t disagree – the savings from decreasing variation and increasing the integration of the provider community are not going to come quickly.   This link  is to a past posting, where I note that if we immediately cut all this waste we would cut so many jobs that we would create Detroits all over the country.

“Much of the rest would be paid for with revenues from the very same drug and insurance companies that stand to benefit from tens of millions of new customers.”

This represents what Victor Fuchs calls cost shifting.   I have no disagreement with Obama – new revenue will be needed to pay for expanded access.  But this tax will be passed on as higher premiums to others – and will not lower the cost of health care.

“Reforming our medical malpractice laws”

This got a big cheer from the Republican side of the aisle. The real costs of torts include substantial defensive medicine, so tort reform is a good idea.  Savings will take a long time, though.

“Medicare is such a big part of the health care system, making the program more efficient can help usher in changes in the way we deliver health care that can reduce costs for everybody.”

True that!  Medicare is such a large payer for most hospitals and many physicians that reforming the way Medicare pays can have an enormous positive impact on the health care delivery system.  There will be losers, though, so this won’t be easy.  Obama is wise not to divulge too many details of his administration’s thinking on this.

“This reform will charge insurance companies a fee for their most expensive policies.”

Again, this will be passed on to purchasers of health insurance policies – so this doesn’t represent cost savings, but rather a cost shift. Economists on the right and left agree that offering full tax breaks to ridiculously high benefit policies is regressive and a bad idea. But health insurance plans in high cost states (Massachusetts, Florida, New York among them) are much more likely to be subject to such a tax – and our legislators won’t go easily.

So – the speech was inspirational (especially the nod to Ted Kennedy, who wrote a stirring deathbed endorsement of health care reform), and there is serious substance here that forms the heart of a health care reform bill.  It’s not surprising that the President offered far more details on access than on cost saving.  Cost saving is necessary, but won’t be easy to attain.

Succinct Two Pages on Why American Health Care Costs So Much

Victor Fuchs has summarized the difficult problems in controlling health care costs in two pithy (if ill-titled) pages in this week's Journal of the American Medical Association (JAMA). (Harvard link) (Non-Harvard Link) He points out that cost shifting (like mandating rating health insurance by health status) might make insurance less costly for the sick - but would also make health insurance more costly for those enjoying good health. This cost shifting might be good in terms of equity, but it could also lead to some healthy people dropping out of the health insurance system altogether.

Fuchs' eight root causes for our high health care costs compared to other 'developed' countries:

1) High administrative costs
2) More specialists and fewer primary care physicians
3) More "stand-by" capacity
4) Open-ended funding (no overall budget for health care)
5) Malpractice
6) Less social support for the poor
7) Higher drug prices
8) Higher physician incomes

I can't say I agree with these 100% (I would have listed fee-for-service payment system separately, as well as the lack of integration of the health care delivery system. ) Many economists also list first-dollar coverage, but Fuchs does not and I agree - since most developed countries have much lower patient cost-sharing than the US.

It's rare to read two pages that say so much.

Retail Clinics Save Money (and Don't Overprescribe Antibiotics)

An elegant study in this week's Annals of Internal Medicine shows that in Minneapolis patients who went to retail clinics for ear infections, sore throats, and urinary tract (bladder) infections had lower overall health care costs than those seen in physician offices, urgent care centers, or emergency departments. (Abstract) (Harvard full text)They also did not have lower rates of preventive care visits over the 3 months after the retail clinic visit. The retail clinics are in pharmacies, and there has been concern that they will overprescribe antibiotics. The amount of antibiotic prescriptions in the retail clinics was not substantially different than the rate from physician offices or urgent care centers.

So - here's something that works. Retail clinics are a disruptive innovation, since the retail clinics are not able to perform the full range of services performed by a physician's office. They are designed to be able to do a "good enough" job to meet a limited set of needs. This study suggests they are succeeding. It also does not appear that they are a death knell for continuity.

Even so, retail clinics have not expanded as much as expected, even though insurance plans are increasingly providing full coverage for their services.

Care Management Simulation -- Measure Success at 10 Years or 25?

Yesterday’s Washington Post headline shouted “Study Raises Questions About Cost Savings From Preventive Care.” The article itself captured some of the nuance of this article that the headline did not.

The Post was reporting on a Health Affairs web article that simulated potential savings from improved diabetes management. The improved management would lead to an improvement in hemoglobin AIC (a long-term measure of blood sugar control) and blood pressure – both are agreed to be indicative of better diabetes control. The simulation suggested substantial savings from major complications of diabetes including blindness, kidney failure, amputations, stroke, and coronary artery disease. However, these savings were not enough to pay for the intervention to improve diabetes care.

You read that correctly – the cost of improved management of diabetics would be more – not less -- in the 10 year or the 25 year time horizon.

The authors’ argument – a bit academic – is that the ‘excess’ cost of better management of diabetics is less pronounced at 25 years than at 10 years. Therefore, it’s unfair for the Congressional Budget Office to give thumbs down to an intervention based on a projections of results over ten years. Alas, with this particular simulation, the CBO would still give a thumbs down for results of a program that would increase the federal deficit over 25 years (just not as much per year).

A few other tidbits from this journal article: The intervention model suggested that the highest payoff over 25 years was in the youngest diabetics; there was cost saving in the population of diabetics 24-30. Of course, that’s a pretty small cohort. The simulation also suggested that the cost of diabetes direct care would increase by about $600 per year based on increased testing and more use of medications. This is no surprise, but a blow to the argument that better diabetes care can save money over the short-run.

Most of what we do in the medical field doesn’t save money over a 1, 5, 10 or 20 year time horizon. The medical ‘industry’ delivers better quality (or quantity) of life – and does it in a manner which is (usually) cost effective –not cost saving. No one thinks it saves money to dialyze a patient whose kidneys have failed, or to replace a worn out hip. These interventions yield quality adjusted life years at a reasonable price. So too, more intensive, evidence based care of diabetics can mean a diabetic will have improved vision, won’t have a stroke, and won’t need kidney dialysis. Even if this effort doesn’t save money, it seems like a good idea.

The best idea is to get the benefit of better health care and not spend so much on program costs. How can we do that? We should dramatically decrease the cost of chronic disease management programs using remote monitoring technology. This might also allow for better patient selection – making expensive interventions only for those diabetics who really needed them. We need improved patient engagement, including more effective programs and better incentives that fully employ the lessons of behavioral economics. We also need to improve the care delivery system itself, as interventions to augment the delivery system are by nature expensive and duplicative.