Welcome to the Health Wonk Review. Health care costs, politics, and the economics of health care seemed to be the prevailing themes in the submissions this time, and there are some great ideas floating around here. Enjoy!
Health Care Costs
Aaron Carroll of the Incidental Economist brings us an excellent article – complete with graphs – about factors driving health care costs in the United States. Our per capita health care costs here are dramatically higher than the rest of the world, and people often point out that it must be because of so many people in the US are obese. But it turns out that obesity (and all other disease prevalence factors) accounts for just a fraction of the higher health care costs here. The problem can’t be pinned down on something as simple as obesity.
While obesity might not be a major factor in driving health care costs, health care administrator salaries are hard to ignore, especially when they start to break into the seven figure range. Roy Poses of Health Care Renewal writes a must-read piece about how hospital CEOs are using logical fallacies (and downright ridiculous statements) in defense of their inflated compensation packages. I would say that this might also be true of a lot of high level administrators in the health insurance industry and the pharmaceutical industry.
Hopping around the world for a minute, ever wondered about how the Australian health care system works? Healthcare Economist Jason Shafrin gives us the details. Australia – like all wealthy nations – spends far less money per capita for health care than the US does. Health care spending in Australia amounts to 9% of the GDP, and all Australian residents are covered under their universal health care system. Providers are allowed to balance bill, but the vast majority (79%) do not. Instead, they charge only what Medicare Australia allows, and bill charges directly to the health insurance system. Nearly half of Australians also have private health insurance, but payments from private health insurance amount to only 12% of national health expenditure.
While physician groups may be dissatisfied with the state of medical malpractice (and there’s no doubt that some docs do pay huge sums of money for malpractice insurance), Joe Paduda of Managed Care Matters sheds a little more light on the issue, noting that while medical liability system costs (including defensive medicine) amount to about 2.4% of total health care spending, the cost of “adverse events” (poor quality care, medical mistakes, etc.) is closer to 5% of total health care spending. Joe explains that “One has to view the cost of medical malpractice in context – and the fact is there’s far too much lousy medicine, and far too little accountability.”
Health Business Blog’s David Williams shares details of a letter from Blue Cross Blue Shield of MA, explaining that going forward they will be sending payment for out-of-network charges directly to the patients, and then providers will have to seek reimbursement from the patients. This does seem like an odd practice, and it will be interesting to see if it catches on in other states or with other insurance carriers. I agree with David that the specifics in the letter are probably a bit exaggerated… I doubt that the non-network providers are really getting reimbursed three to five times more than in-network providers for the same services. If that were the case, there would be little incentive for docs to be in-network. As an aside, the individual policies we work with here in Colorado typically have an out-of-network deductible that is double the in-network deductible, and separate from it. So a person with a $2,000 deductible would have to pay the first $4,000 in charges out of pocket in order to see a non-network provider. And then the $2000 network deductible would still have to be met if the person also saw in-network providers during that year. This provides a pretty strong incentive for people to seek in-network providers whenever possible.
Politics and Health Care
The Hospitalist Leader’s Bradley Flansbaum discusses CMS head Dr. Don Berwick, and how his message appears to have changed since his appointment to lead the CMS. Apparently Dr. Berwick now sounds a lot like an Obama administration spokesperson, and Dr. Flansbaum is worried that this will lead to watered-down baby steps instead of real changes. Of course, he also points out that the political climate right now makes it hard for anyone to get much done or introduce controversial ideas, and that’s probably true. I’m not sure that anyone in Dr. Berwick’s position could do any better.
For another take on Don Berwick, Shannon Brownlee of The New Health Dialogue writes in his defense regarding his support for making sure patients are fully informed about their treatment options and potential risks. Dr. Berwick was criticized by Kimball Atwood for being too supportive of patients’ choices when it comes to complementary and alternative medicine. But Shannon points out that a lot of conventional medicine isn’t evidence based and can actually cause serious problems for patients – as opposed to alternative medicine, which may sometimes be a waste of money, but isn’t likely to cause devastating side effects.
Ken Terry, writing at BNET, explains physicians’ concerns about how Medicare payment cuts will impact their income, and changes that some of them would like to see in terms of issues like malpractice reform and Medicare balance billing. Several state medical associations drafted a letter to Harry Reid blasting health care reform, and there’s obviously some contention between the AMA and some of the state medical associations. Should be interesting to see how things play out, especially after the Medicare reimbursement cuts that are scheduled for December.
Anthony Wright of Health Access Blog explains some of the steps CA is taking to implement changes to health insurance rules earlier than required by federal law. It makes sense that this will help to make the transition to 2014 more smooth. Colorado is making some similar changes, with no gender rating allowed as of 2011, and maternity coverage on all individual policies in 2011. States that take proactive steps towards reform will likely have an easier time with regulation when 2014 rolls around.
Jaan Sidorov of the Disease Management Care Blog draws a comparison between the Bush administration’s justification of the invasion of Iraq and the Obama administration’s push for the passage of the Affordable Care Act. His argument is convincing, and it does leave one wondering if lawmakers and the Obama administration realized how difficult it would actually be to lower health care costs prior to the passage of the ACA.
Economics and Health Care
On his Health Policy Blog, John Goodman shares a very free market-based idea about how much money we should spend on health care. He writes about how programs like Medicare and Medicaid (and employer group plans, or really any health insurance policy that isn’t specifically chosen by the insured) provide good quality health insurance coverage, but the insureds cannot choose to use the health care dollars for other things and forgo health care. His analysis comes from an economic point of view, explaining why we should treat health care like any other commodity, allowing people to spend more or less on it, depending on how much money they have available.
Employees are paying quite a bit more for their health insurance coverage than they were even just a year ago. Rich Elmore of Health Technology News shares data from the Kaiser Family Foundation showing that while total premiums (including the portions paid by both the employer and the employee) rose only 3%, employees are paying 14% more for their coverage than they were last year. This makes sense, given the recession – employers have had to scramble just to maintain coverage for their employees, and while most of them still pay the majority of the premiums, it’s a lot harder to continue to do that in our current economy. In addition to higher premiums, employees are also facing higher deductibles and copays.
From a different perspective, InsureBlog’s Hank Stern explains that employers don’t pay premiums. Hank does make a good point: health insurance is part of an employee’s “hidden paycheck” and can be looked at as compensation in addition to the stated wages the employee receives. Hank notes that rather than a tax break for premiums, employers would be better off with a break from some of the labor-intensive regulations involving health insurance premium reporting and record-keeping that are part of the ACA. This is a good point – anything that makes it easier for employers to administer health insurance benefits also makes it more likely that they will continue to do so.
Arnold Milstein and Mark Smith of Health Affairs Blog demonstrate how engineering tools like queuing theory should be used by payers to set fair and practical reimbursement rates for hospitals. Hospitals that vary in size and in terms of percentage of patients that are admitted on an urgent or emergent basis will otherwise likely be unfairly compensated.
The Apothecary’s Avik S.A. Roy tackles the issue of health care in the free market by proposing that we divide health care into two categories: Life or death care that doesn’t belong in the free market, and non-essential, elective care that he says would do well in a free market system. I agree that this is a good way to look at it, but I think the question then would be where do we draw the line between what should be allowed to function as free market health care, and what should not. Right now, things like Botox and elective cosmetic surgery are squarely in the free market category. But while Avik would put hip replacements into that same category, I think I’d be a bit reluctant to do so. Either way, it’s a good starting point for a discussion.
Other Good Stuff
Julie Ferguson of Workers’ Comp Insider brings us details on the investigative report about a scary cruise ship incident. Be sure to click through to the link with the video – it looks like something staged in Hollywood, and I’m really glad I wasn’t on that ship!
Healthcare Talent Transformation’s Jonena Relth explains the benefits of working with an organizational development team in order to smoothly guide medical offices through the myriad of changes that will be coming over the next few years. Things like switching to electronic medical records – even though they will likely benefit everyone involved as time goes by – may be seen as a headache for staff members who aren’t adequately prepared and coached through the process, and that’s where a good OD consultant can step in early and make the process easier.
Peggy Salvatore of Healthcare Talent Transformation hosts the next Health Wonk Review on September 30th – be sure to check it out.
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Super job, Louise!
I like the categories – very helpful.
Thanks for hosting, and for including our post!