Thursday, October 29, 2009
He discusses why there likely will be job loses, more contractor work,rising medical costs ( increased premiums,more out of pocket costs,unfunded state obligations), ultimately lower take home wages and harm to the middle class in a number of ways.Increased demand for care, no change in supply so wait times move higher and quality decreases even more . See here, for a NYT's commentary regarding the incentives and complications that will likely result from the Baucus bill's provisions.
Labeling and spin is important in political issues. The label "health care reform" implicitly promises the reader a change for the better. The current health care bill will change many things but little in Goodman's analysis or in the analysis offered in the NYT would be for the better. I have used the term health care deconstruction-reconstruction rather than reform.Reform is a word to spin whatever congress can cram into thousands of pages into a feel-good image.
Dr. Goodman's (PhD economics, Columbia) analysis seems to me on target about what is likely to happen after the bill's provisions go into effect. I would like to see an economist speculate on what strategies and tactics businesses in and outside of the health care complex will employ to minimize their loses and prepare as best they can for the several years down the road when the health care bill kicks in. One new growth industry is likely to be "consultants" who can advise business on how to live within the new health care environment.
After noting that in the draft bill ( I don't know if there are provisions in other draft bills on not) that 6/25 of panel members will represent for-profit organizations , Dr. Poses continues:
We often discuss how clinical research sponsored by organizations with vested interest in the research turning out to favor their products or services may be manipulated to favor these interests, and sometimes suppressed if it does not. In the US, there are few unconflicted sources of sparse funds to support comparative effectiveness research.
...If the government is going to support comparative effectiveness research, it ought to make sure such research is not run by people with vested interests in the outcomes coming out a certain way.
"Making sure" that a government endeavor is not run or significantly influenced by interest groups may be not possible considering the strong, well practiced, very well funded lobbying capabilities of vested interests (Madison spoke of factions and hoped in vain that a republic versus a direct democracy would hold them at bay)) and the general inability ( or lack of desire) on the part of legislators to resist their efforts.
The composition of the CER panel is regulatory capture preemption at its best-writing into the bill a seat at the planning table for representatives of vested interests. Go to Dr. Poses commentary for details of the appointment and composition of the panel. Note this panel is not a government agency but it is appointed by government and its work product will greatly influence health care funding and ultimately decisions made by physicians and insurance companies.
"If the government is to tell big business men how to run their business, then don't you see that big business men have to get closer to the government even than they are now? Don't you see that they must capture the government, in order not to be restrained too much by it? Must capture the government? They have already captured it.".....Woodrow Wilson,1913
I welcome comments from those who expressed optimism and enthusiasm for government sponsored CER now that some of the details of how that will work are becoming available.
Tuesday, October 27, 2009
More generally it has referred to a strategy whereby you make your enemies think you are losing and you are really not.
On to the public option. Many opponents believe that adoption of a public option will be the slippery road to government run health care and the single payer. We are seeing that the public option may not pass and that democrats are supposed to be fighting over it (the Republicans' dismal performance in the last election effectively disarmed them) and if it fails the country will be saved from government run health care. The inclusion of compulsory health insurance in all of the current bills already means government health care regardless of the outcome of the public option.
I maintain that adoption of employer and individual mandates and subsidies will constitute government medicine. Read Michael Cannon's essay on mandates (see here ) and the power implicit in the control over what type health insurance everyone must have and then see if you think the public option "controversy" really matters.
Maybe the public option contrived ruckus would be better characterized as Arnold Kling did :
... the debate over the "public option" in health reform also can be viewed as an exercise in symbolic politics and diversion. The point is to divert attention away from the bankruptcy of Medicare. (see here for his entire commentary)
And I would add diversion away from the mandates.
Sunday, October 25, 2009
Tyler Cowen, a professor of economics at George Mason University, offers this detailed and cogent argument against the mandate from an economic point of view.Thomas Sowell talks about economic thinking as involving thinking "past stage one" and analyzing things not in terms of the hoped far results but in terms of the incentives and constraints that a given policy is likely to bring about. Cowen looks at the incentives that mandates and subsidies involve.
He points out that the mandate will result in lower wages, discusses "implicit marginal tax rate increase" and who will be hurt by that,the likelihood of "mandate creep", and the likelihood of continuing increasing cost of health care which will be exacerbated by the mandate. The issue of implicit marginal tax is discussed in detail here by another economist,Greg Mankiw from Harvard.
Cowen closes with these remarks:
We’re often told that America should copy the health care institutions of Western Europe. Yet we’re failing to copy the single most important lesson from those systems — namely, to put cost control first. Instead, we’re putting our foot on the gas pedal and ratcheting up the fiscal pressures on the system, in the hope that someday, somehow, it will all work out.As it stands, we’re on the verge of enacting a policy that is due to explode, penalizing many of the very people that it was ostensibly designed to help.
The two economists speak of damage to the very groups the bills purport to help and collateral damage for most everyone else. I wonder how much effort has been made by the medical organizations (AMA, ACP and others)that seem to support much of what the current (five) bills contain to think past "stage one" and consider what incentives will be put into play under the rubric of reform.
Madison had it right when he said this over two hundred years ago:
"the old trick of turning every contingency into a resource for accumulating force in government." The massive increase in central government power, and control that these reform bills will bring about will happen with or without a public option.
Friday, October 23, 2009
The more popular argument is to the contrary. One example appeared recently in the NEJM,Oct 8,2009 edition in the "Perspective" section which featured a discussion about economics and health care reform. The comments of one of the participants seems typical. Dr. Elliot Fisher said in part ," Fee for service does not pay us to have long conversations with our patients.When we're feeling constrained, it is much harder for us to have the long conversation with patient with heart failure to see if we can manage them at home".
Fee for service once did pay us to have those longer conversations and offer longer history and physical exams when the fees were considered by the physicians to be adequate compensation . When I practiced in a fairly large group of internists ( circa the 1980s) most of us set aside one hour for new patients and 15-20 minutes for followup.Then CMS imposed wage and price controls and other third party payers typically followed the lead of CMS. This is the origin of the constraints of which Dr. Fisher speaks.
The price controls have worked as price controls have almost always everywhere.The quantify demanded increases, the quantity supplied decreases and quality of service diminishes.In econospeak, the demand curve slopes downwards and the supply curve slopes upwards.
FFS as currently constituted does not pay enough for physicians to spend the time previously spent with patients when fees were higher. To compensate physicians have decided to spend less time and thereby see more patients per day .Even with this, generally physician incomes are lower now than in the pre price control era when inflation is taken into account.
In these discussions, one jumps quickly to a fix-how to have a system that will rectify the defects of the flawed fee for service way of doing business, assuming away any argument counter to the assertion that FFS is to blame for the cost curve that is bent the wrong way.
One fix was suggested in the above referenced NEJM article-just pay one flat fee based somehow on a risk adjusted basis and on the quality and value of what they deliver. (as if quality and value are inherent characteristics such a weight or specific gravity) Enter from stage left the "accountable care organization", (ACO) which will save us from the FFS induced mess we are in now.
The ACO is the latest incarnation of a entity or mechanism that will do the wine for water trick for health care-improve quality and save money. Here is a brief discussion of the ACO from Kaiser Health News which, for some strange reason, reminded me of Will Roger's comment about boiling the oceans.
One of by two favorite EP cardiologist bloggers hit it solidly here when he said "
"Perhaps I'm too cynical, but I think the subliminal message coming from Washington so far is really this: doctors should be happy becoming salaried employees of larger health systems. This way, the government can pay the health system a bundled fee and the doctors can fight for their share of the kitty."
Wednesday, October 21, 2009
"A 2007 report by the respected Seattle-based actuarial consulting firm Milliman surveyed the damage. It noted that "by 1996 GI and CR requirements effectively eliminated the commercial individual indemnity market in New York." While the reforms were supposed to help keep insurance affordable, "premiums for the two [remaining] standard plans increased rapidly," with one researcher noting "insurers increased premium rates 35%-40% in this period."
Today, New York's private individual insurance market is among the nation's most expensive and highly regulated. New York City residents buying private, unsubsidized individual insurance coverage pay at least $9,036 a year for individual coverage and $26,460 for family coverage. New York's average premiums in the individual market are more than twice the national average, according to a 2007 eHealth Insurance survey."OK, so it costs more , what about increasing the coverage?
"Today, 14% of New York's population lacks coverage, essentially the same as the national average of 15%"....."In 1994, about 4.5% (10.45 million) of the U.S. nonelderly population was covered by individual insurance. Today, that number has grown to 5.5% (14.35 million), a 20% increase."
The old saw about someone who continues to do the same thing and expect a different result is foolish may not apply to legislators. Maybe the Washington lawmakers know what will happen and believe the less than desirable results will move the U.S. closer to a single payer.
Tuesday, October 20, 2009
I have blogged before about some of the observational studies that link higher levels of physical activity and protection from dementia.In that regard one has to mention "reverse causation". Do the seniors who have early dementia withdraw from various activities such as regular exercise? The Archive article does reference one interventional article which suggest benefits of exercise in folks who already have some cognitive decline.
Social engagement also seems to correlate with lower risk of dementia. But is a low level of social engagement merely an early sign of dementia rather than a modifiable risk factor?
In discussing exercise and brain function one has to at least mention the putative roles of two substances,ILGF and BDNF.
There some animal data suggesting that insulin-like growth factor I (ILGF) may have some neuroprotective effect and that exercise can increase ILGF levels.Also there is human data published from Japan linking lowered levels of ISGF to dementia and more carotid artery thickening.
Brain Derived Neurotrophic Factor (BDNF) as the name suggest is recognized as a substance capable, under certain conditions,of stimulating nerve cell growth and repair and exercise has been shown to increase levels of BNDF. Other animal data indicated that in rats the increased learning noted in exercising rats could be blocked by a substance (an immunoadhesin molecule) that inhibited BDNF uptake by the hippocampus.
In the early days of the jogging-aerobic craze ( that never went away- at least so far), runners would knowing say that they felt so good from running because of release of endorphins. Now runners can feel even more self satisfied by thinking about all those wonderful neurotrophic factors surging in their veins and brains and get all tingly as they envision benefits in terms of synaptic plasticity.
Friday, October 16, 2009
The Baucus bill ( or the vapor bill as skeptics call it) did not abolish the SGR and part of its alleged savings was to be the annual taking it out on the hides of doctors via SGR. This bill will also abolish those putative savings.Hence the reference in the title to the accounting trick. So one could vote for Baucus's savings with a wink knowing the savings would be vapor with the passage of Stabenow.
Of course, I favor doing away with the SGR;it was a terrible idea which was bound to self destruct or at least destroy medical practice as we once knew it.However, the basic price controls on physician's Medicare payments remains in place and periodically congress will threaten further cuts and off to Washington will the representatives of AMA,ACP,ACCP etc to to plead for more money.
Price controls almost always lead to 1)increased demand for the good or service,2) decreased supply of the good or service 3) poorer quality and 4) black markets. Since CMS put into place the price controls on physician's Medicare fees the first three have come to past and only number 4 is yet to be realized.The Stabenow bill, if passed,will help a little bit, but the problem remains.
Wednesday, October 14, 2009
From the news report:
Mayo announced late last week that its flagship facility in Rochester, Minn., will no longer accept Medicaid patients from Nebraska and Montana. The clinic draws patients from across the Midwest and West, but it will now accept Medicaid recipients only from Minnesota and the four states that border it. As it is, 5 percent of Mayo's patients in Rochester are on Medicaid, well below the average for other big teaching hospitals, and below the 29 percent rate at the other hospital in town.
The Washington Post article continues:
Separately, the Mayo branch in Arizona -- the third leg of the Mayo stool, with the Rochester clinic and one in Florida -- put out word a few days ago that under a two-year pilot program, it would no longer accept Medicare for patients seeking primary care at its Glendale facility. That facility, with 3,000 regular Medicare patients, will continue to see them for advanced care -- Mayo's specialty -- but those seeking primary care will need to pay an annual $250 fee, plus fees of $175 to $400 per visit.
I would not having good standing to criticize their refusing some Medicaid patients,I did the same thing in my practice as did most of my partners. I am puzzled how they can charge more to Medicare Patients seeking primary care.I thought if you "accepted" Medicare patients you agreed to their payment schedule and could not bill for the balance.
Mayo has been held up as a model for high quality, efficient health care but what sort of model is it that is moving to see fewer Medicare patients? What will their stance regarding the public option patients be (should there even be a public option)?
Sunday, October 11, 2009
They had the choice of going with the state plan or paying a fine because the plan their had (a plan from IBM from which the husband had retried) did not meet the requirements of an acceptable or approved plan ,such approval coming from the wise oversight of the state regulators.
Here is part of the story as told by the wife and quoted in the WSJ:
For the first two years of the mandate, our IBM health insurance was seen as acceptable in the eyes of the state. This year the rules changed. The state requires that health plans cap out-of-pocket expenses for individuals (not including monthly premiums) at $2,000 a year. Our plan's cap is $2,500.
Ten years ago, we had excellent coverage through a more gold-plated plan. But we found that it was no longer worth paying the premiums and scaled back to a more modest policy. Today, we pay about $300 a month for catastrophic care. If we went with the next step up in plans offered to us by IBM, our monthly premium would increase to $800. We simply don't need to pay that kind of money for the amount of health care we actually consume.
Nonetheless, we now owe the state an extra $1,000. Ironically, that's about the extra amount we would pay out-of-pocket under our current plan if both of us actually fell ill in the same year.From the description of this couple's economic circumstances it seems clear than they are likely not earning over $250,000 a year.
Another campaign promise often repeated after the election was/is that there will be no increase in taxes for people earning less than $250.000/yr . I have commented before that in the Baucus bill there are provisions that in effect raise the marginal tax on folks quite a bit below the 250 k level. A Harvard economist takes up that issue here in his commentary entitled " Marginal Tax Rates from Health Reform".
The WSJ story family is not hammered by the type of implicit tax planned for those folks who attempt to move out of the lower level of earned income but the fine they pay is just as real.
The Institute of Medicine tell us that there are five criteria that should be used to judge the adequacy of a health care plan. Here is how the Massachusetts stacks up in that context as seen by a commentary in the Boston Globe by a Massachusetts physician.
Thursday, October 08, 2009
The highlighted case in that of New York state which mandated these two magic bullets in 1993. Over a several year period the number of insured, non-elderly people with private ( not group) insurance decreased from 4.7% to 0.2% while states without these two insurance regulatory provisions increased a bit from 4.5 % to 5.5%. This seems to have happened because insurance companies raised the premiums to counteract potential losses brought about by these two provisions in their underwriting patterns and as premiums rose , fewer folks bought policies.
This would appear to conform with the economics 101 notion that as prices of a good or service increases (other things being equal) the quantity demand decreases.
To battle this pesky downward sloping demand curve policy makers might respond with a third provision-simply force every one to buy insurance ( individual mandate) and if they can't afford it give them a government subsidy to pay for the premium. By doing that it is hoped that by adding many more healthy folks to the insurance pool (hopefully many of the healthy young who still consider themselves to be bulletproof) the insurance companies would make up any loss brought about by the first 2 provisions.
We can now look at this quasi experiment as it played out in Massachusetts after it enacted all three provisions namely 1)guaranteed issue,2)community rating and 3)individual mandate which are important elements in the proposed health care reforms bill pending in Congress. The WSJ puts it this way in regard to the question did the mandate fix the problem:
The experience of Massachusetts, which implemented an individual mandate in 2007, suggests otherwise. Health-insurance premiums in the Bay State have risen significantly faster than the national average, according to the Commonwealth Fund, a nonprofit health foundation. At an average of $13,788, the state's family plans are now the nation's most expensive. Meanwhile, insurance companies are planning additional double-digit hikes, "prompting many employers to reduce benefits and shift additional costs to workers" according to the Boston Globe.And health-care costs have continued to grow rapidly. According to a Rand Corporation study this year, the growth now exceeds state GDP by 8%. The Boston Globe recently reported that state health-insurance commissioners are now worried that medical spending could push both employers and patients into bankruptcy, and may even threaten the system's continued existence.
So higher premiums anyway and probably higher premiums in the future plus longer waits to see physicians and the concern that they program go broke.
Maine put into place a plan similar to some of the current proposed public options in 1993 under the interesting name "Dirigochoice" and as reported by the WSJ so far there has been little or no change in the percent of uninsured citizens (about 10%) and an increase in premiums.A recent report suggests the program is on life support and the tubes may be pulled.
When the canary in the coal mine,which was sent down to see the air was safe, keeled over, the proper response was not " well maybe it will be all right for the miners".That seems to be the thinking of many legislators, at least to the extent they actually believe their own rhetoric as they push to go national with something very similar to the Massachusetts Plan.
As Capretta explains as a family moves from the lowest category to the next ( slight higher) run of the economic income ladder they loose a major portion of the government subsidy which is offered to help pay for the the health insurance the government is forcing them to buy.Here is a quote from that article detailed what is in effect an "implicit marginal tax" of no small proportion:
"According to CBO, family coverage in 2016 is likely to cost about $14,400 under the so-called “silver option” in the health-care reform plan sponsored by Senate Finance Committee Chairman Max Baucus. In the Baucus plan, a family of four at the poverty line (about $24,000 in 2016) would have pay to about $1,400 toward coverage, with the federal government paying the other $13,000 on their behalf. In addition, the government would also provide $3,500 to reduce the family’s deductible and co-payment costs for health services. Thus, the new entitlement provided by the Baucus bill would be worth a whopping $16,500 for a family at the poverty line.
As incomes rise, however, the Baucus bill cuts the value of the entitlement. A family with an income at twice the poverty line, or $48,000 in 2016, would get $9,072 in federal assistance for coverage — still a substantial sum. But it’s $7,400 less than the family would get if they earned half as much. The Baucus plan thus imposes an implicit marginal tax rate of about 30 percent ($7,400/$24,000) on wages earned by families in this income range."
Tuesday, October 06, 2009
Fortunately, we have wise, well informed senators who are going to do something about it. They will allow and seemingly encourage companies to use economic punishments on those employees with bad health habits. Junkfood Science tells us about here.
The notion that preventive (which is increasingly spelled preventative) medicine will save money seems so intuitively obvious that it is widely accepted in spite of little evidence that it is true and much to suggest it is not.See here for Charles Krauthammer's commentary of how prevention really does not save money.
There are a number of excellent commentaries and critiques of the evidence that claim to link obesity to most of what is wrong with the nation's health. Megan McArdle has much to say about that and here she discusses some of the aspects with Paul Campos, author of The Obesity Myth.Sandy Szwarc,in her blog Junkfood Science has an excellent series about the "Obesity Paradox".See here for the first of that series.
It is predictable that corporate human resource departments and others will jump on the idea of penalizing employees who are not team players and stubbornly refuse to meet such health goal targets as cholesterol , weight loss, participation in exercise programs.Some companies are already ahead of that curve even to the point of testing employees to see if they really have quite smoking.
A number of years ago I was consulting with the medical department of a large corporation who was hosting a vendor giving their pitch for a wellness program that was supposed to save on medical costs for this company which was self insured. At some point someone asked but if we keep the employees healthy longer won't we have the cost of paying folks their pensions for a longer time.
Monday, October 05, 2009
The auditors will use Part B claims data to identify what they will decide are underpayments and overpayments (don't expect to find a lot of those). Medical records will be "requested" from physicians. They will be looking for noncovered/unnecessary services,incorrect coding,insufficient documentation and duplication of services.
The auditors will be compensated on a contingency basis-the more problems they find the more money they make.This bounty hunting program will be costly to physicians even if they are not audited and even if no problems are found.The time spent preparing for a possible audit will be costly in office staff time and physician time taken away from the actual practice of medicine.
This is happening now and we can look forward to a new program proposed in the Baucus bill for penalties for "outlier physicians" in which the top 10% of "resource user" physicians will be penalized without regard to the patient mix or any other potential explanatory factor. Every year there will be some 10% penalized.
Meanwhile,none of the proposed health care deconstruction-reconstruction bills will do away with the draconian SGR with its built in ratcheting down of physician payments. The specter of ever decreasing Medicare payments, more auditing hassles and the overarching and recurrent uncertainty of what Congress and/or CMS will do next as well as the decreasing satisfaction of the officist practice of internal medicine makes me wonder why anyone would op to do training as a general internist.