Monday, April 16, 2007

Keeping Score of Health Care Realities

What is the reality? What is the score of the game?

John Naisbitt, Mind Set! Collins, 2006

In Mind Set!, John Naisbitt has a chapter “Focus on the Score of the Game.” He says he trusts sports results because, despite the rhetoric, you always know the final score of the game. He points to the European Union. In 2000, the Union proclaimed it would overtake the United States as an economic power.

But Naisbitt asks:

What is the reality? What is the score of the game? In every single year since the announcement in 2000, Europe has lost economic ground against the United States. If you want to know the European Union and its member countries are doing and where they are heading, you have to constantly check the score of the game. Is employment rising or falling? How much growth is being achieved? Are economic reforms being carried out? Few jobs can be created by government. It is entrepreneurs who create new jobs. How nourishing is the environment for starting a new company? Is the productivity increasing or not?”

Keeping Score Using Health Care Data

Using Naisbitt’s logic, we ought to be able to use “the score,” i.e. data, to track and even reform health care in the United States. Indeed, there is a reform school (pun not intended), that says you can effectively use data to control costs.

This school says, among other things, that only if the U.S. government, with the help of employers, would use data to:

• measure health and eligibility status of those entering public programs;
• give each provider a unique identifier to track their activities using data;
• organize a national management infrastructure for keep score of health care economic activities;
• standardize and make transparent pricing data;
• set up a national data repository;
• promulgate national clinical data guidelines and use data to see who complies;
• establish a federal rotating loan fund to encourage doctors to install EMRs;
• reward doctors and hospitals on the basis of data outcomes;
• pay only those submit claims electronically so data could more easily tracked;
• establish a national office of technology assessment to determine what judge
procedures or drugs based on data before procedures or technologies are released for public use;
• give consumers all the data they need to know to judge cost and quality.

all would be well, unnecessary care would end, care would be rational, and costs would come down.

Logical, Realities Keep Getting in the Way

This data reform school approach is logically compelling, and compellingly logical. But let’s look at the score so far:

• The Oregon plan to pay for care based on data-based health priorities failed;
• managerial infrastructures for tracking data still vary enormously;
• EMR use among most doctors hovers around 10%;
• John Wennberg’s studies more than 2 decades ago that care and outcomes vary by region has not changed practice patterns one iota;
• standardized pricing and transparency are still buzzwords;
• pay for performance may die in its infancy;
• the number of regional organizations sharing data remain small and rudimentary;
• a national technology assessment proposed 30 years ago to control CT and MRIs never developed legs and imaging use exploded;
• consumers tend to look only at the data that pleases them and to disregard what displeases them.

Besides, America culture looks suspiciously at “national” or even “managed care” efforts to keep score, maintain discipline, and restrain individualism.

Novelli’s Column

All of this came to mind as I was reading a column “Overhauling Health Care,” by Bill Novelli, CEO of AARP, in the April 2007 AARP Bulletin.

Here’s the table on who pays national health expenses.

1993 2006 % Change

Total Private Funds $512.5 1,129.6 %120.4
Out of pocket $145.2 $250.6 %65.7
Private insurance $295.5 $727.4 %146.2
Other private funds $71.8 $151,5 %111.0
Total Public Funds $400.1 $992.9 %148.2
Medicare $150.0 $417.6 %178.4
Medicaid (federal share) $76.8 $178.1 %131.9
Medicaid (state share) $45.6 $135.4 %196.9
Other $75.2 $132.1 %75.7
State & Local $120.9 $267.6 %121.3
Total Cost (in billions) $912.6 $2122,5 %132.6

The table shows:

• Health costs have more than doubled (2.3 times) in the last 13 years.
• Public share of paying for health costs has risen from 37% to 47%.
• At a 65.7% increase, out of pocket costs have climbed the least among all forms of health payment.
• Medicare costs have gone up most (2.8 times, 178.4%).
• Combined federal and state costs of Medicaid (now $313.5 billion) rank only second to Medicare in terms of percent of cost gain (2.6 times, 156%).
• The greatest percent gain in cost escalation (196.9%, 2.9 times 1993 costs) comes from state Medicaid spending.

Beyond data and inability to contain or sustain this health inflation rate, either on the public or private side, one can argue the meaning of the numbers.

Novelli‘s Take

Novelli’s take, supported by polls, is that the public wants affordable access to health care above all else. He says the greatest promise in delivering this resides in the current California universal initiative,

“because it could serve as a model for national health reform. It broadly tackles the problem (in a state where approximately 20 percent of the population is uninsured) by requiring all individuals to secure coverage for themselves and their families. It creates market improvements, sets wellness and quality goals and cost limits, expands coverage for lower income adults and kids and shows how to finance it all.”

Novelli’s view reflects classic Inside-the-Beltway thinking, namely, that government, state or local, will be the final solution for health care. This attitude makes sense. AARP, after all, is an inside-the-Beltway Powerhouse. The AARP constituency of over 40 million members represents an unmatched power voting bloc.

Furthermore, AARP is switching political horses. In 2003 AARP supported the Republican-backed Medicare bill prohibiting Medicare with bargaining with drug companies to lower drug rates. Now AARP backs the Democratic position that Medicare ought to be able to negotiate drug prices.

My Take

I have a different take. I believe political realities of a near equal sharing of public (47%) and private economic interests (53%), make universal health care unlikely in the near term, especially if a government-run system is superimposed on the current system. The costs of universal case may be prohibitive, especially in light of the government’s poor performance in containing costs. In the April 10 Hartford Courant, an article reports universal care in Connecticut would cost $18 billion, more than Connecticut’s entire state budget of $17.5 billion.

Connecticut is probably overstating the cost. Massachusetts reports it is on the verge of implementing universal health insurance for all but 65,000 of its 328,000 uninsured residents (Pelluck, Pam, Massachusetts Offers Details on Health Care, New York Times, April 12, 2007.) State officials estimate a mere cost at $213 million to taxpayers, a pittance compared to Connecticut estimates, and much less than the $12 billion estimate for universal coverage in California.

That Devilish Data Again

As always, the devil is in the data. Here are the estimated details in Massachusetts uninsured residents will be asked to pay.

Proposed Massachusetts Health Insurance Premiums

Singles, Income Monthly Premiums Yearly Cost

$0 - $15,315 $ 0 $0
$15,316- $20,420 $35 $420
$20,421-$25,525 $70 $840
$25,526-$30,630 $105 $1260
$30,631-$35,000 $150 $1800
$35,501-$40,000 $200 $2400
$40,001 -$50,000 $300 $3600

Couples, Income Monthly Premiums Yearly Cost

$0- $20,535 $0 $0
$20,436 -$27,380 $70 $840
$27,381 - $34,225 $140 $1680
$34.226-$41,070 $210 $2520
$41,071-$50,000 $270 $3240
$50,001-$60,000 $360 $4120
$60,001-$80,000 $500 $6000

Families,Children Monthly Children Yearly Cost

$0 -$25,755 $0 $0
$25,756 -$34,340 $70 $840
$34,341 -$49,925 $140 $1680
$49,926-$51,510 $210 $2520
$51,511-$70,000 $320 $3840
$70,001-$90,000 $500 $6000
$90,001-$110,000 $720 $8620

These premiums appearmodest, unless, of course, you are among the uninsured who are not currently paying premiums because you’re living week to week, month to month check-to-check, and state-imposed mandates for premiums are unaffordable. The Massachusetts government would, of course, subsidize those who could not afford to pay, in the process creating another welfare class.

In the last 13 years, government has shown scant ability to make health care more affordable to all Americans. It is always possible government could do more by expanding Medicare and Medicaid to cover all, but that would be unsustainable for long, if past performance is any guide, and rationing, strict guidelines, and waiting lines might follow.

Current State of Health Care

In the April 12 Wall Street Journal, David Wessel, a columnist operating Inside-the-Beltway, says the debate over health care debate is:

Employer-based health insurance is slowly dying
– He quotes Joseph Antos, health economist at the conservative American Enterprise Institute, who says employers are grown weary of paying the lion’s share of health care coverage. Now, Antos says, they want out.

We don’t know as much about medical science as we need to know -- After several recent large scale clinical trials, it’s become apparent that we’v e been paying more for certain things – stents for coronary artery disease , hormones for alleviating menopausal symptoms, erythopoetin for treating anemia in cancer and kidney failure, Vioxx and Cerebrex for pain – than we need to based on evidence. Few agree on what works and doesn’t work, and practices still vary greatly from one region to another.

Americans want a lot of health care, are willing to pay for it, and don’t like their choices limited. Because of this feature of American culture, it is likely that the enthusiasm and excitement of Democrats over prospects of the final arrival of universal coverage on a national scale will be dashed again on the rocks of reality and politics.


Gail said...

You wrote "The Massachusetts government would, of course, subsidize those who could not afford to pay, in the process creating another welfare class."

Another welfare class? So much better that they have no insurance than that we should look to the welfare of our fellow Americans!

Welfare what a dirty word, like liberal no doubt.

Richard L. Reece, MD said...

Welfare and liberal are both dirty words, just like conservative and evangelical. We live in a world of code words and partisan stereotyping