I apologize for misplacing Manitowoc last week. I said it was in Minnesota when of course it is in Wisconsin. I was using two different newspapers as sources, and the Pioneer Press clearly identifies itself as being in St. Paul, Minnesota while the Manitowoc paper did not specify a state. Sorry.
Angie Hunter has retired from the Council for Affordable Health Insurance and Brian McManus was recruited to replace her as director of federal affairs. As you know, Brian has been running the Coalition for Health Care Freedom since Medical Savings Insurance shut down after Pat Rooney’s death. Please congratulate both Brian and CAHI for finding each other. This is a terrific fit.
IN THIS ISSUE:
Here is one of the most thought-provoking articles I’ve come across in a long time. It’s by Elliott Fisher, M.D. and colleagues at Dartmouth and was published in the New England Journal of Medicine.
As you know, Dartmouth is the home of the Dartmouth Health Atlas developed by Dr. Jack Wennberg, who pioneered the research on “small area variations” in medical practice. The Health Atlas has been zeroing in on variations in the intensity of use between regions of the country under Medicare.
These discrepancies are well-known by now. People on Medicare in New York City consume twice as much care as those in Minneapolis, and this is independent of any differences in local prices or demographics. It also seems to be independent of any differences in outcomes.
It is fascinating work. The usual knee-jerk response from policy people is to blame Medicare’s fee-for-service payments for not rewarding efficient care and paying for whatever services are provided. In effect, paying more for more services.
But that has never been a satisfactory explanation. Sure, incentives drive behavior and people will do more of what they are rewarded for. But the payment system is the same in Miami as it is in Seattle. If that was the cause, the results should be the same everywhere.
This article agrees. It tracks the rate of increase in per-capita spending in five regions since 1992 and notes vast differences between Miami and Salem, Oregon. But, it says, “it is difficult to blame regional differences entirely on the current payment system, since all our evidence on regional growth comes from populations in the fee-for-service system.”
It also suggests that managed care is not likely to be the solution (as many have advocated) because about half of Medicare enrollees in Miami are in Medicare Advantage plans.
The article says physicians in some areas are simply more aggressive than in other areas and more likely to recommend “discretionary services, such as referral to a subspecialist for typical gastroesophageal reflux or stable angina or, in another vignette, hospital admission for an 85-year-old patient with an exacerbation of end-stage congestive heart failure.”
It goes on to suggest more use of “integrated delivery systems,” though it is not clear to me how that is different than managed care.
I would like to propose to the authors a different cause, and that is variations in patient demand caused by cultural differences. I was working at Blue Cross Blue Shield of Maine when Wennberg was starting out. He used our claims data for much of his early work, including an early study that found women in Lewiston, Maine were something like three or four times more likely to get a hysterectomy in their lifetimes than were women in Wiscasset, just 30 miles away.
Wennberg concluded that physicians in Lewiston were scalpel-happy and more inclined to jump into the OR than their brethren in Wiscasset. But that wasn’t it. Fact is, Lewiston was heavily French Canadian and Roman Catholic, while Wiscasset was almost entirely Protestant. Women in Lewiston were using hysterectomies as a form of birth control that was acceptable to the Church after having six or more children. It was a small price to pay to avoid Eternal Damnation.
Statistical analysis is fine, but understanding is something else. Understanding requires personal contact and a love of people. It requires patience and listening. In the case of differences between Miami and Minneapolis, it would be worth asking if there is something about Miami’s Jewish culture that results in a different use of health care than the largely Lutheran culture in Minneapolis.
It may be that it isn’t doctors who are causing the differences, but patients.
SOURCE: New England Journal of Medicine
Watson Wyatt has released its annual survey of employer benefit plans on behalf of the National Business Group on Health. The report finds, “a majority of companies will revamp their health care strategies, and many intend to implement CDHPs.” It goes on to say, “Just more than half (51 percent) of companies now offer workers a CDHP, up from 47 percent in 2008. Another 8 percent are expected to adopt a CDHP by 2010. CDHPs are helping employers control costs–companies with at least half of their workers enrolled in a CDHP have a two-year cost trend (4.6 percent) that is 25 percent lower than non-CDHP sponsors (6.1 percent).”
The study also finds, “The cost of coverage for CDHPs is considerably lower than for either PPO/POSs or HMOs for 2009. Employee-only coverage for CDHPs is $852 lower than for other plan types. For family coverage, CDHP rates are $2,146 below the median PPO/POS plan rates and $2,350 lower than the average HMO plan costs.”
SOURCE: Watson Wyatt
Aetna announced similar results for its “HealthFund” programs. It looked at six years of experience for 2.2 million Aetna members in traditional coverage and 400,000 in a HealthFund CDH plan. Its press release says, “The results show that Aetna HealthFund members are seeking increased levels of chronic and preventive care, using generic drugs more often and accessing online tools and information at higher rates than PPO members, while experiencing lower annualized medical cost increases. Importantly, this year’s results also show that Aetna HealthFund members had lower emergency room use than PPO members, suggesting that members are becoming better informed about where to access health care.”
It also found:
- For full replacement HRA and HSA plans, employers saved $21 million per 10,000 members over the five-year period.
- For employers who offer Aetna HealthFund plans as an option, they experienced savings of $7 million per 10,000 members over the five-year period.
- For employers who offer Aetna HealthFund plans as an option and implemented the strategies that Aetna identified as best-in-class, they achieved savings of $23 million per 10,000 members over the five-year period.
On all measures of consumer behavior HealthFund enrollees meet or exceed that of traditional enrollees, but also had 10 percent lower utilization of primary care physicians and 15 percent lower use of specialists, and seek preventive care and use consumer tools and information at a greater rate than PPO members.
SOURCE: Aetna press release
Kate Levinson writes in the Minneapolis Star Tribune that “HSAs (are) catching on.” She describes a woman with five kids and a chronic illness who “was apprehensive when her employer announced that it was starting the transition to a new kind of high-deductible health insurance.” But, “Four years later, [she] is sold on the way the new coverage lets her control health-care decisions–and hold down costs for herself, her coworkers and her employer.”
The article says her employer, LifeSource, went to great lengths to help employees save money and make smart choices, and it quotes the University of Minnesota’s Steve Parente as saying, “Education matters a lot. If you just introduce these plans without an education component, they’ll fail.” He adds, that, “with good education, high-deductible plans are doing their job, particularly for larger employers.”
The article concludes, “Overall satisfaction is high among the 79 employees on the plan, LifeSource says. For good reason: The organization pays 100 percent of employees’ premiums (which employees supplement for family members), 100 percent of care once they meet their deductibles and 50 percent of the deductibles themselves. It also fully covers preventive care services such as immunizations and cancer screenings, even before deductibles are met.”
SOURCE: Star Tribune
Too bad Kelley Butler, the editor-in-chief of Employee Benefit News, didn’t read Ms. Levinson’s article before writing her own editorial. She headlines the piece, “I regret enrolling in an HSA.” She explains she chose an HSA program in January because she could no longer afford the premium she would have to pay to keep her “beloved PPO.” Beloved PPO? That’s a new one.
She says she fully funded her deductible, but except for her family pediatrician, she now goes to the “the least expensive” doctors, instead of the best ones. She has put off seeing a doctor at all and delayed “minor but necessary surgery due to cost concerns.” She asked a specialist what he would charge for a procedure and he didn’t know the answer. My goodness, that’s an awful lot of health care in just two months.
She goes on to cite the EBRI/Commonwealth survey that found dissatisfaction with CDHPs, but doesn’t look any further. In any case, she says she would prefer to go back to her PPO. For some reason she doesn’t mind paying premiums she can’t afford, but doesn’t want to pay for services out of her fully funded HSA. It sounds like Employee Benefit News failed to do the education that was discussed in the Minnesota article. Maybe they assumed that an editor of an employee benefits magazine would be a bit more savvy about how to use employee benefits.
SOURCE: Employee Benefit News (you have to download a pdf of the entire magazine to access this article)
Oh, dear. It looks like the Obama plan is in trouble already. The New York Times reports that a massive coalition of establishment support has lost two of its labor union members, AFSCME and SEIU. They dropped out because the coalition would not support two provisions–a public alternative within the “health insurance exchange,” and a “pay or play” mandate on employers. The other coalition members included AHIP, the U.S. Chamber, PhARMA, the AMA, and the BCBS Association. I will give the unions credit–they will drop out of coalitions that do not conform to their agenda. Too bad the other groups aren’t as firm in their principles.
SOURCE: New York Times
And, writing for the Associated Press, Ricardo Alonso-Zaldivar reports, “the search for agreement on health care may be short lived.” He is looking at Republican opposition to a public plan within the Insurance Exchange and quotes Rep. Roy Blunt (R-MO) as saying, “This [a public alternative] could cause your employer to simply stop offering coverage, hoping the government will pick up the slack.” He is concerned that government price controls and hidden subsidies would allow the public plan to dramatically underprice private offerings.
Of course he is exactly right, and that is why labor and many Democrats support the idea. Rep. Jan Schakowsky (D-IL) is quoted as saying, “The purpose of health care reform is to make sure all Americans have health care, not to promote the insurance industry.” That view is supported by the president, who says, “The thinking on the public option has been that it gives consumers more choices and it helps keep the private sector honest, because there’s some competition out there.”
The article concludes, “A public plan for the middle class could give a final nudge that puts the system firmly in government hands.”
SOURCE: Associated Press
Meanwhile, the ink is barely dry on the stimulus package and problems are cropping up. The Associated Press writes about a new study by Avalere Health that the money allocated for information technology isn’t enough to do the job. It says, “particularly for doctors in small practices, the high cost of installing electronic records systems could outweigh the incentives and penalties for failing to comply.”
It goes on, “Using government cost estimates, Avalere researchers found that it would cost about $124,000 for a single doctor or small practice to upgrade to electronic health records over the five-year period from 2011-2015 when the stimulus bill offers incentives to do so. But the total incentive payments a doctor could get over that time period only add up to $44,000.”
This is compounded, says the article, because “It’s unclear how quickly the Obama administration will begin putting forward rules outlining how doctors and hospitals can qualify for the money. The director of the Office of National Coordinator for Health IT will be responsible for much of the rule-making but that person has not been appointed.”
SOURCE: SF Gate
Similarly with the much-vaunted pay for performance ideas. Reuters reports experience is not living up to the promises. It says, “Researchers at the RAND Corporation, a nonprofit research group, studied a pay-for-performance program started in 2003 involving seven major California health plans and 225 physician groups who care for a total of 6.2 million people.”
RAND researcher Cheryl Damberg is quoted as saying, “Physician groups are responding to pay-for-performance programs by making practice changes and altering how they compensate physicians to reward quality, but health plans and purchasers say that those investments are not yet translating into substantial gains in quality.”
A related study interviewed physicians who have experience with P4P in the UK and California–“In Britain, physicians said the emphasis on computer systems and data collection crowded out communication with patients. In the United States, physicians said they resented the structure of the audit and payment systems, which sometimes distorted the process of care.”
SOURCE: Reuters
Part of the reason John McCain lost the election is because he was completely unable to explain or defend his own health care proposal. It was obviously delivered to him by an advisor and he accepted it because he had no other ideas. But it is doubtful he asked any questions about it … or even read what it was.
That woeful disinterest in health care is not confined to Mr. McCain. Most (not all) Republicans are equally ignorant and complacent in their ignorance.
Now Mr. McCain is compounding his ignorance by pushing for a prescription drug importation bill. An article by Bloomberg News says, “McCain, an Arizona Republican, will propose the bill with Democratic Senator Byron Dorgan, of North Dakota, and Republican Senator Olympia Snowe, of Maine, according to an e-mailed statement.” It explains, “Brand-name drugs in other countries cost as much as 70 percent less than in the U.S. Allowing imports would save Americans $50 billion over the next decade, including $10 billion for the U.S. government, the lawmakers said.” And, “if it becomes law, the legislation “will bring consumers immediate relief and will ultimately force the pharmaceutical industry to lower drug prices in the U.S.,” according to the senators’ statement.
Golly, sounds like sunshine to me. Immediate relief and lower costs, who could oppose that?
Well, leave it to those mean old greedy pharmaceutical companies to rain on the parade. Ken Johnson, a senior vice president at PhRMA, said, “The worldwide counterfeit threat is knocking at America’s door and will soon be greeted if prescription drug importation moves forward.” He adds, “Interest in prescription drug importation is waning in part due to the millions of seniors accessing medicines and saving money through the Medicare prescription drug program and consumer weariness in the aftermath of recalled tainted foreign products.”
What a party pooper. Here we have an easy, painless way to lower costs and all he can do is warn about the downside. He sounds like those irritating people who wanted to better regulate Fannie Mae when everyone was getting dirt-cheap mortgages on really expensive homes. But like before, we will probably ignore the warnings because we want our drugs and we want them cheap!
SOURCE: Bloomberg
Greg Scandlen is a policy advisor of The Heartland Institute and founder of Consumers for Health Care Choices, a non-partisan, non-profit membership organization aimed at empowering consumers in the health care system.
