Consumer Power Report #172

Published April 3, 2009

I was very pleased this week to be able to spend some time with two formidable people in health care, Uwe Reinhardt and Rick Scott.

I’ve known Uwe for a long time on the conference circuit and exchanging e-mails, but I’ve never before spent “quality time” with him. He invited me to come up to Princeton and give a talk to his graduate seminar in health economics. It was fun and good to see Uwe in his native habitat. The class was good and bright and they seemed to “get it” on consumer empowerment. Uwe, too, had some excellent ideas on making CD health work even better, such as having income-based deductibles so all of us will have reason to be careful shoppers.

I met Rick Scott over dinner in Washington at the invitation of Merrill Matthews and Brian McManus. Rick is in town making the rounds of the various free-market groups to bring them up-to-date on his “Conservatives for Patient Rights” campaign. He is very personable and easy-going, though passionate on wellness. His current business is a chain of urgent care centers that go well beyond the retail clinics that are popping up all over the country. His motivations are simple: He believes in the ability of free markets and free patients to solve problems. He does not see anything positive coming out of the current hurly-burly in Washington.

I probably spend too much time in my home office. It is good to get out and be reminded of the excellent and dedicated people who are working diligently every day in the field.



Inside Consumer Directed Care (ICDC) reports that enrollment in Aetna’s two consumer-driven plans for federal workers increased by 50 percent from 2008 to 2009. About three-quarters of these are in its HRA option with the remainder in the HSA option. The HRA has slightly higher premiums and enrollees are more likely to use all of their account balances during the course of a year. Only about half of HRA enrollees have a roll-over at the end of the year, while 96 percent of HSA enrollees do, averaging $1,398 for singles and $1,854 for families. The Postal Workers Union’s HRA plan also is growing, but not as fast. There has been a 15 percent gain in enrollment since last year.

The same publication reports that credit unions are warming up to HSAs, with account balances doubling in the past year to $139 million. There has been a surge of credit unions offering HSA programs since January of this year, according to the article.

SOURCE: Inside Consumer Directed Care, April 3, 2009 (not available on-line)

An article by Susan Tuz in the News Times of Danbury, Connecticut asks, “HSA plans: How effective are they?” Unfortunately, she seems to be poorly informed about them. She starts by saying, “Established by federal regulations in 2004, the plans have been slow to be picked up,” which is not true by any measure I can think of. And then she adds, “Like all managed care plans, HSAs require using health care providers on the plan’s baseline network.” Also not true. She goes on, “One of the problems seen with these plans is that people often want to keep the money in their HSA accounts and are very cautious about spending it.” That is not a “problem,” that is the very purpose of the plan.

Still, after all that she gets around to finding someone in the state who thinks they aren’t so horrible. “Jackie Mitler, actuarial [sic] and partner in Health Insurance Solutions of Stamford, thinks the plans are a good deal for employer and employee.”

SOURCE: News Times

In the Star Tribune Chen May Yee points out that consumer-driven care is growing so much that hospitals are having to change their billing practices. She starts by citing Sonya Seidl, who resented that her hospital contacted her early about how she was going to pay for the birth of her child. The article says her reaction was, “Is this the state of the economy we’re in–that they’ll shake you down even before you have your baby?”

Shake down? Later, the article comes back to her case. Seidl is an attorney for a big Minneapolis law firm and the article says, “her annoyance dissipated after friends pointed out the hospital is simply doing what’s standard in other industries. It’s not uncommon, for example, for lawyers to ask for a retainer.”

Unlike the article in Connecticut (above), this one says CD health has experienced “rapid growth.” I guess one reporter’s “slow” is another reporter’s “rapid.” But this story puts a number behind the assertion, saying that 10 percent of Minnesotans had an HSA at the end of 2007, and citing Mercer’s recent finding that the average PPO deductible is now $1,000.

Most of the article is about how hospitals are changing their procedures to cope with a new era of cash-paying patients. It says, “hospitals are reaching out sooner, hoping they’ll collect more if they collect early, but moving cautiously.” They are even providing discounts to people who pay their bills within 30 days.

All of this is a refreshing, if revolutionary, change. Hospitals are being forced to act like businesses. They are seeing their patients as customers and looking to find the balance between making these customers happy and making sure they get paid. This is precisely what we had in mind when we got HSAs enacted.

SOURCE: Star Tribune


Writing in The New York Times, Kevin Sack suggests Massachusetts may not be such a great model, after all. He says of the twin but contradictory goals of reducing cost and expanding access, President Barack Obama is tilting towards cost reduction. But in Massachusetts, “leaders decided from the outset to decouple access and cost, and to deal first with covering the uninsured.”

But, “rising costs now threaten the viability of the Massachusetts plan.” The state has raised about all the taxes it can, so it is left with the far more contentious issue of changing the way the state pays for services, “the gamble is that stakeholders are now so invested they cannot back away.”

In Washington addressing costs cannot wait, but “by addressing costs and access simultaneously, the White House and Congress risk alienating key interest groups from the get-go.” He quotes the executive vice president of BCBS of Massachusetts as saying, “When you start talking about cost, you create winners and losers and that leads to a political challenge.”

Sack writes, “Universal coverage should itself bring down costs over the long run by preventing chronic disease and reducing the amount of non-urgent care provided in emergency rooms.” But is there any reason to think that is true? We know it is the insured, not the uninsured, who go to the emergency room for non-urgent care, and there is absolutely no evidence that having insurance prevents chronic disease.

Sack says Jon Kingsdale, director of the Connector, recommends “that Congress pass legislation to expand access while delegating cost-control decisions to a commission.” Ah, yes. The old “create a commission” trick. Works every time.

Sack concludes, “If history is a guide, the success of health reform may depend on whether the White House and Congress can give interest groups enough to keep them on board. By tackling cost at the same time as access, they have made their political challenge more difficult.”

SOURCE: New York Times

The Boston Globe reports, “The state’s bill for providing healthcare to employees and their families who work for large companies increased 24.6 percent to $793.7 million in the last fiscal year.” The law requires large employers to pay 33 percent of the costs of 25 percent of their employees or pay a fine of $295 per employee. Those who meet that threshold don’t pay anything for the 75 percent of workers not covered. These workers are able to get subsidized care from the state.

The three employers who contribute the most workers to state-subsidized coverage are 1. Wal-Mart (4,796 workers), Stop & Shop (4,731 workers), and–ta-dahh!–the Commonwealth of Massachusetts (3,785 workers).

SOURCE: Boston Globe (through AHIP)

The Kaiser Commission looks at the effect of the Massachusetts reforms on community health centers. The study finds that, while the reforms increased the number of people with coverage, it also has increased the demand on the primary care system in the state, and finds, “the experience in Massachusetts indicates that insurance does not guarantee access to care; a shortage of physicians has made it difficult for many to access primary care.” This has increased the caseload of community health centers while actually increasing the proportion of the uninsured served by these facilities, from 22 percent to 36 percent.

The report provides several lessons for reformers. Most importantly that, “Insurance does not guarantee access, so insurance expansions need to be accompanied by investments in the health delivery infrastructure, particularly primary care capacity.” It also finds:

  • Insurance expansions can lead to a surge in the demand for primary health care, especially in medically underserved low-income communities.
  • In addition to expanding insurance coverage, investments to expand the capacity of the primary care system that will care for the newly insured, as well as for those who remain uninsured, will be important.
  • Even post-reform, there will be a continuing need for sources of care for the uninsured.

SOURCE: Kaiser Family Foundation


A recent article by Mary Ann Roser in the Austin American Statesman is causing consternation. The article is headlined, “Austin ER’s got 2,678 visits from 9 people over 6 years.” The article says, “All nine speak English; three are homeless; five are women whose average age is 40, and four are men whose average age is 50. Seven have a mental health diagnosis and eight have a drug abuse diagnosis.” The cost of these visits is estimated at $3 million. The article doesn’t say whether they have insurance coverage, but it does mention that Medicare and Medicaid helped pay the bill.

Actually, we know that the people “clogging” emergency departments are not the uninsured, but people on Medicare and Medicaid. Research shows the uninsured visit ERs at a rate lower than their presence in the population. One of the fallacies of the current obsession with “universal health insurance” is that there is a significant portion of the population who will never be able to cope with any kind of “insurance.” They may be illiterate, mentally ill, drug addicted, criminal underground, or otherwise dysfunctional. They cannot read or understand an insurance policy, cannot file a claim, cannot distinguish between par- and non-par providers. Many of these people are on Medicaid today and still just show up at the ER when they feel poorly. They don’t understand there are alternatives. These folks need health “care,” not health “insurance.”

Dr. Deborah Peel, president of Patient Privacy Rights, offered this perspective:

“What happens next to these 9 people who are not wanted at Central Texas hospitals? Will the public come to know who they are? Will this story lead to them getting the complex, long-term expert care they really need?

“Their privacy has been violated, even without the reporting of their names (so far), but will singling them out as costing the community $3 million/year cause the local health system to change and seek solutions to treat them effectively or will the public get outraged at them? As a cynic/realist, I fear the care these 9 get will worsen as a result of this story and the violation of their privacy will have not served their good or the public good. Violating someone’s privacy to uphold an important long-held key principle of medical ethics, such as saving a life, is clearly justified, but will a greater good or ethical principle be served by this report?

“As the former Chief of Psychiatry at Brackenridge Hospital in Austin for 11 years, I am well aware that Central Texas has extremely poor mental health and addiction services for people on Medicare and Medicaid (few private practitioners will treat people on Medicare or Medicaid because the pay is so low and the state MH system is massively inadequate).

“Hospitals do identify ‘frequent flyers,’ try to hustle them out, try to avoid treating them, or try to dump them ….and often end up blaming the patients for their problems. When a few patients have such high numbers of visits, they inevitably become very well-known to the staff. The problem is homeless people and people with mental illnesses or addictions also have a very high rate of serious medical illnesses too, which studies show are typically poorly treated or not diagnosed. Some ER staff come to feel so negatively about them that the quality of care is affected and they suffer and die from undertreated medical problems.

“20 percent of patients account for 80 percent of the costs in the healthcare system. But people with complex, hard to treat mental illnesses or addictions are not usually viewed as needing or deserving expert care. Patients with all other complex medical illnesses typically have access to highly trained specialists because reimbursement by Medicare, Medicaid, and private insurance comes much closer to the what treatment actually costs to provide. The new federal Parity law appears not to have helped much in Central Texas, nor can the strong negative attitudes toward mental illness, addiction and severe personality disorders be easily erased.”

SOURCE: Austin American-Statesman


Now that $20 billion has been appropriated to pay for health IT, there is a flurry of articles on the topic. One might think the time for all this information was before deciding to spend all that money, not afterwards. But so it goes in the New Utopia. Spend the money first, and then figure out what we’re doing.

An editorial in The New York Times informs us that we’re not talking about a mere $20 billion (chicken feed by today’s standards). That is only the two-year appropriation. It is actually $50 billion over five years. The article cites a recent study in the New England Journal of Medicine that found only 1.5 percent of American hospitals “had a comprehensive electronic-records system in all major clinical units that performed all 24 functions deemed important by a panel of experts. Such systems incorporated physicians’ and nurses’ notes, the ability to order laboratory and radiological tests, clinical guidelines on how to treat various conditions and alerts to avoid dangerous drug interactions, among other capabilities.”

Well, now. If “a panel of experts” decided they should have this stuff, they damn well better have it. Remember the reassurances that the money going in to “comparative effectiveness research” would not be used to tell doctors what to do? Yet the mandated health IT systems will include “clinical guidelines on how to treat various conditions.” I wonder if the computers will allow doctors to do anything other than what they are told by the machine.

SOURCE: New York Times

An article in the Santa Maria Times looks at the same study with a bit more skepticism. It covers the same ground as the Times article but then adds, “Whether electronic health records will lead to dramatic cuts in health care spending is debatable. The Institute of Medicine has said a serious drug error can add more than $8,750 to the hospital bill of a single patient. But a third of hospitals surveyed said they were unsure whether they would recoup their investment. And the Congressional Budget Office last year said the adoption of more health technology alone is ‘generally not sufficient to produce significant cost savings.'”

SOURCE: Boston Globe (through AHIP)

The Veterans Administration is often held up as the gold standard of swell health IT, but the technology publication NextGov carried a report by Bob Brewin that starts, “An eight-year-old, $167 million project to develop a core computer application to schedule patient appointments at hospitals run by the Veterans Affairs Department has all but collapsed, and senior executives are worried about the repercussions it could cause on the Hill and in the White House, according to an internal memo obtained by Nextgov.”

The article quotes Dr. Michael Kussman, undersecretary for health at the Veterans Health Administration, as writing that the effort “still has not developed a single scheduling capability it can provide to the field, nor is there any expectation of delivery in the near future.”

The article adds, “The botched effort comes on the heels of another scheduling program–a five-year, $75 million failed project started in 2001. That program, the Scheduling Replacement Project, was started by IT staffs in the VA healthcare regions serving Louisiana, Oklahoma, Mississippi and Texas, but after five years of work they failed to develop a usable product.”

Gerald Manar, spokesman for the Veterans of Foreign Wars, says, “VA has a decade-long history of initiating IT programs, only to experience extensive delays and major cost overruns. The fact that VA has frittered away eight years and millions of dollars in developing the RSA, with no viable results and no end in sight, is extremely disappointing but, based on its track record, not surprising.”


The Department of Defense is no better when it comes to active-duty servicemen, according to the same publication. An article headlined, “Officials criticize Defense’s ‘unreliable’ health record system,” starts out, “The Defense Department’s top health officials lambasted the department’s central electronic health record system that manages patient files for millions of active duty and retired service members, saying it frustrates doctors because it crashes as often as once a week and generates duplicate records.”

The article explains that the system called AHLTA “stores the health records of 9.2 million personnel in a central data repository, which runs on an Oracle database and stores 25 terabytes of data.” But, “the Army Medical Department has faced ‘near mutiny’ from clinicians who are dissatisfied with AHLTA, particularly its interface and templates used for note-taking.”

According to Maj. Gen. Charles Bruce Green, deputy surgeon general for the Air Force, “AHLTA also is slow, unreliable and so cumbersome that clinicians spend 40 percent of their time inputting data into the system, which is time spent away from patients.”