Wednesday, November 25, 2009

Comment 5 of: Government - Run Health Care (GRHC)

[from Stu - image added by Ira]
Ira wrote:
3) COST CONTAINMENT: Stu does not mention how health care protocols can help contain costs.

I believe the article dealt with that issue pretty well; here are some direct quotes pertaining to cost (in the order in which they appeared) :


Doctors in many areas are also eligible for bonuses of up to about $2,500 a year if their outcomes are good.

The fee-for-service payment system — combined with our own instincts as patients — encourages ever more testing and treatments. We’re not sure which ones make a difference, but we keep on getting them, and costs keep rising. Millions of people cannot afford insurance as a result. Millions more have had their incomes pinched by rising insurance premiums.

Even more important than how we choose our health care, though, is how we pay for it. One of Deming’s principles is that improving quality also tends to reduce costs. That is not always the case in health care; expensive treatments — implantable cardiac defibrillators, for instance — can bring enormous benefits. But Deming’s principle holds more often than you might think. When in doubt about the best procedure, doctors tend to do more — more tests, more procedures, more surgery. So if a hospital does a rigorous analysis of what actually works, it is likely to discover a fair amount of waste.

But in our current health care system, there is no virtuous cycle of innovation, success and expansion. When Intermountain standardized lung care for premature babies, it not only cut the number who went on a ventilator by more than 75 percent; it also reduced costs by hundreds of thousands of dollars a year. Perversely, Intermountain’s revenues were reduced by even more. Altogether, Intermountain lost $329,000. Thanks to the fee-for-service system, the hospital had been making money off substandard care. And by improving care — by reducing the number of babies on ventilators — it lost money. As James tartly said, “We got screwed pretty badly on that.” The story is not all that unusual at Intermountain, either. That is why a hospital cannot do as Toyota did and squeeze its rivals by offering better, less-expensive care.

These pilot programs have been largely overlooked in the public discussion of health reform, because they start small. At first, they would be voluntary. Places like Intermountain would presumably sign up for them, and high-cost hospitals would not. But the Obama administration is hoping to make the pilot programs national — and mandatory — if they are successful. In that case, the program would suddenly not be so small. It would begin to attack medicine’s most upside-down incentives.

Other such ideas also have a chance to be a part of health reform. One is the so-called Cadillac tax on the most expensive health-insurance plans. It would put pressure on insurers to hold down costs, which would increase their incentive to steer patients to hospitals like Intermountain. Another idea would aim to make the market for health care more like the market for new cars. Pushed by Senator Ron Wyden, the Oregon Democrat, the proposal would encourage employers to let their workers choose from a much wider range of insurance plans, which would allow people to shop around for those that provided good, cost-effective care.

For the past decade or so, a loose group of reformers has been trying to do precisely this. They have been trying to figure out how to improve health care while also holding down the growth in costs.

These pilot programs have been largely overlooked in the public discussion of health reform, because they start small. At first, they would be voluntary. Places like Intermountain would presumably sign up for them, and high-cost hospitals would not. But the Obama administration is hoping to make the pilot programs national — and mandatory — if they are successful. In that case, the program would suddenly not be so small. It would begin to attack medicine’s most upside-down incentives.


[NOTE FROM IRA: Stu explained why he initiated a new Topic:

I had to make this a new post rather than a comment to the original GHRC post because as a Commenter I got the following message from the stupid Google Editor: "Your HTML cannot be accepted: Must be at most 4,096 characters"

Note to Ira: if you can fix this please feel free to do so...

Sorry Stu, that is a setting by Google Blogspot that I cannot change. Even in my exalted position as Administrator, my Comments are restricted to 4096 characters. What I do is edit them down or post multiple Comments.]


Ira Glickstein said...

Yes, Stu, your linked article did mention cost issues.

1) Bonuses for good outcomes of $2500/year (mentioned in your linked article) are chicken feed to most doctors. I would favor a cost-effectiveness and outcome-based bonus/penalty scheme that was closer to 30% of a doctor's salary.

2) Yes to standardizing treatment protocols. As I noted in my comment to the other Topic thread, I believe the government, through NIH, has an "honest broker" role (using President Obama's words) in setting guidelines based on Comparative Effectiveness Research (CER) and pilot programs conducted by NIH-funded university and teaching hospital researchers. The recent mammogram guidelines are a good example of the role of govenment-authorized panels (and a bad example of how guidelines can get shouted down by interested parties and withdrawn by weak-kneed politicos).

3) I also agree workers should get a wider range of health care options as suggested by Sen. Wyden in your linked article. How about Sen. McCain's plan to allow cross-state medical insurance as we do with car insurance? Some states like Utah (where cost-sensitive Intermountain operates) have average per capita health care costs less than half of states like Massachusetts and New York.

4) The biggest problem (aside from tort reform - fear of malpractice suits drives much unnecessary tests) is the fact that "someone else" is paying and neither the beneficiary (the patient) or the provider (doctor/hospital) have any incentive to control costs. If a third party (the government or private insurance) was paying our restaurant bill, we'd tend to order the more expensive items on the menu. That is why medical expenses should be paid from health savings accunts owned by the beneficiaries or paid out-of-pocket if our health savings accounts are tapped out, to give all of us an incentive to shop around for the best deal. Only catastrophic coverage shuldbe mandatory (and subsidized for those who cannot afford it). A catastrophic event would be one that cost more than $50k in any given year.

Ira Glickstein

JohnS said...

Stu, I think it is better to break long postings and comments thereto into separate postings. They are easier to read and to follow the arguments.

The difficulty I have with statistically logical, CER, QALY government health care that extends beyond a minimal system is it removes my choice. All my life, as is true with most my age, I have been responsible for my decisions; I bear and accept the consequences. Of course, some have been good and some marginal to say the least. None has been seriously bad, fortunately. Regardless of Consumer Report and other organizations evaluating automobiles, I am going to choose the one I want. Sure, I may pay more for less still it’s my decision to have a Toyota Camry sedan while a Smart Car could serve me as well. My choice.

I want the same option for my health. I can accept the government advising me that a certain procedure is both effective and cheaper. I suppose I could accept signing a release, however, I want the final choice to be mine.
I may go against the government’s advice and against my doctor’s advice. It may cause additional suffering, cost and an earlier death. So be it. I believe that I can make, maybe not a perfect choice, but a rational choice and I want the privilege to do so.

Howard Pattee said...

I agree with Stu, John, and Ira (except his religion-geographical theory of medical costs).

Rising health care costs have many components. Number one is the fraction of people covered. (If you want universal coverage, you can’t control this.) Number two is the efficiency of administration and delivery, and this is partially controllable, and as a cost fraction it need not increase. Number three is the cost and use of the covered procedures themselves. Limiting the use of these procedures is where principled changes must be made, and this is where there is the most visceral opposition.

This is the source of the steady cost increases, and is not easily controllable because the cost of procedures is largely a technological and operational necessity. Instrumentation is becoming enormously sophisticated (and incredibly effective at prolonging life). The capital costs of modern hospitals, imaging techniques, robotic surgery, prostheses, genetic testing, and pharmaceuticals have increased at 7% to 9% per year. They also require specialization (more doctors and technicians). On top of that, their usage has increased at the same rate because doctors must use the latest procedures. This is a vicious circle that is increasing at a rate the cost of which is obviously not sustainable.

This is the main reason health care cost would continue to grow even in the unlikely event that all other problems are solved. The only solution to this problem is some form of triage, rationing, limiting, or refusal of treatment. Who is going to do this? Not the patient who wants the best care and doesn’t have to pay for it, and not the doctors or hospitals if they lose money by limiting treatment (as Intermountain found with their improved lung care).

The NY Times article on Intermountain Healthcare gives the only answer: “As long as doctors and hospitals are paid for each extra test and treatment [fee-for-service], they will err on the side of more care and not always better care. No doctor or no single hospital will change that. It requires action by the government.”

I emphasize that this does not mean a government-run health system, but only a government regulated health insurance system that should control (i.e., line-item-budget) only tax-derived insurance so health care does not bankrupt the country. Of course individuals must remain free to pay for any treatment that they can afford, as John recommends.

Who is going to agree on such a budget, and who will support it?!

Ira Glickstein said...

Thanks Howard for your comments. We agree on the general outlines if not every specific. I would say government guidance or standards rather than "regulation" which, at least to me, seem a bit more regressive.

As for my "religion-geographic theory of medical costs", I plan to post a new Topic next week with maps to show the coincidence of low-medical-cost counties with high-church-attendance and high-conservative/Republican-voting patterns.

Of course, we know that coincidence does not prove causation, but what else would explain the more than 2:1 higher average medical costs in your state than in Utah?

Ira Glickstein

Howard Pattee said...

Ira asked what else could cause the correlation of low health costs and religion? As the CBO report warned, “The variation is even greater among smaller geographic units and among individual medical providers (see Figure 2).”

In other words, costs in Boston, MA are much higher than costs in Williamstown, MA. I doubt that is because we (in Williamstown) are more religious than Bostonians. It’s because the most high-tech specialized hospitals are in Boston, and they are much more expensive. (Of course we go there when we need specialist.) Massachusetts also has high costs because, as Ira knows, the Boston area is a center of medical training, research, and high-tech medical engineering. We have more doctors per population than any other state, but we are still short of primary care physicians.

This shortage is a good example of why free-market (follow the money) medical care doesn’t work. It only makes problems worse. MA recognized this early on, and was the first state to try a near-universal care program in 2006. It has problems and is still too costly, but CER is becoming standard even in our small hospitals.

If you really want to study health care, the New England Journal of Medicine has been running editorials on health care from all perspectives. (For those of you who don’t know NEJM, it is the oldest continuously published medical journal in the world, and has the highest impact factor (number of citations) of any medical periodical in the world. It is published in Waltham, MA. Check its weekly TOC and editorials that are free.)