Better Health: Smart Health Commentary

Featured

Robot-Assisted Surgery Has Poorer Outcomes And Is More Expensive – But Because It’s Cool, We’ll Use It Anyway?

July 27th, 2009 by DrWes in Better Health Network, Health Policy, News
1 Comment »

Yesterday in our cath conference, we discussed the substudy from the prospective randomized trial called PREVENT-IV just published in the New England Journal of Medicine. That study evaluated the major adverse cardiac event rates of minimally invasive vein harvesting compared to open vein harvesting prior to coronary bypass surgery.

I was surprised to see that minimally-invasive vein harvesting had a higher combined complication rate of death, myocardial infarction (heart attack) and need for revascularization in the patients who received vein grafts harvested by the minimally-invasive technique. Following the presentation of the data, our surgeons were asked why this might be the case. While none knew for sure, they postulated that the art of harvesting vein-conduits using endovascular techniques might play a role (it’s more difficult), or the effects of the thrombolytic state induced by on-pump bypass vs. off-pump bypass might create the discrepency in post-surgery vein survival, since patients are less likely to develop clinical thromboses in the post-open chest bypass population.

So this morning, I was surprised that President Obama toured Cleveland Clinic yesterday and had such an up-front experience with minimally-invasive robotic surgical techniques for mitral valve repair that hardly represents mainstream American health care. While the marvels of the technology cannot be disputed, like the endovascular vein harvesting study above, might we find that robotics could be as deleterious to patients compared to open chest techniques? After all, these techniques have yet to be compared in multi-center trials to more conventional open techniques for mitral valve repair. But more concerning as we move forward is this question: will academic centers be granted more funds to test comparative effectiveness research for robotics at the expense of front-line American health care? Surely, this won’t be, will it?

Probably.

But when I see pieces like this I wonder why the article does not question the cost and risks of this technique compared to conventional open-chest procedures, especially in this era of touting the need for health care cost containment. How much is this piece about the marketing of this technique to the community (for financial gain) or to the President (for obtaining grants or political favors)?

Perhaps we should ask ourselves how many of the physicians and surgeons at Cleveland Clinic stand to earn a seat on the proposed MEDPAC board that will determine if Congress will approve payment for robotic techniques even when few data exist to show their superiority over conventional techniques.

Now that might make for some really interesting reading.

*This blog post was originally published at Dr. Wes*

The Real Cost Drivers Of Health Insurance Premiums

July 27th, 2009 by EvanFalchukJD in Better Health Network, Health Policy
No Comments »

Gary Schwitzer links to a Business Week article that says health insurance is a very uncompetitive market.  Schwitzer notes this hasn’t gotten much attention, and wonders if it is a reason why health insurance premiums keep going up.

It is – and it isn’t.  As with most things in health care, there’s more to it than it seems.

Business Week and Schwitzer are right that the market for health insurance is not especially competitive.  Most states have one or two dominant health insurers, and a number of other much smaller players.  The smaller insurers are often at a big disadvantage.  I blogged about this a couple of months ago.

But the question of the cost of health insurance is something that mostly affects small employers – the companies that employ some 55 million Americans.

As companies get bigger, they minimize their exposure to the insurance market.  Mid-sized employers (between about 500 and 2,500 employees) buy so-called “stop loss” coverage.  Under these plans, they self-insure for some of the risk, and buy coverage for unexpectedly high expenses.  It’s sort of like a high deductible plan, except it’s for the company.  That market is, in fact, highly competitive, and serves many of the 14 million Americans who work for companies of this size.

Really big companies – which employ 43 million Americans – don’t buy health insurance at all.  They hire a health plan to administer their expenses, but have completely opted out of the health insurance market.

So is the uncompetitive health insurance market driving health care premium increases?

It doesn’t help, but there here are three other things that we don’t talk enough about that are driving these increases:

1.  State coverage mandates. Each state requires that insurers who wish to sell there comply with a huge variety of coverage mandates.  In fact, there are nearly 2,000 mandates, some of which add significant costs to health insurance.  Adding new mandates is a regular activity of state governments, based on the political clout of patient groups, pharmaceutical companies and others.  State governments have had an important role to play in driving premium increases.

2.  Guarantee issue requirements. The other thing some states have done is outlaw medical underwriting.  This means that if an uninsured person gets diagnosed with an illness, he can just go out and buy an insurance policy and, for the cost of an annual premium, get all the care he needs.  He can even cancel the policy after he’s done being treated, and buy one again if he gets sick again.  There may be valid public policy reasons to make health insurance guarantee-issue.  But the reality is that insurers have to add in additional premium to account for the fact that their risk pool includes in it much more costly individuals than otherwise would.  There is no free lunch.

3.  Other cost-shifting.  Studies show that tens of billions of dollars a year of uncompensated health care to the uninsured is provided by medical providers.  They try to offset these costs by negotiating higher payment rates from private insurers.  The same is true for government-funded programs.  As these programs have attempted to control costs by simply paying less, providers have tried to recoup those reductions through higher fees to health plans.  In each case, the ultimate cost is passed on to the consumer.  Some groups think this kind of cost-shifting adds 5-10% to annual premium rates.

There are, of course, lots of other reasons for the rapidly increasing health insurance rates.  These are few of the less discussed that we ought to talk about more.

*This blog post was originally published at See First Blog*

There’s Not Enough Waste And Inefficiency In Healthcare

July 20th, 2009 by DrRich in Better Health Network, Health Policy, Opinion
No Comments »

In what is quickly becoming a bad habit, DrRich once again provides a misleading title. Obviously, there’s plenty of waste and inefficiency in our healthcare system, enough to suit almost any taste, and DrRich deplores every bit of it.

Indeed, DrRich strongly suspects that at least 20 to 30% of all healthcare spending is completely wasted, and has seen claims (masquerading as proof) that the actual value is as high as 50%.  So again, despite the title of this post, no matter how you look at it there is plenty of waste and inefficiency to go around.

It’s just that there’s not, well, enough.

Before you go away mad, let DrRich quickly explain (quickly, at least, for DrRich) what he means here. Healthcare reform is in the air, and we all know that any effective healthcare reform is going to have to find a way to control healthcare spending.  And a central assumption of any reform plan yet proposed is that we can control spending by eliminating – or at least substantially reducing – the vast amount of waste and inefficiency in the healthcare system. Some propose to do this by incorporating the efficiencies of the marketplace (though these individuals have now been run out of town and won’t be bothering us anymore), some by adopting and enforcing stricter regulations, others by introducing a single payer healthcare system, and still others by mandating new technologies such as electronic medical records. But one way or another, each scheme for reforming healthcare proposes to bring spending under control by reducing waste and inefficiency.

Another way of describing what the reformers are telling us is: There is so much waste in the system that we can avoid healthcare rationing by getting rid of it. Most Americans believe this. Most policy experts believe this. DrRich suspects that even most of his loyal readers believe this, despite what he’s been telling you all this time.

But this is unfortunately false. No matter how much waste and inefficiency you think might be plaguing our healthcare system today, there’s not enough to explain the uncontrolled rise in healthcare spending we have been seeing for decades, and therefore, not enough to allow us to avoid rationing altogether.

And in this sense, there is not “enough” waste and inefficiency in healthcare.

DrRich has tried to explain this before, but he will now try to do it better, because it’s important. He will do it using one of the three universal languages, the language of Math (the other two being the language of Love and the language of Healthcare Rationing, both of which are encumbered by expressions of impassioned pledges, heartfelt exaggerations, and other blandishments, and are thus unsuited to a sober discussion of unpleasant truths).

But first, there is an underlying concept we must agree upon, a concept our political leaders are loath to address. To wit: The real fiscal problem with our healthcare system is not simply that we’re spending a lot of money on healthcare, or even that we’re spending a large proportion of our GDP on healthcare. Surely, if we simply had to live with continuing to spend 15% of our GDP on healthcare, we could figure out a way to do that. But that’s not really the problem. The real problem is that healthcare expenditures are growing at a double digit rate of inflation, several multiples faster than the overall inflation rate, such that, over time, an ever larger proportion of our annual GDP is being consumed by healthcare expenditures. Unless this disproportionate rate of growth is stopped, eventually healthcare spending will consume our entire economy. (Rather, what will actually happen is that it will grow to the point of producing societal upheaval, sending us back to a more typical era  for mankind, where healthcare is a little-thought-of luxury, and not a necessity or a right. This will happen well before healthcare consumes 100% of the economy.)

To reiterate, it’s not the amount of spending on healthcare that is creating a fiscal crisis, it’s the rate of growth of that spending.

There are only two things that can possibly account for this excessive inflation in healthcare expenditures.  Either it is caused by unrelenting growth in wasteful spending (as we are assured by our political leaders), or it is caused by unrelenting growth in useful healthcare spending. If it is the latter, then in order to get spending under control we must ration. So therefore (we all fervently pray), the rate of growth must be caused by wasted spending.

This desired conclusion, unfortunately, leads to mathematical absurdities, and therefore (for anyone who eschews magical thinking) turns out to be utterly false.

DrRich is going to show you data from a spreadsheet. It illustrates what would have to happen in order for wasteful spending to account for our current healthcare inflation.  The spreadsheet is based on the following four assumptions:

Assumption 1) The proportion of healthcare spending today that is wasteful is taken as 25%. The actual number, of course, is not possible to discern with any real confidence. It depends, for one thing, on who gets to define “wasteful.” If I’m a 92-year-old man who gets a $12,000 stent procedure to eliminate my angina, I and my doctor might consider it money well-spent, while you might consider it wasteful. DrRich has arbitrarily chosen a number that falls within the range of popular estimates. But it’s a spreadsheet. If you don’t like 25%, substitute your own estimate. You will find that the rate of wasteful spending we assume for Year 1 in this spreadsheet has little effect on the outcome.

Assumption 2) The annual overall rate of growth of healthcare spending (i.e., healthcare inflation) is 10%.

Assumption 3) The annual growth rate of useful (i.e., not wasted) healthcare spending is economically well-behaved. That is, it matches the rate of overall inflation. The spreadsheet therefore assumes a 3% annual inflation rate for useful healthcare spending. (We must make this assumption if we would like to avoid healthcare rationing, because if useful healthcare spending were not economically well-behaved, that is, if the growth rate for useful healthcare expenditures were substantially higher than the overall rate of inflation, then no matter what the rate of growth for wasted healthcare spending, we would still have disproportionate healthcare inflation – and rationing would be unavoidable.)

Assumption 4) The difference between the “well-behaved” growth of useful healthcare spending and the overall rate of healthcare inflation is accounted for by spending on waste and inefficiency. This of course, is the assumption that underlies all proposals for healthcare reform.

(Note: If you would like to play with the actual spreadsheet itself, e-mail DrRich and he’ll send it to you: DrRich at covertrationingblog dot com)

We see from this table several things. First, as expected, the amount of money we’re spending on healthcare, assuming a rate of healthcare inflation of 10%, is doubling roughly every 8-9 years, a growth rate that is ultimately unsupportable.

Second, in order to account for this unsupportable growth in healthcare spending by invoking waste and inefficiency, the proportion of healthcare spending that is caused by waste must increase to ridiculous proportions very rapidly, such that (for instance) by the 10th year we will have more than doubled (59%) the proportion of all healthcare expenditures that are wasteful; and by the 20th year, nearly 80% must be wasteful. Similarly, the proportion of the annual increases in healthcare spending that would have to be due to waste and inefficiency rapidly climbs to equally ridiculous proportions. By year 5, wasteful spending will have to account for 82% of the annual increase in healthcare expenditures, and that proportion continues to climb, eventually approaching 100%.

To DrRich, these numbers seem absurd on their face. But if you still need to be convinced, consider that in real life, runaway healthcare inflation has already been taking place for decades – so our position on such a spreadsheet would not be at year 1, but at year 20 (or higher).  And no matter what value for wasteful spending we might have plugged in at year 1, by year 20 wasteful spending would have to be well above 80%, and more likely approaching 100%.  In order for waste and inefficiency to account for the situation in which the American healthcare system finds itself today, therefore, one would have to believe that virtually all healthcare spending is wasteful.  (And if you believe that, then what does it matter that tens of millions can’t afford healthcare?)

Now let us illustrate the same point in a slightly different way.  This time, let’s assume that as recently as 2006, our healthcare system was 100% efficient. That is, only three years ago there was no waste whatsoever.  Then let’s allow that the remaining three assumptions given above are still operative. The following table results:

We can see from these results that, even if only three years ago we had a completely efficient healthcare system, in order for waste to account for the excess growth in healthcare spending we’ve experienced since that time, then as much as 74% of today’s annual increase in spending has to be due to waste and inefficiency.  Indeed, unless at some point within the second term of George W. Bush we actually had a completely efficient healthcare system (which seems doubtful), this spreadsheet tells us (again)  either that our fervently held belief that waste and inefficiency accounts for healthcare inflation is completely wrong, or that today virtually all of our annual increase in healthcare spending must be due to waste and inefficiency, and none due to useful healthcare.

Play with the spreadsheet yourself. You will quickly see that as long as we insist that wasteful spending must account for the unsustainable growth we’re seeing in healthcare costs, then whatever our assumptions may be regarding the current proportion of wasteful healthcare spending – whether we say it’s 20% or 50% or 0% – we very quickly encounter the same mathematical absurdities.

One can only surmise from this analysis (done, DrRich reminds you, with actual Math) that our desired conclusion is wrong. A substantial proportion of our growing healthcare expenditures must necessarily be coming from real, honest-to-goodness, useful healthcare. And if we’re going to substantially curtail that growth, we’re going to have to curtail useful spending. Which means we have to ration.

But, once again, we’re Americans and Americans don’t ration. Which is why we’ve commissioned the big insurers and the government to do the rationing covertly, a task they have accepted with great gusto. DrRich is compelled to point out, once again, that waste and inefficiency is the sine qua non of covert rationing. Disguising all the rationing activity as something other than rationing fundamentally requires opaque procedures, unnecessary complexity, bizarre incentives, Byzantine regulations arbitrarily and variably enforced or ignored, and the diversion of healthcare dollars to non-healthcare ends (such as corporate profits, expanding layers of government bureaucracies, and other massive bureaucracies within the healthcare system created to defend against government bureaucracies). Covert rationing multiplies waste and inefficiency, and does so systematically. To reduce the necessary rationing to the smallest amount possible, we will have to figure out a way to do the rationing openly, and not covertly.

In the meantime, DrRich does not kid himself that exposing the mathematical absurdity of the chief assumption espoused by our political leaders, in their brave efforts to reform healthcare, will change hearts and minds.  American political partisans, not to mention the American media, eat mathematical absurdities for lunch.  And magical thinking amongst the populace, at least when it comes to the exuberant accumulation of household (and national) debt and the application of medical science, far from being discouraged, is actively promoted.

*This blog post was originally published at The Covert Rationing Blog*

The Only Way To Decrease Healthcare Costs Is To Ration Care

July 13th, 2009 by KevinMD in Better Health Network, Health Policy
1 Comment »

Those on the left will pretty much sacrifice everything to attain their goal of universal coverage.

But, in this well-reasoned piece by conservative economist Tyler Cowen, expanding coverage won’t necessarily control costs, which is a more imperative issue. The bandied about means of cost control, such as electronic medical records, cutting provider payments, and preventive care, all will have little nor no impact in controlling costs.

Take physician reimbursements, for instance, a favorite target of health reforms. According Princeton economist Uwe Reinhardt, a favorite son among policy wonks, cutting physician pay by 20% would only reduce spending by 2%.

Furthermore, under the current payment system, simply cutting provider reimbursements will only give more of an incentive to do more procedures to make up for lost revenue.

The hard truth is that care will be rationed, and that’s something the Obama administration is unwilling to admit. Indeed, as Mr. Cohen writes, “if we aren’t willing to take even limited steps to conserve resources, we shouldn’t be spending any more money elsewhere.”

Cost control first before universal coverage, and therein lies the central contention of the debate.

And the worst case scenario, as progressive blogger Ezra Klein correctly surmises is, “that the final bill will include a pricey expansion of coverage paired with a speculative and uncertain set of cost controls.”

*This blog post was originally published at KevinMD.com*

The Friday Funny: Medicare Goes Bankrupt

July 10th, 2009 by Dr. Val Jones in Friday Funny
1 Comment »