July 3rd, 2009 by admin in Better Health Network, Health Policy, Opinion
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[This post was written by Charlie Baker, President and CEO of Harvard Pilgrim Health Care, Inc., one of New England’s leading non-profit health plans.]
I heard this idea promoted at a luncheon I was at last week — that the best way to fix health care in the U.S. would be to move to a “Medicare-For-All” system. Needless to say, I find this odd — since I think many of the things people hate most about our existing system — too procedure driven, doesn’t support primary care and prevention, favors technology over face-to-face interaction, doesn’t support multi-disciplinary approaches to care delivery, etc. — derive from the rules of the game set up and enforced by…Medicare!!! Yikes!
But aside from that, the two things I always hear about why it’s a good idea are — Medicare has lower Administrative costs than private health plans and they’re a ”better” payer than the private plans. Hmmm…Let’s take the first one. What I’ve heard before is that Medicare only spends 4% of its money on a per beneficiary basis on administration, while the plans spend 14% per member on administration — a big difference. This is interesting, but misleading.
Medicare beneficiaries are over the age of 65. They spend almost three times as much money on health care as a typical private plan member — most of whom are under the age of 65. If the Medicare member typically spends $800 per month on health care, and 4% of that is spent on administration, that’s $32 a month on administration. If the private health plan member typically spends $300 per month on health care, and 14% of that is spent on administration, that’s $42 a month — a much smaller difference. But we’re not done yet. Medicare is part of the federal government, so its capital costs (buildings, IT, etc.) and benefit costs (health insurance for its employees and retirees (!), pension benefits, etc.) are funded somewhere else in the federal budget, not in the Medicare administrative budget.
Private plans have to pay for these items themselves. That’s worth about $5-6 per member per month, and needs to come out of the health plan number for a fair comparison. Now we’re almost even. And finally, Medicare doesn’t actually process and pay claims for all of its beneficiaries. It contracts with health plans around the country to do much of this for them. That’s not in their administrative number, either — and it is, needless to say, in the private health plan number.
People push and pull these numbers all the time, and there may be “some” difference between Medicare and the private health plans on administrative spending as a percent of total spending. But it’s not huge, if you try to compare apples to apples.
On the payment issue, the numbers I’ve seen suggest that nationwide, private plans — on average — pay somewhere between 120 and 125 percent of what Medicare pays for hospital and physician services. In other words, private plans pay MORE than Medicare pays, not less! If people want Medicare For All, they need to be prepared to either dramatically raise Medicare rates and payment — and therefore, Medicare costs — by a lot of money — 20 to 25% by this estimate — or kick the bejeebers out of the physician and hospital communities and make them eat the difference.
Medicare-For-All is not as simple as it seems.
*This blog post was originally featured at the Let’s Talk Healthcare blog.*
June 24th, 2009 by KevinMD in Better Health Network, Health Policy
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It’s not because of what you think.
The common thought is that health insurers will quiver at the sight of a government plan, with the public option offering lower premiums to patients due to leaner administrative burdens.
But Charlie Baker, CEO of Massachusetts’ Harvard Pilgrim Health Care, isn’t so worried about that. Instead, he first wonders about the government’s competence in handling another large bureaucratic program:
I worry less about the impact of having the federal government writing the rules and competing directly with plans like Harvard Pilgrim for business, and more about the federal government’s ability to do this at all, much less do it well. Merely coordinating basic demographic information between Social Security, Medicare and Medicaid – three big federal programs that millions of Americans belong to – can be a chore for beneficiaries, their children, and their health plans. It’s not unusual for our members to spend six months or so trying to get this stuff corrected before they call us and ask us to step in on their behalf.
And next, he has zero confidence that the government will be fiscally disciplined administering such a plan. With how it handled the General Motors fiasco as an example, Mr. Baker wonders how any proposed public plan “will negotiate with providers for a mutually agreeable fee . . . will balance its books every year . . . will have to cover its costs of doing business – just like the private plans do – [but] won’t add to the federal deficit.”
Is that even possible?
*This blog post was originally published at KevinMD.com*
June 13th, 2009 by Shadowfax in Better Health Network, Health Policy
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Ezra opines a bit on the role of doctors in health care with the strangely misleading headline:
Listen to Atul Gawande: Insurers Aren’t the Problem in Health Care
This wasn’t Gawande’s point at all, and is something quite tangential to Klein’s point:
The reason most Americans hate insurers is because they say “no” to things. “No” to insurance coverage, “no” to a test, “no” to a treatment. But whatever the problems with saying “no,” what makes our health-care system costly is all the times when we say “yes.” And insurers are virtually never the ones behind a “yes.” They don’t prescribe you treatments. They don’t push you towards MRIs or angioplasties. Doctors are behind those questions, and if you want a cheaper health-care system, you’re going to have to focus on their behavior.
Yes, doctors are a driver — one of many — in the exponentially increasing cost of health care. Utilization is uneven, not linked to quality or outcomes in many cases, and may often be driven by physicians’ personal economic interests. All of this is not news, though certainly Atul Gawande wove it together masterfully in his recent New Yorker article. (I’m assuming you’ve all read it — If not, then stop reading this drivel and go read it immediately.) Nobody disputes that doctors’ behavior (and ideally their reimbursement formula) need to change if effective cost control will be brought to bear on the system.
But it’s completely off-base to claim that insurers aren’t one of the problems in the current system. There are two crises unfolding in American health care — a fiscal crisis and an access crisis. I would argue that insurers are less significant as a driver of cost than they are as a barrier to access. Overall, insurers have, I think, only a marginal effect on cost growth, largely due to the friction they introduce to the system — paperwork, hassles & redundancy and internal costs such as executive compensation, advertising and profits. It would be great if this could be reduced, but it wouldn’t fix the escalation in costs, only defer the crisis for a few years until cost growth caught up to today’s level. In the wonk parlance, it wouldn’t “bend the cost curve,” just step it down a bit.
But as for access to care, insurers are the biggest problem. It’s not their “fault” per se in that they are simply rational actors in the system as it’s currently designed. Denying care, rescinding policies, aggressive underwriting and cost-shifting are the logical responses of profit-making organizations to the market and its regulatory structure. Fixing this broken insurance system will not contain costs, but it will begin to address the human cost of the 47 million people whose only access to health care is to come to see me in the ER.
*This blog post was originally published at Movin' Meat*
April 26th, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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Our survey of employer attitudes about health benefits told us a lot about what employers are doing, and what they want to stop doing. Here are 5 things employers want to stop doing:
1. Stop paying for bad employee lifestyles. Bad lifestyle choices are big drivers of expense. Our study shows that employers want to stop being solely responsible for those costs. More than half (54%) are adopting programs that use incentives — and penalties — to encourage employees to take responsibility for their health. A study released last week by Watson Wyatt showed similar results.
2. Stop expecting health plans to deliver customized programs. Health plan offerings are popular — there is a nearly 90% adoption rate for core health plan services. But employers increasingly turn to outside vendors for customized programs to fix bad employee health habits. Health plans are looked to for value-based insurance designs, with 40% of employers looking to implement VBID or similar programs.
3. Stop paying for programs that don’t work. Fifty-five percent of employers said they were reducing the number of health benefits they offer or focusing on those with a proven ROI. With 59% saying cost savings are their top priority, it makes sense that they cut costs where they don’t see savings.
4. Stop confusing employees with too many benefit offerings. Employers have in place 10 or more distinct health benefits, with 60% identifying at least five major programs (EAPs, nurse help lines, health coaching, wellness, etc). Employers want to implement a single point of contact to navigate their programs, with adoption rates of these services expected to triple in the next 2 years.
5. Stop thinking bad medical outcomes are because of bad luck. Sixty-five percent of employers said their employees struggle with making the right treatment decisions when sick. Thirty-five percent said making sure their employees have better quality care was a high priority, with 38% saying they wanted to do more to empower employees to make good health care decisions.
*This blog post was originally published at the See First blog.*
April 23rd, 2009 by DrRob in Better Health Network
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Thanks to Andrew Sullivan who cited my post on the uninsured, I’ve gotten a lot of new comments on that subject. While my post was just a gripe about the problem, the comments were mainly focused on solutions. How do you fix the problem? I even got an e-mail specifically asking me what I would do to deal with the problem of the uninsured.
You have to realize that I’m basically chicken (as are most doctors). I like to point the finger and avoid the fingers of others. It’s much easier to gripe than to fix things. It’s much easier to criticize than it is to say things that can be criticized. But I will break from the safe position of critic and give some thoughts on what I think needs doing on the problem of the uninsured/underinsured. Those who doubt the reality of this problem have only to spend a few days in primary care physician’s office to realize that it a huge problem that is getting worse.
So here are my suggestions:
1. The government has to take on tasks that are in the best interest of the public.
Preventive healthcare should be paid for. This could be done via public health clinics, but having having some sort of preventive health insurance for the uninsured would not have much overall cost (compared to the whole of healthcare) and would potentially save money.
There certainly is debate as to what prevention is really worth it (the PSA test debate is a good example), but some prevention is clearly beneficial (immunizations, Pap Smears). Simply building a relationship between people and primary care physicians also has benefits by itself.
The overall goal is to improve the overall health of the American public. Promote behavior that deals with problems when they are still small or before they happen at all. Just visiting a PCP isn’t the solution by itself, but it is probably a necessary component to achieve a healthier public.
2. Promote proper utilization
One of the main costs to any system, public or private, is overutilization of services. Any solution that does not somehow look at utilization will automatically fail. More care costs more.
Here are areas of increased utilization:
- Emergency room visits for non-emergencies.
- Visits to specialty physicians for primary care problems.
- Unnecessary tests ordered – more likely in a setting where the patient is not known.
- Patient perception that “more care is better.”
- Nonexistent communication – ER doesn’t know what PCP is doing, PCP doesn’t know what happened at specialist or in the hospital. This causes duplication of tests.
Solutions to these problems include:
- Better access to primary care or other less costly care centers
- Increase the ratio of primary care to specialists
- Care management for high utilizing patients
- Public education (not through the press but through better public health).
- Promoting connections between information systems – better IT adoption would help, but that IT must communicate.
- Make the malpractice environment less frightening to doctors. A large amount of questionable care is given to protect physicians from lawsuits. (A good example is PSA Testing. Even though recent studies question the benefit, many doctors fear that not ordering them will expose them to risk should the patient develop prostate cancer).
How does this help the problem of the uninsured? It reduces the overall cost of non-catastrophic care, which makes either public or private insurance focused on this more feesable.
3. Fix problems with Pharma
Medication costs are a huge problem to my uninsured and insured populations. There are many reasons for this, but some of them are simply due to a bad system. For example:
- Medication discount programs cannot include Medicare patients. Why should I be able to give a discount card to my patients with private insurance, even my uninsured, but not Medicare patients?
- High cost of generic drugs. When a drug goes generic, there is usually only a slight drip in the price. The system allows only limited competition for price, so the cash price remains high. Encourage cost competition.
- Drug Rebates. This raises the overall cost of drugs to everyone. Rebates are sent to insurance companies by drug companies for inclusion on the formulary. It pretty much looks like extortion. The cost of these rebates is not absorbed by Pharma, it is passed on to those who aren’t covered by insurance companies getting the rebate. These need to be eliminated.
- Get rid of direct to consumer marketing of drugs. This is pure capitalism that encourages over-utilization.
All of these programs would allow reduced overall cost of medications, which would make either drug coverage more possible or make the cash price of drugs more affordable.
4. Address Conflicts of Interest
Insurance companies are largely publicly-traded companies. This means that their main business goal is to maximize profits by either cutting their costs or increasing revenue. Having them the ones managing care is like putting the kid in charge of the cookie jar. Insurance companies should get back to the business of insuring. Care management is certainly important to control overutilization, but that should not be done by those who could profit from it (insurance companies, hospitals, physicians).
Insurance companies promote themselves as healthcare companies. They don’t provide care, and they shouldn’t. Perhaps there needs to be a third-party that does care management – I am not certain – but it is clear that good care management would greatly reduce overall utilization and profiteering.
How does this help the uninsured? It reduces the footprint of the insurance industry on healthcare as a whole, which should bring down the cost if insurance. It should let insurance companies compete solely on cost, not on provider pannels or other services they shouldn’t be giving in the first place. If insurance costs less, there are less uninsured.
5. Focus on the “uninsurable”
5% of Americans account for over 50% of the overall cost of care (reference). These are the uninsurable people – those who are truley expensive to treat. There needs to be very close management of these people. Leaving them uninsured doesn’t reduce cost, it just shifts it to hospitals and local government. It also leaves them unmanaged. Of the waste in healthcare, the likelihood is that a very large percent of it is in the high-utilizers (by definition). These people need management, either in a “medical home” or by some sort of care management.
There you have it. Follow these rules and everything will be fine.
Yeah, right. Alright everyone, have at it! Tell me what you think, but don’t be a chicken: criticism should be accompanied by an alternative solution.
*This blog post was originally published at Musings of a Distractible Mind.*
