Posts tagged ‘#healthcare’

Surgical checklists work–at scale

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In an article in the Annals of Surgery this week, some of Dr. Atul Gawande’s team at Ariadne Labs demonstrated that widespread implementation of his surgical checklist lowers mortality on a massive scale: the entire state of South Carolina.  Lead author Dr. Alex Haynes showed that not only does a standardized procedure work in particular settings, the benefit of the checklist can be implemented at scale.

Working with the South Carolina Hospital Association, they enrolled fourteen hospitals across the state to use the checklist as standard operating procedure, and then compared their surgical mortality over a three year period with the 44 hospitals that didn’t adopt the checklist.  Mortality at the beginning of the trial was comparable between the two groups of hospitals, about 3.4-3.5%.  After implementation of the checklist, the surgical mortality in the implementing hospitals dropped to 2.84%, while the control group mortality actually rose to 3.71%.  This amounted to a relative reduction of 22%.  Surgical mortality had been cut by almost a quarter, though the use of a simple questionnaire.

Why is this a big deal?  So many times we find that something exciting happens in a small, controlled environment, but we are frustrated when we try to make it “just the way we do business”.  What we don’t recognize is that while we consider the environment surrounding the experiment to be normal for us, significant conditions can be very different in other places at other times.  For example, some of Jack Wennberg’s early experience in sharing variation among surgeons in New Hampshire was that once he showed them how differently they practiced, their variation narrowed almost automatically.  For Wennberg, doctors taking action on data was normal.

But what Wennberg perhaps didn’t appreciate was the setting in which those conversations occurred.  They occurred within communities in which the surgeons knew each other well, and trusted each other’s judgment.  This was normal for them.  In other settings without that community feel, many of us have been frustrated that changes sometimes take much longer to happen, or sometimes don’t happen at all.

So for Dr. Haynes to demonstrate that despite the likelihood that his sample of hospitals differed significantly in their characteristics, on average, using checklists saved lives.  Patients did better even when the hospitals weren’t exactly like one another.  And that is a significant and hopeful finding.

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April 19, 2017 at 3:15 PM Leave a comment

CBO score shows 24 million more uninsured by 2026 under AHCA

Crowd by Andrew Malone

Photo by Andrew Malone

Getting everyone into the tent proves trickier than anticipated

On the surface, it can be confusing what Republicans are trying to accomplish with their recently introduced American Health Care Act (AHCA). After all, no one consciously drafts a plan to reduce coverage and raise premiums; the ever-rising cost of health care will do that quite well on its own.  The CBO score shows higher costs in the near term, but then a 10 percent reduction in projected average premiums vs. the status quo in 2026.  CBO also projects that we will have 52 million uninsured in 2026, or an increase of 24 million over today.  As discussed in a previous post, for progressives this is ideologically unacceptable since they consider health care to be an absolute right.  Others with concerns likely fear the use of the increased number of uninsured as a campaign issue in the next election cycle.

Well, exactly what were the drafters trying to accomplish?  As we discussed in a previous post, many of the maneuvers in AHCA are purposed to draw in young, healthy people into the insurance pool, in order to offset the cost of older and sicker people.  In the conservative view, it is wrong for government to mandate the purchase of health insurance; instead, the product must be made attractive enough that young invincibles buy it voluntarily.  The increase in the allowed rating multiple from 3:1 to 5:1 does this, since having older people pay more means younger people pay less.  Another measure is the $100 billion Patient and State Stability Fund, which is money in the bill that is likely to be used by some states to make reinsurance payments to health plans, thereby lowering everybody’s premiums somewhat.

So could that work?  It’s possible to make insurance more affordable for the young by taking those steps, in my opinion.  The problem is that those actions also have other consequences:

  • First, when you shift the cost of insurance away from the young and healthy, you have to put it somewhere, and that appears to be to the old and sick. Premium projections for poor 60 year olds net of subsidies go up by about $10,000 a year.  For someone in this working poor group, the premium could be half of their entire salary.  As a result, CBO projections suggest that the uninsured rate for those age 50-64 making <$30K/yr. will rise from 12% to an impressive 30% of the population.  Again, no plan is able to take the same benefits and make the cost lower for everyone; if somebody pays less, somebody else has to pay more.  In essence, some of the people you were trying to subsidize in the first place end up uninsured as a consequence of the effort to make it more affordable for the young invincibles.
  • Second, the CBO projections say that by 2020, about 9 million fewer people will be buying coverage in the individual market. By 2026, those losses shrink to 2 million less, but this is largely because the CBO anticipates some employers stopping providing insurance as a benefit altogether, shifting people from employer-sponsored insurance to the individual market. The CBO agrees that more young people will sign up, but that will be more than offset by older people dropping coverage because they simply cannot afford it.  The reasons are complicated, but have to do with the CBO’s lack of confidence that the penalties in the AHCA for being uninsured will be as compelling as the individual mandate in the ACA.

The AHCA still has to work its way through more committees before it makes its way to the floor of the House.  There may still be amendments and revisions along the way.  There is even talk about a “sidecar” bill addressing sale of insurance across state lines and association health plans.  But currently, this shift of cost from younger and healthier to older and sicker is a big issue for Democrats and moderate Republicans (not to mention AARP, who have termed the AHCA an “age tax”).  That, in addition to the substantial increase in the uninsured rate, makes this bill tough to swallow for a broad swath of Congress and its constituents.  Whether it can survive with this shift is something that will be hotly debated in the next couple of weeks before Congress’ Easter recess.

 

March 20, 2017 at 6:09 AM Leave a comment

Is A Better Way Actually Better?

Is Paul Ryan’s world view a place we want to live? We’re about to find out.

paul-ryan-by-tony-alter

Photo by Tony Alter

In the current debate over the Affordable Care Act’s repeal and replacement, we are watching the collision of two world views.  While partisans on both sides are likely to disagree, here’s my mini sketch of each of those views:

Progressives

  • Health care is a right. Everyone, regardless of ability to pay, has the right to whatever the rest of us have access to.
  • The main cause of the high cost of health care is profiteering by health care companies, whether providers, pharmaceutical manufacturers, or insurance companies. If profit was eliminated and health care made a utility, it would be affordable for the average American.
  • The influence of the free market should be minimized in health care, since that’s the source of that unreasonable profit in the first place. Lots of entities have made lots of money trying to avoid getting people necessary care, instead of providing it when it’s needed.  That’s just wrong.
  • Bigger insurance pools are better, because they are more stable, have economies of scale, and it’s easier to pay for new stuff when you can spread the cost over lots of people. The best insurance pool would be one big national pool with everyone in it.  This is called a single payer solution.
  • Government systems are less expensive and fairer than private systems, because there isn’t a profit in government enterprises. All that running away from expensive people that private insurances do?  Government aren’t allowed to do that.

Conservatives

  • Health care is a right, but it comes with responsibility, too. You should get access to care if you participate in the system.  It’s your individual responsibility to take care of yourself so that you’re not needlessly draining our shared resources.  This includes working to the degree possible so that you’re paying your own way as much as you can.
  • The main cause of high cost in health care is overregulation and litigation. If health care weren’t so burdened by trying to prevent things that are almost never happen in the first place, and provide services you didn’t ask for, the cost would be much lower.  That overregulation also stifles innovation and competition, which is what makes goods and services in this country affordable for the average person in most other industries.
  • The road to restoring affordability is to unleash the power of the free market. First, make people spend more of their own money using Health Savings Accounts.  Then they’ll care about the price of medical stuff, which they don’t right now because insurance pays for most of the cost.  And people will only shop effectively if they’re spending their own money, not somebody else’s.
  • If you truly can’t contribute to your own health care cost, we’ll give you the money to do it through refundable tax credits, and then you can shop for your own care. After all, who can shop for you better than you?  Inevitably when government shops for you, they do a bad job and load a bunch of requirements and benefits in there that don’t address your individual circumstance.   That’s waste, and it’s expensive.
  • Private insurance is the best vehicle to cover everybody where possible. This is because private vendors respond to customer needs much more quickly and nimbly than governments can.  Yes, there is profit in health care, and there should be.  Why else would anyone redesign a system to make it more efficient, if they didn’t get profit as a reward?  Price controls simply create more friction and waste in the market, as people will find a way to get what they want one way or another.

Who is right about this?  Which world view is most true to reality?  I think there are elements of truth to both points of view.  But there are also a few inconvenient truths that neither side wants to acknowledge:

  • For progressives, the profit in health care is a problem, but mostly they talk about that profit in drug/device companies and insurers. In fact, most of the profit in health care is in providers.  For example, where are we more different from western Europe, the amount of stuff we use, or the prices of that stuff?  It turns out that it’s the prices of the stuff that account for most of the cost variance.  When you look at the amount of stuff we use like hospital days or doctor visits, we actually look pretty competitive vs.  western Europe.  This was the source of Uwe Reinhardt’s Health Affairs article in 2003 entitled, “It’s the Prices, Stupid”.  Providers in our systems, whether doctors, nurses, or hospital administrators make much more than their counterparts in other countries, and that’s all loaded into the cost of insurance.
  • For conservatives, the evidence that markets in health care operate like other goods is quite limited. Some will say: “Look at Lasik!  Look at cosmetic surgery!  You can’t tell me that medical services are that different.”  They’re right, Lasik and cosmetic surgery in particular are a lot like other discretionary goods, say, the eyeglasses and make up they replace.   You get to elect to use those goods or not, and you can shop for them by comparing prices for a standard, understandable service or set of services.  But much of the rest of medicine isn’t that kind of shoppable service.  Rolling into an emergency room, nobody comparison shops and asks to be taken to the next emergency room because of price.  Then, after you start treatment, a lot of your purchasing decisions are made by your doctor, using your Mastercard (insurance) liberally.  Not the price-regulating market proponents would like to see. Try this sometime: ask your doctor what a particular procedure or drug costs.  Mostly you’ll get blank looks, or a reassurance that your insurance will pay for it.  But actual prices, not so much.
  • For everybody, the rapidly increasing cost of health care has a lot to do with our rapidly increasing ability to actually stave off death and cure stuff with technology in ways that are downright miraculous, in addition to insurance company profit and filling out forms for burdensome regulations. Stuff like being able to cure cancer or hepatitis C, or turn AIDS into a chronic disease.  Would we be willing to forego such miracles to lower the cost of health care overall?  Well, that depends, for many people, on whether they can see themselves having one of those diseases.  If yes, then the billions spent to develop those treatments are well-spent.   If you look at where the eye-popping drug costs are these days, they’re associated with just these kinds of miracles.  The adult conversation we haven’t gotten to is how much of our GDP we should devote to such miracles that will benefit an unknown few of us who could be any of us, versus broad-based benefit for the many, like improving education.

It should therefore not be surprising that there is a royal disagreement in DC these days about whether/ how to repeal and replace the ACA.  The ACA is founded on a progressive worldview, and the replacement will be founded on a conservative one.   And conveniently, by arguing about whose view is right, we can pretend we don’t see any of the difficult issues above, and blame continuing price increases on flaws in the other guy’s theory.  But if we are to get to coherent public policy, we will have to face those truths and make hard decisions as a society.  Anybody on the left or the right who claims otherwise probably doesn’t have an acquaintance with these inconvenient truths.

March 6, 2017 at 6:17 AM Leave a comment

Undoing American Healthcare

Why assuming we’re rational about health care may be a dangerous assumption

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Photo by Torbakhopper

I am reading a wonderful book called The Undoing Project by Michael Lewis, about the development of behavioral economics by two of its pioneers, Daniel Kahneman and Amos Tversky.  One point of their work over five decades is that while we think we make decisions rationally and objectively, in actuality our thinking and valuation of things are fluid, and uses different criteria with different weights at different times.   For example, if I am weighing where to take a vacation trip, I might choose the beach if I’m particularly tired one day, but the mountains if I’m not.  Both choices would be rational ones, but not consistent from moment to moment, and therefore seemingly illogical.  Which do you want, the beach or the mountains?  Make up your mind!

In health care reform there are many reforms that assume consistent values and rationality: health savings accounts, reference pricing, narrow networks.  All these phenomena have in common a belief that if you have people spend their own money, they’ll rationally find the best value and shift their buying choices toward those that serve them best.  But what if the perceived value of services shifts depending on my circumstances as a consumer?  For example, if I am buying a health insurance policy, and at the time I’m perfectly healthy, what would I choose?  Most likely I would be buying strongly based on price at that moment.  If I never see the doctor, I’m not actually buying medical services at that time; more likely I’m buying relief from worry that if I get sick I’ll go broke.  In that case, I’m buying the cheapest policy available that allows me to sleep at night.

And, in that same case, let’s say I get diagnosed with diabetes while holding that cheapest policy.  Suddenly my priorities shift.  I now want a policy that gets me all the care I need at the lowest price.  I am no longer as interested in cheapness, and more interested in comprehensiveness.  Will I be able to go to an endocrinologist, or even an academic diabetes center?  How low can I keep my copays and deductibles and still get the best care in my mind?  My focus shifts partly from what I’m paying to what I’m getting.

There are instances where market theory seems to work well.  The classic is Lasik eye surgery to correct nearsightedness or farsightedness.  Market proponents correctly cite the steady drop in the cost of that service.  But Lasik surgery has some special circumstances attached to it:

  • First, no one dies without Lasik. I could get that procedure because I’m nearsighted, but glasses have worked for me since I was 10, so it’s purely elective for me.
  • There are advertisements online all the time, and I can readily get pricing and a sense of how often a given surgeon performs the procedure. (This relates to safety and likelihood I’ll get the result I want.)
  • I am spending my own money because the procedure isn’t covered by insurance in most cases, so I have a natural incentive to shop around.

But me rolling into the ED after a car accident?  It’s possible that none of the three conditions above apply at that time.  And thus the conundrum that our thinking when we purchase insurance policies may be different than when we consume services: which do you want, cheap or comprehensive?  Make up your mind!

Pundits debate how much health care is like Lasik, and how much it’s like a car accident.  Is it purely elective, or is it a bolt from the blue?  Can I shop for it and control costs, or am I at the mercy of the provider in an emergency?  The debate rages on, and we are about to see a shift in worldview in the federal government from a belief in health care’s unpredictability to it being elective and shoppable.  Which do you think health care is, mostly elective, or mostly unpredictable?

February 27, 2017 at 9:25 AM Leave a comment

Secretary Price’s ACA Replacement Plan

Is the Price Right?

U.S._Congressman_Tom_Price_speaking_at_Freedomworks_New_Fair_Deal_Rally_outside_the_US_Capitol.jpg

Photo by Gage Skidmore

On February 10th, Rep. Tom Price was confirmed as Secretary of Health and Human Services on a party line vote, 52-47.  As such, it seems prudent to learn a bit about his plans for reshaping American health care.  The good news is that there is already a document that gives us a detailed view of what he’d like to see in law: he was lead sponsor of the Empowering Patients First Act, that passed the House in 2015.  The bad news is that it’s 242 pages long.   So here are some important points about it:

  • EPFA has many of the elements Republicans have been clamoring for during the last eight years, including expansion of Health Savings Accounts, selling insurance across state lines, association health plans, and high risk pools.
  • To replace the individual mandate, there are continuous coverage provisions. This allows insurance companies to charge a premium for those who have not had recent coverage, as a deterrent to those who would otherwise wait until they’re sick to get insurance.
  • To replace the Cadillac tax on especially rich health coverage, there is a limit on deductibility of health insurance for companies. While wonks will argue about the difference between these two arcane provisions, the intent and effect of them are the same.  Both are intended to blunt the effect of rich health coverage on increasing utilization.  This isn’t popular with some in the Republican party, but it’s in here nonetheless.
  • To replace the subsidies in the marketplaces/exchanges, there are refundable and advanceable tax credits. So instead of using federal dollars to make coverage more affordable, Dr. Price uses federal dollars to make coverage more affordable.  EPFA is different, however, in that while the ACA subsidies are only available to lower income individuals, everybody gets access to the tax credits regardless of income.  So even the wealthy will get some federal dollars to buy health insurance.
  • EPFA contemplates the return of annual and lifetime maximums. Effectively this opens the door to “running out of insurance” again, not a comforting thought but something that will make insurance cheaper for everyone else.  You get what you pay for.
  • Medicaid provisions are a bit vague, but speak about states needing to submit plans to insure 90% of children under government programs or commercial insurance. Notably missing are details of coverage for childless adults, a big portion of the expansion population.  This leads many to conclude there might not be coverage for those folks under a Price HHS.

There are other competing Republican plans out there, and it remains to be seen how much the final repeal and replace effort resembles Secretary Price’s plan while a member of the House.  But it is noted in the press that his plan is one of the more aggressive in rolling back key provisions of the ACA.  Many of these same provisions appear in the draft that just came out of the House, which was drawn on A Better Way, the speaker’s plan. capture

 

February 17, 2017 at 9:22 AM Leave a comment

Alternative Payment Models, Teeth, and Tires

Does the provider lose money making repairs, or does he make money?

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Photo by ccPixs.com

There is a lot of talk in health care these days about paying differently for services.  Like any other industry, we have our jargon: fee for service (FFS), pay for performance (P4P), bundles, capitation, population payment.  All of this is confusing for the average American, and understandably so.

But no matter what we call it, there is a big difference between various ways of paying for health care.  It’s actually not that different from how we buy stuff in other parts of our lives.  This came home to me recently when my wife was in two situations:

  • First, when she recently went to a new dentist to get a teeth cleaning, the dentist did a thorough exam. She then offered that if Marti wanted it, she would be happy to drill out some old fillings to see if they were likely to fail soon.  Only by drilling them out could she be sure that the fillings were still sound or not.  If there was a problem, she could refill the cavity or replace the whole tooth with a crown.  My wife had no symptoms then and still doesn’t.
  • She also recently went into the local tire store where she’d bought a set of four tires a few months ago, with a warranty. There was a screw in one of the tires (we have a lot of remodeling going on in our neighborhood).  The technician looked at it, and after examining the screw and removing it told her that there was no leak caused by the screw, and she was good to go.  No tire repair or replacement needed.

Quick quiz: which practitioner was operating on FFS, and which one was operating on a bundled payment?

If you said the first was FFS and the second a bundle, you get a gold star.  The fundamental difference is that the first proposed transaction would have resulted in the dentist getting a fee for the work, maybe over a thousand dollars if it involved a crown.  The second transaction would have been covered under a warranty, and so would have cost the tire shop time, materials, and labor, but would not have generated a new payment.  This is the fundamental difference between FFS and bundles or capitation.  Right down to brass tacks, in fee for service, every new service draws a new fee; in bundles or capitation, some or all services don’t generate new revenue.  I often think I can spot FFS behavior and capitated behavior without knowing the financial arrangement, just from how the practitioner behaves in the transaction.  For example, if a shop offers to do a “free inspection”, I think you can almost always expect them to come back with a recommended purchase of something from them.  This is classic FFS behavior.  Conversely when someone is capitated or works under a bundled payment, they give a lot more thought to the question, “Is this really necessary, or could we watch and wait to see if it’s really a problem?”

There are big implications for our health care system in the move away from FFS to bundles and capitation.  I personally favor the latter, because I think it’s just too easy for American providers to order and reorder things without consideration for the financial consequences to the payer, which is increasingly the patient himself.  Even if the patient isn’t directly responsible for the bill, someone pays for it, and that usually means the collective we, whether through insurance or government programs.  Most people in health care reform think this dynamic is one of the reasons we spend twice as much as most countries and get poorer results: the FFS system incents people to do more, not better.

So when you go see your provider, which do they seem more like, the dentist or the tire shop?  More importantly, which do you want them to resemble more?

text-box-tires

February 13, 2017 at 10:11 AM Leave a comment

Sharing: is it going out of style?

dorm-elpadawan

Photo by elPadawan

Back when I was in college in a small school in Indiana, I was in a fraternity, like 85% of the kids who attended there.  All the guys in my house slept in one of two “dorms”, or mass sleeping rooms in the back of the house.  The freshmen slept in the “rookie dorm”, and the upperclassmen slept in the other dorm (there wasn’t another name that I recall).

But over time, my fraternity brothers started building lofts, or sleeping platforms that went over their desks, for their rooms.  This allowed them to sleep in their study rooms, rather than in the communal space.  I’ve been back to that fraternity house in recent years, and the dorms are altogether gone, replaced by more spacious rooms that include both study space and bed space, like more traditional college dorm rooms.

Why did my friends build their lofts?  The dorms dated from the mid-20th century, and looked like what was familiar to that post-war generation: barracks.  It was a bonding mechanism for pledge classes, that they had to live, eat, and sleep alongside one another.   Partially as a result, I still have friends from that pledge class, and I still feel loyal to them.  But sharing space also meant listening to each other’s snoring, or gossip in the middle of the night.

I think about this experience now, because that drive to not have to accommodate to others is pretty human, and very American.   The lofts allowed people to have their own schedules, and not have to cooperate with one another on quiet time, etc.  But since then, we’ve essentially become a country where lots of kids grow up with a bedroom to themselves.  But it makes me wonder if we aren’t worse off in some ways, because having to depend on and accommodate to one another made us know one another, with all our quirks and faults on display daily.  (Believe me, some of it wasn’t pretty!)  I wonder if in a society based on individual empowerment we aren’t losing some of the glue that holds us together in community.  Freedom is great, but perhaps some experiences that force us to accommodate to one another wouldn’t be all bad.  Indeed, sharing a health care financing and delivery system appears to be one of those shared experiences that will remain for the foreseeable future.

This has relevance in the ongoing debate on health care reform.  Should we have community rating, or should it be experience rating?  In other words, if I smoke and am obese, should I pay more for health insurance?  If so, how much more?  In essence, how much can and should we depend on others’ money to bail us out when we get sick?  What if it’s a disease that I’m partially responsible for causing through my behavior?  What if it’s something that I couldn’t reasonably prevent or control?  Are there circumstances under which I don’t deserve to be able to buy insurance, because I didn’t paid into the pool when I was healthy?

As we watch a new administration unfold, these questions are going to be terribly relevant.  Clearly the Obama administration’s answers to the questions above were toward the community side.  Community rating, guaranteed issue, the individual mandate, and outlawing lifetime and annual maximums are all in line with the thought: “We’re all in this together.  Everyone should pay into the system, and it should be there for everyone, even if you are in some part responsible for the disease from which you are now suffering.”  But reading some of the Republican plans, there is more emphasis on individual responsibility and taking consequences for not living a healthy life.  Which is better?  The results of the past few election cycles tell me that we don’t agree as a country on the answer to this question.

January 12, 2017 at 9:12 AM Leave a comment

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