Does It Matter Who Pays For Care? Who Has the Standing to Set Limits?

Some observers have begun to suggest that it really doesn’t matter who pays for health care. What matters is how we pay, and what we pay for.

Dr. Atul Gawande made this point in the brilliant piece that the NewYorker published at the beginning of this month.  “Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks . . . ” Gawande observes.  “These arguments miss the main issue. When it comes to making care better and cheaper, changing who pays the doctor makes no difference.” In other words, he is saying, it just isn’t important whether we have a public-sector insurance plan competing with private sector insurers.

Over at the Huffington Post, Jim Jaffe makes a similar argument. He begins by saying that health care spending has become unsustainable. Trying to pay less for health care services isn’t the whole answer: “Ultimately we have to provide fewer services.” 

“Too many are now invested in a series of side debates irrelevant to this central issue,” Jaffe continues. “The existence of a public plan won't cut consumption unless it includes limits on services  . . . A public plan isn't a prerequisite for imposing such limits.”

I have to disagree. I believe a public sector plan, overseen by a Federal Heath Board comparised of physicians, medical reserachers and medical ethicists, is the only plan that can impose limits, weeding out unnecessary, ineffective, and potentially harmful  tests, products and procedures.

“Limiting Services”= “Managing Care”

Let's be honest. We are, in effect, talking about “managing care”–what “health maintenance organizations” (HMOs) were supposed to do. As originally conceived, they were called “health maintenance organizations,” because they were charged with keeping us well by providing generous and vigilant preventive care. They were supposed to “manage” chronic diseases, making sure that the right person received the right care at the right time. And they were supposed to use medical evidence to make certain that patients were receiving the care that provided the greatest benefit—and the least risk—for that particular patient.

When Dr. Paul Ellwood coined the phrase “health maintenance organization” he envisioned non-profit organizations subjected to strict quality reviews (with these reviews based on medical research). In Ellwood’s mind, plans would compete with each other on the quality of care they provided, not the price. The cost-consciousness of managed care would be balanced with an emphasis on outcomes.

At the time, there were few for-profit insurance companies peddling health care. For-profits sold other types of insurance—but not medical insurance. When the HMO Act of 1973 was passed, the law did not bar for-profit HMOs, but neither did it encourage them. By contrast, it did offer federal loans and grants to non-profit HMOs. The Nixon administration believed that non-profit HMOs could curb health care inflation by moving away from fee-for-service payments while simultaneously offering better care. The HMOs that Ellwood described in the early 1970s, sound very much like the “accountable care organizations” that Gawande and others talk about today.   

But in 1980, with the election of President Ronald Reagan, priorities changed. Non-profits were no longer in favor. The for-profit corporation became the model for the nation.  In the early 1980s, Washington eliminated the federal grants and loans for non-profit insurers. 

By this time, the nation’s health care bill had begun to spiral. For-profit insurance companies saw just how much money was on the table; and they realized that now that the non-profits no longer had a stream of federal funding, for-profit insurers  could probably move in and take over the market. And this is just what they did.  Since they had deep pockets, these publicly -traded insurers were able to create price wars–and win them. Meanwhile, non-profits looking for capital turned to Wall Street—and turned themselves into for-profits.  In 1981, 88% of HMOs were non-profits; by 1986, the share of nonprofits had fallen to just 41 percent.   And by the 1990s, the vast majority of managed care companies were profit-driven.

They took over the HMO business and redefined what “managing care” meant. Rather than looking at outcomes, they looked at costs. Their investors were focused on quarterly earnings; they wanted profits to rise Now. This lead to short-term thinking. Rather than emphasizing on what might keep their customers healthy over the long-term, insurers focused on how to cut costs in the next three months.. Too often, this meant saying “no” to needed, effective care.

As we all know, patients, doctors and the media fought back. Stories of “care denied” became regular features on the evening news. Sometimes the treatment the insurer wouldn’t pay for was, in fact unproven. Bone marrow transplants as a treatment for breast cancer provided no benefit.  But the media put enough pressure on insurers that they relented, and covered the transplants. As a result, a great many women suffered horribly from a cure that was worse than the disease. (Some became so sick that when they died, they were unable to say good-bye to loved ones.)

Finally, at the end of the 1990s, the HMOs threw in the towel. They stopped saying “no” and began paying for most tests and treatments that the FDA approved. This was costly, of course, and explains why private insurers’ reimbursements have been climbing by 8% a year. Meanwhile they have passed those costs along in the form of higher premiums, making health care insurance unaffordable for more and more families. In Money-Driven Medicine, I quote a Wall Street analyst: “The social compact was that managed care would make careful decisions about costs; instead they became a cost-through vehicle.”

This brings me back to Jaffe’s argument. He says that, to contain costs, we must limit services, and “a public plan isn't a prerequisite for imposing such limits.” A private for-profit insurer could do it just as well., he suggests.

Here, he ignores the history of what happened in the 1990s. For-profit insurers did not “manage care” in a way that “maintained” their customer’s health. 

Why did they fail? As Ezra Klein recently explained in his Washington Post column: “The issue isn't that insurance companies are evil. It's that they need to be profitable. They have a fiduciary responsibility to maximize profit for shareholders.”  Klein goes on to paraphrase Wendell Potter, a 20-year insurance company employee who recently testified before Senator Jay Rockefeller’s Commerce committee: “as Potter explains, he's watched an insurer's stock price fall by more than 20 percent in a single day because the first-quarter “medical-loss ratio” [the percentage of  premiums that the insurer paid out in claims] had increased from 77.9 percent to 79.4 percent.”

Potter knows what he is talking about.  Disappointed shareholders can be brutal. And it doesn’t take much to disappoint them. In this case investors sent the share price plummeting because the insurer had the poor judgment to increase the amount that it paid out to doctors, hospitals and patients by 1.5 percent.

Even if an intelligent CEO wanted to do the right thing, take the long-term view, and provide labor intensive chronic disease management so that, over the long term, customers would be healthier—the CEO of a large publicly-traded insurance company probably wouldn’t keep his job long enough to find out whether or not his ideas worked.

But, for the sake of argument let’s assume that under health care reform, both private insurers and their shareholders experienced a change of heart. Patients still won’t accept limits imposed by for-profit managed care companies. They don’t trust them. They know that the law says that a corporation must put its shareholders’ interests first. Patients—and doctors—will always suspect that when insurers try to limit the number of services patients receive, they are just trying to save money.  They are not physician organizations. They are not medical ethicists. They are not even elected officials. Put simply, private insurers have neither the scientific expertise nor the moral standing to set the nation’s healthcare priorities.

Should For-Profit Corporations Make Such Important Social Decisions?

Some insurers understand this. “We find ourselves [becoming] private regulators and making public policy by HMO,” Alan Hoops, then chief executive officer of Pacificare told the Los Angeles Times in 1998. “We in the business of constantly passing judgment on the societal value of a given protocol.”  If the insurer agrees to cover more treatments, we all pay for them, in the form of higher premiums. Often the judgments raise questions of medical ethics. “How much reconstructive surgery is truly needed for children with severe facial disfigurement?” the LA Times asked. “Surgeons could simply restore normal functions or do more elaborate, and more costly work that would dramatically improve patients’ lives. ‘Do we reconstruct the entire face or simply improve it?’ asked John Golenski, a medical ethicist and executive director of George Mark Children’s House in San Leandro, California. “How to draw those lines in not clear in any insurance organization I’ve ever worked with.”

The LA Times zeroed in on the central question: “As health care is increasingly dominated by large, publicly traded corporations intent on maximizing profits for shareholders, should insurers be taking the lead on issues of such importance to society? Can the competitive marketplace handle these issues in a way that society will find acceptable?”

Probably not. I can only imagine the headlines if Wellpoint decided thatm  for a child  born with a hole in her face where a nose should be, surgery that ensured that she could breathe easily would be sufficient. Many of us might well feel that federal regulators should insist that private insurers cover full plastic surgery for children born with physical  deformities. Many of us might feel that they should pay for the PSA testing for early-stage prostate cancer that many urologists still recommend—even though there is no evidence that it either saves or prolongs lives. Others might argue that MRI breast scans should be available for average-risk women, even though the reseach reveals that, by detecting "pseudo-disease," the scans do more harm than good.  The list is endless.

Yet, Jaffe is right, we must reduce the volume of health care services we provide. In some cases we can “pay less” for certain drugs, devices and procedures that are over-priced. But we also need to “pay more” for certain vital services such as primary care, chronic disease management, and palliative care.

We need to pay Medicaid providers more. We need to reward hospitals that invest in systems that reduce errors and infections.  We need to fully fund Medicare and Medicaid so that they can ferret out fraud. (One reason Medicare’s administrative costs are so low is because it doesn’t do what it should to find and prosecute healthcare providers who are bilking the system.)

While we pay more for some treatments, we need to eliminate those that are ineffective. We have ample evidence that one-third of our healthcare dollars are squandered on products, procedures and hospitalizations that are exposing patients to risks without benefit. If we want better outcomes, we have to learn to “do less.” We know that more conservative medicine leads to better outcomes. .  

Who should decide where to draw the line?

If a Federal Health Board, composed of doctors and scientists began to limit the services that a public sector insurance plan offered– using comparative effectiveness research that had been analyzed by a panel of  physicians, nurses and patient advocates who had no financial interest in the outcome (a group very much like the group that now serves on the Medicare Payment Advisory Commission (MedPac)), many patients and doctors would feel far more comfortable with their decisions.

Very likely, in many cases, the public sector plan would not refuse to cover a product or proceduret(unless it was clearly harmful) , but it would be likely to hike-co-pays and lower fees for less effective treatments as the Congressional Budget Office has suggested. Over time, if patient outcomes improved, both patients and doctors would become more comfortable with the idea of following the Board’s guidelines.

Couldn’t a Federal Health Board layout regulations for private insurers, telling them what they can and cannot cover? A Board could lay out minimal standards for what must be covered in an insurance package. But micro-managing  private coverage, often on a case by case, drug by drug, procedure by procedure basis, would turn into a bureaucratic nightmare.  Think of the how much time hospitals and doctors now spend negotiating approvals with private insurers.

By contrast, Medicare has managed to make it clear what it will and won’t cover without endless wrangling. A public-sector insurance plan should be able to do the same.

This is why it does make a difference whether or not we have a public sector insurer. Privately, some for-profit insures have told MedPac that they never again want to be on the front lines of “managing care.”  But if Medicare—and a public-sector option—would provide cover, they would happily follow whatever precedents it set. If a public sector plan refused to cover Vioxx, deeming the risks too great for patients, , they would refuse payment for Vioxx. If the public-sector plan refused to cover bone-marrow transplants for breast cancer patients, knowing that there was no evidence the procedure saved lives—or even extended lives by one day—private insurers would follow suit. But this would be voluntary; the government would not be making case-by-case decisions for insurers, telling them what they couldn’t cover. 

At the same time, if private-sector insurers wanted to compete with the public-sector option on both price and quality, they would have to focus on making wiser coverage decisions that would lead to better outcomes. This means paying attention to comparative effectiveness research and covering what patients really need rather than what drug-companies tell them that they should have. Public sector insurers could serve as a model for private-sector insurers that want to life quality while reining in costs.

In the end, only government has the standing—and the responsibility—to appoint unbiased medical experts to set the standards that will best serve the public good.  Corporate America was never elected to do that.

30 thoughts on “Does It Matter Who Pays For Care? Who Has the Standing to Set Limits?

  1. “In the end, only government has the standing—and the responsibility—to appoint unbiased medical experts to set the standards that will best serve the public good.”
    How would you keep this appointment process from being politicized? Those of us who are skeptics about government think the Medpacs of the world do what they are supposed to do till they get to control real tax money, then they are devoured by the political process.
    Thank you for as clearly written a case as I’ve ever seen for what WE on the Right call “socialized medicine”.
    My question is meant as an honest response, not snark.

  2. “Medicare has managed to make it clear what it will and won’t cover without endless wrangling”
    Actually local as opposed to national coverage decisions (by contractors) are often confusing, fuzzy, and arbitrary. Not always clear, and what you get in Duluth, may not be what you get in Albuquerque. This is a wide criticism of the system.

  3. Maggie,
    I would like to offer a few comments on this.
    First, there is a lot of interest among large self-insured employers around prevention, wellness and disease management programs. Safeway, for one, has been in the news lately regarding its ability to hold its medical cost trend for its non-union employees flat for four years running now. Safeway’s strategies include allowing its employees to earn discounts or rebates from their contribution toward the cost of health insurance. The program is aimed at smoking cessation and controlling blood pressure, cholesterol and weight. Even the union leadership has recently expressed interest. Insurers do not sell insurance to large self-funded plans. Instead, they sell administrative services. Nonetheless, they are aware of the results.
    We seem to disagree on this, but I keep saying that insurers cannot please shareholders unless they please enough customers enough of the time. When service is poor or claims are frequently denied for no apparent reason, word gets around pretty fast, especially among the broker and consultant community. Moreover, in Jim Sabin’s book, “Setting Limits Fairly,” I recall a discussion of at least one complex procedure where, after studying identical facts, a for profit company decided to cover it while a non-profit decided not to. Since I think you said he is a member of your working group, perhaps you could ask him about it.
    With respect to even highly regarded non-profit HMO’s like Kaiser in Northern CA, I have not seen any data about how their costs or their insurance premiums compare to their competitors. If they are doing a superior job with preventive care, they should have significantly fewer inpatient bed days per thousand members which, in turn, should allow them to charge less. Do they? I don’t know. I think lots of people are wary of even non-profit HMO’s because they perceive an incentive to under treat because of the capitated payment model and they are restricted to a comparatively tight network of doctors and hospitals that they can access for care without being exposed to significant out-of-pocket costs.
    For the healthcare system as a whole, if we want people to embrace accountable care organizations, HMO’s and medical homes, I think we need a major league education and marketing campaign that will change the perception (and hopefully, the reality) of the PCP within these organizations from a gatekeeper who throws up roadblocks to access specialists to a trusted counselor, coach and guide to help the patient navigate the medical system as needed.
    Finally, I actually agree with you that government has the perceived moral authority to set limits while the private sector, both for profit and non-profit, doesn’t. However, I would argue that CMS already has more than enough market power to implement such limits as determined by an expert, politically independent group like MedPAC. Once CMS implements the MedPAC recommendations, the private sector can follow without the need for a public sector sponsored insurer.

  4. The critical point here is that private insurers need and have asked for the government to take the lead in instituting rational care — using the payment system to encourage cost effective care and discourage ineffective care.
    The reason is that the insurers are stuck in a competitive system that penalizes making unpopular decisions — as one executive told me, “you can’t become known as the insurance company that won’t let people get MRI.”
    Barry’s point about the fact that insurance companies acting as advisors to companies doing self-insurance are able to do that is a good one. The reason is that it is the company itself, not the insurer, who is the target of resentment, and the employees are stuck with the company.
    One of the very strong arguments for a strong public plan either working as part of Medicare or closely linked with Medicare is that they have the power, both with providers and patients, to do this type of thing.
    Also, the variation in local administration of Medicare is exactly that, administrative variation. The policies are set in Washington, and if an administrative company ends up with too many complaints that prove to be valid, they will likely lose their contract, since dealing with all those complaints costs time and money in Washington. It has been my experience as a physician that Medicare administrators are more responsive to complaints by providers and more likely to correct problems than insurance companies.

  5. Tim,
    Tim– Thanks for your comment and welcome to HealtheEat.
    You ask a very good question about how one keeps the process from being politiicized.
    But first–let me say . . .
    that “socialized medicine” isn’t what Obama is talking about. Socialized mediicne is a system where the govenrnment owns the hosptials and doctors are on the government payroll.
    That really isn’t what anyone in Washington is suggesting.
    Nor are they proposing “single-payer”–a different system where doctors and hospitals stay in the private sector, but governnment pays all bills.
    The Democrats are proposing a hybrid system where doctors and hospitals remain independent, and bills are paid by a combination of private sector and public sector insurers.
    No patient would be forced into the public sector plan. Patients could choose whatever plan they prefer.
    But–and this is the big difference from today’s system– health insurers would be regulated the way old-fashioned gas & electric utilties have been (can’t just raise rates without showing a reason), everyone would have insurance & those who couldn’t afford it would receive subsidies from the government.
    This isn’t a “government takeover” of healthcare, but it does mean government regulation. ..
    Now, your question: How does one keep the Federal Health Board from being politicized?
    The administration has talked about giving members of the board very long terms,and having their
    recommendations confimred by Congress in a single up or down vote. (Congress would not be able to change the details inserting pork, etc.)
    MedPac’s panel is appointed by the Comptroller General– this office seems pretty a-political, mainly focused on keep the nation in the black.
    I wouuld add that the members of the board should be medical professoinals and patient advocates who have never taken a dime from any stakeholder. (These are the people now on the MedPac panel)
    I also think that it would be very helpful if they were located somewhere outside D.C.
    FASB — the indepedent board responsible for settning accounting standards for U.S. corporartions–has stood up to Congress on numerous occasions. It is located in Norwalk , Ct.,
    which helps keep it independent.
    Finally Zeke Emanuel (Rahm’s brother and now White House budget director Peter Orszag’s chief health care adviser) has written a book suggestion that national healthcare should be funded by a dedicated VAT tax. This would mean that it wouldn’t have to go to Congress for appropriations every year.
    The tax revnues would go up, automatically, with growth in GDP.
    The would make national health care quite independent.
    Usually a VAT is regressive, in this case it woudnt’ be (I won’t go into the details here. See the book or my earlier posts. )
    I don’t expect that we are going to institute a VAT tax during a recession/depression. But five years from now, we might. And it could be a very good way to protect healthcare from politics.
    See Emanuels book: “Healthcare Guaranteed.”

  6. Maggie,
    In general a good article which I mostly agree with.
    However, you say: “We are not talking about rationing effective care; we are talking about squeezing out the tests and treatments that provide NO (emphasis added) medical benefit to patients.”
    This is an oversimplification/distortion of the situation. In most cases, there is no “bright and shining line” between a test that provides a benefit and one that does not. In most cases the true question is how much of a benefit for how much of a cost.
    Take the example of CT angiograms of the Chest for P.E. In my opinion, this imaging test (like many others) is significantly overused. It is possible to come up with criteria that if followed, would significantly reduce the number of CT angiograms of the Chest, while detecting nearly as many P.E.s as doing the test on nearly everyone. Use of these criteria would significantly increase the “bang for the buck” of this test. But please note the word “nearly” – it is inevitable that if criteria are tightened there will be a very small number of people with P.E. who will not have the test, will not have their P.E. detected and will suffer morbidity and mortality because of this. This will happen even if doctors are following criteria developed by the Mayo Clinic, Kaiser-Permanente and Harvard Medical School, then carved in stone by Moses.
    Thus the correct statement should be: “we are talking about squeezing out the tests and treatments that provide LITTLE (emphasis added) medical benefit to patients”
    This is a very different statement and requires some difficult decision to be made – difficult decisions that inevitably require decisions about the value of life and limb. To pretend otherwise is to be ignorant or dishonest.

  7. This comment not related to post. My apologies.
    My Google account was hijacked by a spammer and you probably got a stupid letter soliciting money to be sent to London.
    Sorry, but all my best efforts to get the Google robots to let me go back and repair the damage have met with no human response.
    I’ve quit blogging for the moment and have reactivated an old Yahoo email which I will send you separately. I still want to know when the DVD of your book will be available.
    Meantime, take three minutes from your busy day, grab a cuppa, and go here…
    You may already have seen it, but it was fresh to me. I found it at hilzoy’s place. Sebastian found it.

  8. No sane politician can possibly touch this one.
    Dr. Rick Lippin

  9. Legacy Flyer–
    You make an important point.
    I usually say “no benefit for patients who fit a particular profile.”
    Or, one could say “little or no benefit, while exposing the patient to the risks that accompany any medical treatment.”
    Though I would add that we do actually do tests and procedures that provide no benefit for patients who receive them. (A much smaller pool of patients might well benefit– and should receive the treatment)
    Here I’m thinking of PSA tests for early-stage prostate cancer.
    No evidence that they do any good. Much evidence that they do harm.
    I’m thinking of the reader who wrote in about her 90-something grandmother who suffered from congestive heart failure.
    While she was in the hopsital someone did a mammogram, discovered she had breast cancer, and decided to do a mastectomy –she died on the operating table.
    Often, in the hospital, a paitient who is dying from) one disease is subject to aggressive treatment for another disease. No benefit.
    In his book Complications, Dr. Atul Gawnde points out that when we do autopsies on patients who died on hospitals something like 30% of the autopsies show that the diagnosis was wrong. The patient was being treated for X but actually died of Y. And in many cases, the treatment for X exacerbated Y hastening or even causing his death.
    When Gawande first read this statistic, he couldn’t believe it was true. He and a group of doctors at Harvard re-did the reserach. It was true.
    The real irony is that, with all of the diagnostic tests we have, teh % of diagnosis that turn out to be right (if you do the autopsy) hasn’t improved since an earlier time when these diagnostic tests didn’t exist . .
    Other examples:
    Vioxx for people who could tolerate older pain-killers– no benefit, just risk of heart attack or stroke.
    Much low-back surgery.
    A great many C-sections.
    MRI breast scans for average-risk women– pretty solid evidence that the risk (detection of pseudo disease) outweights the benefit (when you look at number needed to treat.)
    Unnecessary hospitalizations “just to see what’s going on.”
    Doctors have tried to hospitalize my husband on a couple of occasions when “what was going on” was minor.
    One doctor thought it would be a nice idea to correct his deviated septum. (For what reason??)
    I don’t want him to fall victim to a hospital acquired infection or error.
    You are absolutely right in suggesting that there is a great deal of ambiguity in medicine.
    But there is also a great deal of low-hanging fruit.
    Especially when you compare the risks to the possible potential benefit.

  10. Legacy Flyer makes a valid point that there are a large number of tests, procedures, and medications that have a small amount of utility at the margins, but are not very useful overall. The point he neglects to make, but which is raised by Maggie, is that many of these tests or procedures are associated with negative effects, up to and including death in some cases.
    The example of CT pulmonary arteriography is a good one (both Legacy and I are radiologists and are very familiar with the overuse of the test.) Although there are a very small number of patients who benefit from having the test on a knee jerk basis – in my experience with thousands of the exams I can remember only one case in which the finding of pulmonary embolus (blood clots in the lungs) was a surprise – there are some patients who are actually injured by the test. A small but real number of patients suffer kidney injury from the dye used in the test, and a smaller but still real number of patients go on to have permanent kidney problems because of the exam. The test gives a fairly high radiation dose as diagnostic exams go – the equivalent of hundreds of chest x-rays, which is of uncertain significance but may cause some damage. The stress of administration of the dye is associated with heart problems, both heart attacks and sending people into bouts of congestive failure, in a small number of cases. There are a very small number of people, but again a real number, who have serious, even fatal, reactions to the dye. In the end, there may be a significant number of injuries offsetting the rare benefit.
    The situation is similar in other situations. Unnecessary tests may lead to unnecessary surgery. Surgery of questionable utility may lead to all sorts of complications, including death. Medications can cause serious problems.
    This is one of the things that people are not aware of when they read about the waiting times for some exams and procedures in Canada, Britain, Sweden, and elsewhere. In many cases the wait is actually beneficial. The patient improves during the waiting time and concludes that the procedure is no longer desirable. There is considerable evidence that lower levels of some procedures — including heart surgery, joint replacement, some high tech radiologic exams, and so on – occurring in other countries actually leads to better, not worse results.
    There is some low hanging fruit here, where the evidence is quite clear. Other situations are more problematic, and would require more research. The money Obama has allocated for effectiveness research is a good place to start. Paying closer attention to the process of bringing new drugs, tests, and procedures on line is another important step.
    No matter what we do in medicine, there are always some bad results. Procedures performed and drugs administered can lead to dangerous complications, while procedures not performed and drugs not administered can result in some patients not receiving benefits. The essence of effectiveness research is to measure the balance. Unfortunately, the bias in the US has long been strongly in favor of doing rather than not doing, and of embracing the new rather than regarding it with some caution. It is now becoming clear that we cannot afford to continue that bias, but must start joining the rest of the world in embracing greater caution.

    ” .. it just isn’t important whether we have a public-sector insurance plan competing with private sector insurers ..”
    Yes. Let’s ignore FANNIE MAE and FREDDIE MAC. The basic insolvency of Medicare. The public debt at 63% of GNP and rising. Brilliant.
    Buy gold — the USA is heading for bankruptcy. With this kind of cognitively-vacant thinking.

  12. Pat S and Maggie,
    Pat S says: “The point he neglects to make, …. is that many of these tests or procedures are associated with negative effects, up to and including death in some cases.”
    Pat S is quite correct, many tests including CT pulmonary angiography do have complications including radiation exposure, exposure to potentially toxic/allergic chemicals and a bill for the co-pay (the most likely “complication”). I did not discuss this in my last post because it add further complexity what is already a complex situation.
    The rate and severity of the complications of a test should be considered when deciding who should or should not be tested. Obviously, the more likely or more serious complications are, the greater the need for the test should be before it is performed. Put another way – don’t do a dangerous test unless you REALLY need to.
    This does not change my basic point – in most cases there is no clear line between an “indicated” and an “unindicated” test, the line is fuzzy and subject to different interpretation by different people. Perform the test too frequently and you increase costs for little benefit, perform the test too infrequently and you risk missing disease that could be treated with benefit to the patient.
    Maggie says: “I’m thinking of the reader who wrote in about her 90-something grandmother who suffered from congestive heart failure. While she was in the hospital someone did a mammogram, discovered she had breast cancer, and decided to do a mastectomy –she died on the operating table.”
    This was clearly a bad decision and is “low hanging fruit”. But the real discussion about mammography is not about anecdotes like the one above. The real, nontrivial discussion includes:
    • At what age should we start screening patients? (40, 45, 50)
    • At what age should we stop? (75, 80, 85)
    • What frequency should we screen? (every year, every other year)
    • Should we screen with one view like they do in Sweden, or should we screen with two views as we do in the US?
    These are not simple questions to answer and the answers include judgements about cost and the value of a life. The Swedes have answered these questions differently than Americans likely would.
    Maggie says: “One doctor thought it would be a nice idea to correct his (Maggie’s husband’s) deviated septum. ”
    My brother has a nose that looks like the beak of an eagle that flew into a plate glass window (slight exaggeration). It was the result of an unfortunate incident during high school gym class that my parents never even thought about suing over. I am sure that a Hollywood plastic surgeon would start to drool uncontrollably if he saw it and my brother has been offered to have it corrected several times. Secure in the affection of his friends and family and not burdened by vanity he has kept his “crooked beak”. At this point in his life it looks “distinguished”. I hope your husband’s nose is not quite as “distinguished” looking as my brothers!

  13. I would divided the “low hanging fruit” of wasteful healthcare system spending into four categories that would require four different strategies to address independent of how we ultimately deal with financing health insurance. The four categories and the needed strategies, in my opinion, are as follows:
    1. Routine screening and diagnostic tests. This covers everything of PSA blood tests, mammograms and colonoscopies to sophisticated imaging to rule out serious conditions. Protocols need to be developed, if they haven’t been already, by entities with appropriate expertise and credibility. Doctors who follow them should be given robust safe harbor protection from lawsuits based on a failure to diagnose a disease or condition.
    2. Surgical interventions. This is a high cost category that lends itself to shared decision making other than for interventions that need to be performed under emergency conditions. Patients should also not be shy about seeking a second opinion.
    3. End of life care. Here, palliative care consultations need to be widely available and appropriately compensated. The execution of living wills and advance medical directives should be strongly encouraged with the information stored on central registries which doctors, hospitals, and other providers can access as needed.
    4. Expensive drugs and devices including specialty cancer drugs. Here, cost-effectiveness research needs to drive coverage and payment policy. If there is a lower cost alternative that is just as effective or almost as effective, payment policy should steer patients toward the more cost-effective alternative. If it can’t pass a reasonable cost-benefit threshold, we shouldn’t pay for it.
    I’m sure there are other areas of excess costs like the much higher percentage of c-sections as compared to 30 years ago. The bottom line, though, is that we need to attack healthcare costs. It is not one war but a series of wars each of which requires a different strategy and attack plan. As I said at the top, how we finance health insurance and how many of the currently uninsured we can bring into the system is a separate and independent issue.

  14. Maggie,
    Thanks for taking the time to respond.
    I should disclose that I am a manager of a surgical group practice. So I write from within the belly of the beast.
    I do not believe a hybrid is a stable solution. As a practical matter, to the degree patients are covered by a government payer we (on the provider side) are now employees of the government. They tell us how and how much we will be paid, and that is that. In my world, that is now about 1/3 of our business. This entire debate simply represents the probability that this inability to negotiate is about to become 100% of our customer base.
    And that may be fine with the country. If it is, it simply means you are about to make your doctor a government functionary. Again, that may be fine with everyone. I think when we see it within our borders, we won’t like it. The American health consumer has built a certain expectation level, and backed it up with a legal system that will not allow a European-style delivery of care.
    I realize I’m not offering an alternative. I do agree the system is broken. We do have the finest health care in the world, I believe — as the Right keeps saying — in the individual parts. But we don’t have the best health care SYSTEM, because we have no system at all. So, when you have high quality moving parts, but no overarching design, your machine doesn’t work.
    But everyone needs to keep in mind that the domineering power in American health care already is, and has been, a federal agency: CMS. As a practical matter, the US government decides NOW what gets paid for, and how much, and they have, for decades. Is care uncoordinated? Are specialists paid too much and primary care too little? Do we have a procedure-driven approach?
    CMS can change all this, now, overnight.
    Sure, there are greedy doctors and hospitals in the system — there always will be — but the overall tone and tenor of the “system” is NOW a product of legislators, regulators, and lawyers. Not providers. Now, we are told, if we can just get the right laws passed it will all be o.k.
    I don’t believe it.
    Maggie, FASB sets accounting standards in a non-politicized environment, sure, but just let large amounts of taxpayer money get tied to their decisions plus whether someone’s grandma lives or dies, and that ends.

  15. Yeow! Pithy post, pithy comments! Right up my alley! No response (from me) to what’s being said, yet, here, but I’m going to keep up with this post. I LOVE the multi-faceted, hard core consideration being advanced in this post.

  16. Dont let the government take over our health care. I do not want to wait 6 months to a year for surgery or to be seen by a doctor. Why do people in Canada come down here for medical problems? In Ireland you have to wait for 6 months or more for needed surgery. The government is screwing up this country dont let it take over its citizens.

  17. Kath, Legacy, Gail Rae
    Kath-I am afraid you have been misinformed on many counts.
    First, no one is talking about a “govt takeover”.
    No one is proposing that the government take over the hospitals or that docotrs work for the govt , as they do in Canada.
    Secondly, Canadians do not come down here in large numbers (or even medium-sized numbers) for healthcare.
    An article published in Health Affarrs looks at this myth. The reseracheres interviewewd US. doctors and hopsitals near the border. They looked at hospital discharge records.
    Very, very few Canadian patients.
    They titled the article “Phantoms in the Snow” (Click here
    The notion that Canandian have to come here for care is conservative propaganda designed to make people like you worry that health care reform will mean long waits, etc.
    But conservatives will continue to spread misinforamtion. The article concludes:
    “Despite the evidence presented in our study, the Canadian border-crossing claims will probably persist. / . Debates over health policy furnish a number of examples of these “zombies”—ideas that, on logic or evidence, are intellectually dead—that can never be laid to rest because they are useful to some powerful interests. The phantom hordes of Canadian medical refugees are likely to remain among them.”
    Finally I have relatives in Ireland. One is now here, in grad school at NYU. They don’t wait months for “needed” surgery.
    They may wait for “elective surgery” (i.e. knee surgery or a knee replacement–as people often do here (especially if you want it done by a particular surgeon). This is actually a good thing. It gives people time to think about it, decide if they really want it.
    In Ireland, they don’t wait for primary care. (Here, try moving to a new city and trying to find a primary care doc. Very likely you’ll be told you can have an appt. in 2 months.
    That’s why well-insured people wind up in ERs)
    Legacy Flyer–
    We actually have very good guidelines on mammograms from Cancer Socieites and Preventive Services Task Force– based on medical evidence.
    If I recall correctly mammograms for average risk women are now recommended only for women 40 to 60. . . .
    (See Naomis’ recent post to double-check.)
    As a woman, and the mother of a daughter, I’m very comfortable with this.
    If some average-risk women want mammograms when they are younger–or much older–that’s fine but it makes sense for them to pay a high co-pay.
    A co-pay of, say $50 or $75 will make them ask, why so high? And hopefully someone will explain: current medical evidence suggests that at your age the mammogram may well do more harm than good.
    (For full explanation see Naomi’s post.)
    Re my husband’s nose. Thanks for your concern. But he actually has an elegant straight nose.(He was born with the deviated septum. )
    Gail– Welcome to the blog, and thanks for your kind words.

  18. This is one of the better blogs and comments, that I have read, in a while. Very informative.

  19. There was an piece on CNN by Sanjay Gupta which revealed a large number( I think it was many thousands) of U.S citizens go to plces like India’s big cities for top of the line care and coming at 1/10 the price. India now has few top of the line hospitals that cater to U.S citizens.

  20. Maggie,
    You say: “We actually have very good guidelines on mammograms from Cancer Societies and Preventive Services Task Force– based on medical evidence.”
    There are many different guidelines out there and they are all theoretically based on medical evidence. The one you quote is probably one of the least influential and least followed guidelines out there.
    The guidelines of the Obstetricians and Gynecologist are probably the most widely followed are are different.

  21. I am sure this is probably a slip in writing quickly and that Maggie knows the facts, but doctors do not work for the government in Canada.
    The vast majority of doctors in Canada are private practitioners or employees of medical systems, just as in the US. Their fees are paid by government insurance.

  22. India is great. It’s cheap, one of the reason’s being,you have to worry about getting, shot, blown up or getting your head cut off on a webcam. A 20 hour plane ride is also probably not a very good idea right after a surgery, otherwise proceed.

  23. Legacy, SPARTEN,Everyone Else–
    I will be back. Have been very busy. Need more sleep. And some comments are more ocmplicated (sometimes this is good, sometimes not), but in any case, they require more time and thought … ) best, mm
    You wrote:
    “The guidelines of the Obstetricians and Gynecologist are probably the most widely followed and are different.”
    Yes they probably are more widely followed–and “different”
    Who makes money in this area (often from referrals?
    The Preventative Services Task Force has no vested fiancial interst. And the NCI and ACS come pretty close to agreeing with the Task Froce on this issue.
    SPRARTAN– Welcome to HealthBeat –and thanks for your kind words. I hope that, in the future, you’ll participate.

  24. A Distraction
    I happen to believe that the “debate” over a public option is more of a distraction than a substantive policy option. A distraction from what? A distraction from the timid approach to health care reform that we have seen to date from the leading lights in Congress and the Administration. From where I sit, the three main plans that are in play all represent similar tinkering with the current system and are unlikely to produce a more effective and sustainable system over the long term.
    I do not see how a public plan, managed by MedPAC and competing on a “level playing field”, will result in any better outcomes than private insurance companies operating and competing under standards established by a Federal Health Board. Except, of course, that we don’t have a Federal Health Board – that would be real reform. By way of example, that part of the financial services industry that has operated under federal regulation has performed reasonably well in private hands – it was that part of the industry that grew up outside regulatory boundaries that has gotten us in our current financial trouble.
    The question to ask about a public plan is whether or not it is going to lead to better outcomes and manageable costs. Atul Gawande makes a good point in a recent interview with Ezra Klein – he writes perhaps $50,000 in orders in any given day. He questions whether it really matters to the total cost of health care if they are paid for by a public or private insurance plan?
    In a similar vein, David Riemer and Alain Enthoven in an op/ed piece in the NYTimes made the point that “Medicare has a dismal record of controlling costs and improving quality.” They go on to recommend that “a better public plan would not be a new government-run insurer at all, but rather a government-chartered mechanism that would let employers and individuals buy health coverage from private insurers in a manner that uses the three most essential market forces — choice, competition and incentives — to reduce the price and improve care.”
    This is not to say that a public plan is a good or bad idea, it is only to make the point that it is not likely to contribute to true reform. Until the health care industry, represented by such organizations as the Advanced Medical Technology Association, the American Hospital Association, the American Medical Association, America’s Health Insurance Plans and the Pharmaceutical Research and Manufacturers of America, assumes the risk for the goods and services they deliver, will we see it improve itself if out of pure self-interest. In other words, the industry will have the incentives to improve performance when the individual consumer has a choice among competing plans.

  25. Bill Blake:
    “In other words, the industry will have the incentives to improve performance when the individual consumer has a choice among competing plans.”
    I can maybe understand how prices for the same process may come down a bit with competition among different private plans, but outcomes?? Is it insurers who practice medicine in this country or licensed providers? Last time I checked, it was licensed providers. Okay, so how does competition among private insurers by itself lead to better outcomes through the actions of licensed providers, and how will patients really know?

  26. NG
    The problem with so much of the debate on health care reform is that it centers around reigning in or dissolving insurance companies leaving providers relatively untouched to continue to practice inefficiently and ineffectively by national standards of measure. By “competing plans” I was referring to a provider/insurer operation, an HMO if you will, or is the term now ACO?
    I am a big fan of the Guaranteed Healthcare Access Plan (Emanuel/Fuchs), because it is organized around what are basically competing HMO’s. The time is long overdue for insurers and providers jointly to assume the risk for the efficacy of the services they provide. That is not the case today – risk falls overwhelmingly on the consumer.

  27. Bill Blake and NG, Bill (second comment) Ray, Pat S.
    Bill– If you read the MedPac reports from the last 3 or 4 years you would realize that if MedPac’s recommendation’s were implemented, the financial incentives woudld be realigned and providers would have to provide more efficient care (better outcomes at a lower cost) if they wanted to stay in business.
    For instance, hospitals that did not make real progress toward benchmarks for efficiency over 6 years would ultimately not be eligible to care for Medicare or Public Sector Plan patients.
    That means they close their doors.
    No private insurers has the size or the clout to enforce rules like that. If customers like an inefficient brand-name hospital (say, UCLA)
    that costs insurers twice as much, and an insurer drops it from its network, customers will pick a different insurer.
    NG & Bill– See what I said above to Bill– This brings me to a second point: As NG implicitly points out in his question, “How will patients really know?”
    They won’t.
    That’s why patients choose inefficient hospitals like UCLA — where outcomes are not nearly as good as at many other medical centers (including UCSF), where they are much more likely need to spend more days in the hosptial–because the are being treated by too many specialists and their care is not well co-ordinated–and then have to be readmitted because they were discharged without sufficient information; etc, etc.
    Yet most patients in the area just see a big, modern hosptial with lots of hi-tech equipment.
    They know if they like the rooms, the nurses, etc. They have no idea whether they are getting the right tests and treatments.
    As Kenneth Arrow, the father of health care economists pointed out long ago, when it comes to healthcare, this is an areas where consumers (sick patients) are not in a position to life quality and drive down costs.
    So in citiies like Manhattan, LA, Miami etc.
    people pay top dollar for medical care–and actually think that their hospitals and doctors are “the best”–but when you look at outcomes data, after adjusting for race, sex, age and the underlying health of the population, you find out that outocmes are better in places like Iowa City.
    If I or my husband were very sick, I would leave Manhattan and probably go to Dartmouth-Hitchock, the nearest very efficient and safe hospital that I know of. (As it happens, I have a national insurance plan under Aetna, that would cover me at many places, including Mayo. But I’d feel just as safe at Dartmouth. Or Geisinger in Pennsylvania.)
    There are, of course, many superb doctors and nurses working in Manhattan. But even many of them would say that the delivery system —the hosptials and the lack of collaboration– makes these hosptials dangerous places to be.
    There is also an emphasis on reserach that makes clinical care a secondary priority at many NYC hosptials.
    Bill– I, too, like the Emanuel/Fuchs plan very much.
    One of the best things about it is the dedicated fudndng from a VAT tax that protects it from Congress and Lobbyists.
    But, we’re not going to have a new large tax in the middle of a depression– particularly not one with a European pedigree.
    I also very much like provider/insurance operations which put the provder and insurer on the same page. These can work very well.
    But we can’t suddenly herd all of the nation’s providers into ACOs. We can encourage them; we can provide incentives for them to network and share risk, but that’s about it.
    In the meantime, we need something like MedPac–and a Federal Health Board–that is as insulated from politics as possible– requiring providers who want Medicare’s and a Public Sector Plan’s business to provide more efficient care.
    Some say you could never insulate MedPac or a Federal Health Board from lobbyists.
    I say that NICE (in the UK) has done pretty a good job of doing just that (both docs and the leading healthcare economist at the London School of Ecnoomics) confirm this.
    NICE has learned to play rival lobbyists off against each other. . . .
    If they can do it in the UK I don’t see why we can’t do it here.
    Are we THAT much more corrupt?
    I’m afraid Gupta was doing a travelogue. He’s really not a serious medical reporter.
    Yes, some upper-middle-class and upper-class people go to India for care, and yes, India does have some very fine doctors and hospitals.
    But gong to India is not cheap.
    First, trust me, if you’re over 40 you wouldn’t want to fly to India coach–even if you were in good health.
    I’ve done it, first class (two tickets for the price of one on Swiss Air) with a one day stop in Zurich on the way back to break up the trip, and it was still grueling.
    A wonderful trip, but exhausting.
    Secondly, you would want to bring a friend or relative with you.
    There are few if any reasonably priced hotels in INdia. There are hotels for back-packers and there are luxury hotels for people who don’t want to sleep in a tree-house.
    So figure $700 or more a night for your friend in a hotel.
    (The good news is that food and services in said hotel are inexpensive.)
    After you’re discharged from the hospital, you too will probably want to spend at least a few days in the hotel hospital, up for the trip back. Figure another $4,000.
    Finally, if something goes wrong, you have no recourse. You can’t sue for malpractice and you can’t even require the hospital and doctor to re-do the knee transplant that, for whatever reason, is infected, or doesn’t seem to fit right — whatever.
    A good doctor would no doubt help you with an infection, but the question of fit and how soon it should be comfortable is pretty subjective.
    Mistakes happen in the best hospitals, in India as in the U.S. But at least in the U.S. you do have some recourse . .
    I can see going to another country for a very low-risk procedure (I know someone who had her teeth whitened in Colmbia for about 1/4 of what it would cost here–and they look beautiful. But she was going to Colombia anyway to visit her mother..)
    Finally, and most improtantly, getting healthcare abroad is unaffordable and just not practical for the vast majority of Americans who don’t have the money, and who have responsibilities (kids, elderly parents they care for, jobs) that would make it impssible to take off for a month in India.
    Pat S.– Yes, of course most docs in Canada are self-employed. It’s single-payer, not socialized.
    And you make a good point, when most people talk about how difficult it is to draw a bright line between effective and ineffective treatments, they are looking only at benefits–not risks.
    When risks are potentially high, the benefits have to be great for me to want to undergo any procedure–including tests.
    We cover so many treatments that provide only marginal benefits –at best–and the risks and side effects are always there.
    Just because we can do something doesn’t mean that we should
    And yes, the evidence does show that when people have to wait a few months for an elective procedure, often they improve, or think it over and change their mind.
    In the U.S. too many people are rushed into aggreessive procedures.
    They go to a doctor with a complaint, and the next you know someone is saying “Okay, this is what we’re going to do ! )
    The patient is swept along in the surgeon’s enthusiasm . . (And this doesn’t mean the surgeon isn’t being truthful. From the surgeon’s point of view, surgery probably seems like the best idea. Surgeon are proud of their craft; they like to help people.
    But they are not the ones who will have to suffer through recovery, or risk a mistake (they may well be made by someone other than the surgeon) that leads to serious complications.
    In general, patients have good reason to be somewhat less enthusiastic than surgeons about surgery.)