This fortnight’s Health Wonk Review is hosted by Louise Norris of the Colorado Long Term Care Insider who has done an excellent job of rounding up some of the most provocative health care posts published in the past two weeks.
Writing on the Incidental Economist, Austin Frakt explains that if we rein in health care spending, we have to go where the money is. And that is not in the health insurance industry. Insurance premiums are so high, in large part, because reimbursements to health care providers have been sky-rocketing, along with payments to drug-makers and device-makers.
“In each of the past 50 years payment to health care providers has accounted for more than 85 percent of health insurance premiums,” Frakt points out. “Thus, only a small fraction of spending on health insurance premiums is consumed as a cost of insurance. I have no doubt that there are ways to squeeze some efficiency out of the insurance system. But doing so is not likely to make a substantial, long-term impact on the inflation of health care costs.
“Sure, there are things that could be done to make health insurance premiums cheaper for some people, relative to what they might otherwise costs. Some of those things are in the new health reform law. In combination, the mandate, the new exchanges and subsidies will put downward pressure on premiums, particularly for those participating in the non- or small-group markets.”
But when it comes to lowering costs system-wide Frakt emphasizes, “we need to remember that vast majority of private-sector spending is not tied up in the insurance system. Thus, focusing on insurance reforms alone while claiming to seriously address the long-term spending issues for everyone ignores this basic math.”
Will the law passed last year reduce costs? “A lot depends on the new, experimental ideas in it, like bundled payments, accountable care organizations and the Cadillac tax,” says Frakt. “And that is why we need to let those experiments play out — keeping at the cost problem.”
I agree. I would add that we know that many of these changes in how care is delivered—and how we pay for it—can save money. But we don’t know how much. These experiments will work well in some parts of the country, not as well in others. This is why the Congressional Budget Office and others haven’t been about to “score” how much will be saved. But it is clear that, under the Affordable Care Act, the Secretary of Health and Human Services and the Independent Payment Advisory Board have the power to reduce spending—without needing approval from Congress. In the past, lobbyists have blocked most attempts to cut health care spending. Now they won’t have nearly as much power.
Frakt concludes: “To begin to address health care spending growth we need to follow the money. Providers, not just insurers, need to be part of the solution, and a big part of it — most of it, actually. Last I checked they have some very politically powerful organizations representing their interests, which makes this both technically and politically challenging. Reducing payments to providers takes money out of someone’s pocket.”
This won’t be easy. And it will take time. We cannot suddenly whack payments to hospitals or specialists without disrupting care. But we can “break the curve” of health care inflation by beginning to pay for value, not volume—and by refusing to pay for tests and treatments that provide no benefit to the patient.
On the question of unnecessary tests, Gary Schwitzer has taken on a sacred cow: mammograms. Over at Health News Review, Schwitzer begins by reporting on a “mammogram party” at a local hospital that “offers women a dose of pampering to calm the nerves. In its description of the festivities, the Pioneer Press quoted two different hospital marketing people promoting their ‘Mingle & Mammograms’ parties. The story described pampering, appetizers, chocolate, sparking cider or wine, flowers, swag bags, massages, foot reflexology, and cuticle paraffin treatments.
“But in a 1,000-word story,” Schwitzer observes, “fewer than 100 words even hinted that there is important scientific disagreement about mammography. More than twice as many words were devoted to what marketing people said. There was not one word about the very real tradeoff between benefits and harms of mammography for women in their 40s.”
Schwitzer quotes what some experts have to say about mammograms:
“Dartmouth's Dr. Gil Welch (author of "Should I Be Tested For Cancer? Maybe Not, And Here's Why") wrote about mammography in a medical journal: ‘The question is no longer whether overdiagnosis occurs, but how often it occurs.’ He included a table to explain the tradeoffs of harms and benefits (debits and credits) – and this was for 50-year old women, for whom the evidence of benefit is stronger than it is for those in their 40s.
“Welch explains: ‘The benefit of breast cancer screening is that some breast cancer deaths can be avoided. Unfortunately, it doesn't happen very often: most women destined to die from breast cancer, will still do so – even if they are regularly screened." So while in 1 in 1,000 benefits, the other 999 would be screened for 10 years and gain nothing. Some, as shown, are harmed.’”
Welch quotes other breast cancer specialists who note that despite all of the screening, overall cancer rates for breast cancer and for prostate cancer are higher than in the past: more patients are being treated and “the absolute incidence of aggressive or later-stage disease has not been significantly decreased . . . “
Meanwhile, another physician points out that “There are all sorts of commercial entities that stand to gain with an aggressive indiscriminate screening message . . . Somebody, somewhere, is raking in boatloads of money.”
Schwitzer ends his post by saying: “This is not meant to discourage anyone from screening. It’s a call for accurate, balanced and complete information on screening to help people make informed choices.
That would be something to celebrate.”
On Managed Care Matters, Joe Paduda tackles two other controversial subjects: Should Medicare negotiate for lower prices on drugs? And should HHS base reimbursements on comparative effectiveness data, rather than the cost of providing care? Paduda says “yes” to both ideas. Over time, I think this will happen, simply because it must. We cannot afford to continue to over pay for drugs, and health care will become unaffordable for most of us if we continue to lay out enormous sums for treatments that are no better than—and sometimes riskier than—the less expensive treatments that they are trying to replace.
Norris reports that on Workers’ Comp Insider “Jon Coppelman explains how legislators are trying to hash out (sorry) the details of legal medical marijuana and workplace regulations. The rights of employers to maintain a drug-free workplace and the rights of medical marijuana patients seem to be at odds with each other, and this issue promises to become more widespread as more states address the issue of legalizing medical marijuana.”
On HealthBlawg David Harlow offers insight into how Accountable Care Organizations might work. He looks at “the Alternative Quality Contracts (ACOs) in Massachusetts that are somewhat similar to Accountable Care Organizations (ACOs), although,” Norris notes, the latter have yet to be completely defined and rolled out. Harlow describes a recent presentation by the CEOs of BCBSMA and Atrius Health (a group of 700 doctors who participate in the ACQ), who detailed how they’ve implemented the ACQ, and how it could work as a model for ACO implementation across the country.
Over at Health Care Renewal Dr. Roy Poses reveals how corruption and conflict of interest is draining money from worthy global health initiatives. “He notes that recent news stories have focused on corruption in various large health-promoting organizations, and yet most health care organizations still have no initiatives in place to fight corruption and promote transparency and accountability.”
Norris spotlights a post by Jessie Gruman, writing at Health Affairs Blog, which “gives us an excellent (and very personal) look at the nitty gritty details behind shared decision making between patients and providers. As a current cancer patient, Jessie details her own experience with sharing evidence and decisions with her oncologist, but also notes how difficult it is to be actively involved in the decision making process while also coping with the pain and fear that often accompany a serious illness. But despite the obstacles, she notes that shared decision making is the ideal scenario, and something that both patients and providers should strive for." This is a brave and wise post. I recommend it to everyone.
At BNET Healthcare Ken Terry notes that insurers are striking back at high cost hospitals by encouraging members to utilize lower cost options instead. “Although much of the focus of “healthcare reform” has been on insurance reform instead, this is one strategy that could actually lead to lower healthcare costs. If large insurers offer financial incentives in the form of lower premiums and/or deductibles and copays for policies that utilize lower-cost facilities, high-cost hospitals might be more inclined to bring their fees more in line with the averages, even if it means being a little less profitable.”
Yes, as I indicated in my post below on “Hospital Consolidation”, I think this is the future. Insurers will be under pressure from state and federal regulators to keep a lid on premiums; this means that they will begin to push back if providers are charging more than they can afford.
By contrast, John Goodman thinks that insurers will go right on overpaying. Writing on his Health Policy Blog, he details the cost-shifting that he thinks will be necessary “in order to implement the various reforms of the PPACA,” and notes that there are no free lunches. “Unless providers agree to earn less money across the board,” Goodman argues, “patients with private health insurance will be paying more in order to compensate for lower reimbursement rates for Medicare and Medicaid patients.”
Apparently Goodman didn’t read Ken Terry’s post. Goodman ignores the fact that private sector insurers have made it clear that they plan to follow Medicare in reducing payments to providers that charge more. And they will also begin to look at comparative effectiveness research and refuse to pay for pricey treatments that provide no additional benefits for patients who fit a particular medical profile. In South Carolina, for example, Blue Cross/Blue Shield has decided that it will no longer cover “spinal fusions” for degenerative disks. (As I explained in a recent post, there are better, less expensive procedures for these patients.)
Goodman also doesn’t seem to understand that in cases where for-profit insurers decide to follow Medicare’s model, and cut reimbursements which “overvalue certain services” (the language that the “Affordable Care Act” uses when giving the Secretary of HHS the power to cut fees), providers won’t be asked “whether they are willing to earn less money across the board.” They will be told “this is what we are willing to pay.” The evidence from Massachusetts suggests that many patients will be willing to desert the most expensive providers if that means lower health care premiums.
As Austin Frakt explains in his post (above) the only way to bring down the cost of care throughout the system is to pare payments to providers. It won’t be easy. And it should be done carefully. But over time, it must be done. The alternative is that health care becomes unaffordable for the vast majority of Americans.
As Norris notes: “One has to wonder if perhaps we’ve become a bit too extravagant in terms of what we expect from our healthcare. Do we want affordable medical treatment, or do we want a hospitalization to feel like a visit to a hotel? Maybe shared patient rooms isn’t such a bad idea (for all of us, not just those on Medicare and Medicaid), if it would help to bring down the cost of care.”
In much of Western Europe, hospitals are far more Spartan than in the U.S., but they provide care that is, by and large, just as good—sometimes better—for much less. This is how they can afford to provide universal coverage.
I wish I could comment on all of the posts mentioned in the Valentine’s Day edition of Health Wonk. I urge you to read the entire round-up by clicking on this link.