“Essential Benefits” that Insurers Must Offer Under Health Care Reform

Will Universal Coverage Mean “Medicaid for All”?

Often, I refer to the health care reform bill that President Obama signed into law in March of 2010 as “the Affordable Care Act” or ACA.  Friday,  as I read the Institute of Medicine’s (IOM’s) report on the “Essential Health Benefits” (EHB) that private insurers will be required to cover under reform, I resolved never to make that mistake again.

The lawmakers who crafted the legislation called it the “Patient Protection and Affordable Care Act” (PPACA) and with good reason. The first goal of the legislation is to protect patients by ensuring that they have access to all of the health care that they need. Yet the IOM committee charged with proposing how the Department of Health and Human Services (HHS) should go about defining “essential benefits” made “Affordable” its first priority. “Patient Protection” trails, in second place.

The summary of the report makes this clear when it suggests that “one way to think about the EHB package is to compare HHS’s task to going grocery shopping. One option is to go shopping, fill up your cart with the groceries you want, and then find out what it costs. The other option is to walk into the store with a firm idea of what you can spend and to fill the cart carefully, with only enough food to fit within your budget. The committee recommends that HHS take the latter approach to developing the EHB package.”

I have talked to two of the experts who served on the 18-member IOM committee:  Marjorie Ginsburg, Executive Director of the Center for Healthcare Decisions, and James Sabin, a Clinical Professor in Harvard Medical School’s Departments of Psychiatry and Population Health, who is also  Director of the Harvard Pilgrim Health Care Ethics Program. Those conversations have convinced me that the committee did not necessarily intend to make “cost” the main theme of a report which is actually sub-titled “Balancing Coverage and Cost.”

As Sabin and Ginsburg pointed out to me, the full report is far more nuanced than the introductory summary suggest. Yet  few will ever read the full 300-page report. When it was released, most journalists only had time to read the 4-page “Report Brief”–especially after an overly ambitious blogger broke the embargo on the full report late Thursday. (This meant that journalists were working hard to get the story in newspapers Friday morning, before the formal release of the report later in the day.)

The 4-page summary puts costs up front, and the grocery-shopping analogy pops off the page. It’s easy to grasp and it seems to make sense. As a result, media headlines, like this one from the Washington Post, sum up IOM’s message this way: “Health-care law benefits must be limited to ensure affordability.”

Defining “Essential” as the Benefits Small Employers Offer

Yet while the summary may not do justice to the full report, the truth is that the report does downsize the required benefit package by recommending that it should be modeled on the “scope and design” of  packages that “small employers offer today.”  By contrast, the Patient Protection and Affordable Care Act suggested that “essential benfits” should mirror the coverarge that Americans receive through their employers. Most observers assumed this meant that, under reform, everyone would be able to count on the standard benefits that the majority of U.S. workers now receive from large to mid-sized firms.

But instead, the IOM committee chose the package that small employers can afford, which is typically less generous. One way to measure the difference is to look at premiums. According to the Kaiser Family Foundation in 2011, family coverage offered by small employers (with 3 to 199 employees) averaged $14,000, with the employer contributing a little over $9,000 and the worker chipping in roughly $5,000. By contrast, family coverage offered by large employers cost $1,500 more, or $15,500, with the employer contributing $11,700 and the employee kicking in $3,700.

Let me be clear: Harvard’s Jim Sabin argues that if we excised some of the waste from our health care system, we should be able to provide high-quality family coverage for $14,000 — and I agree. But the report suggests that “essential benefits” should be based on the “scope and design” of the policies that small firms offer. Here, we’re talking about just how comprehensive the policies that for-profit insurers sell on the Exchanges must be.

What is omitted from the small employer package? Kaiser offers several examples, including “smoking cessation programs (offered by 31% of small firms vs. 63% of larger firms), and weight-loss programs (28% vs. 53%.) The IOM committee also looked into the “scope” of these plans, and the report explains that there is little data available on “typical benefits” in the packages small employers provide. But the group did manage to collect information from three major insurers. An Appendix to the report reveals that the following services:

  •     hospice care
  •     drugs that help smokers quit smoking
  •     services for autistic children
  •     hearing exams and hearing aids
  •     diabetes care management

are less likely to be included in the plans that small companies offer.

 How the PPACA Contradicts Itself– the Committee’s Solution

The IOM committee points out that health care reform legislation lists “10 general categories of health services” that should be considered “essential”:

• Ambulatory patient services

• Emergency services

• Hospitalization

• Maternity and newborn care

• Mental health and substance use disorder ser­vices, including behavioral health treatment

• Prescription drugs

• Rehabilitative and habilitative services and devices

• Laboratory services

• Preventive and wellness services and chronic disease management

• Pediatric services, including oral and vision care

Yet, the committee observes, “standard” packages offered, not just by small companies, but by large employers, often do not cover mental health and substance abuse services, dental and vision care for children,  some wellness services, and chronic disease management.

In other words, the Patient Protection and Affordable Care Act contradicts itself. It says that the policies offered in the Exchanges should be modeled on employer-based insurance, and at the same time stipulates that these policies must cover 10 areas that even the insurance offered by large corporations often doesn’t cover.

The IOM report suggests that HHS will need to modify the typical package offered by a small employer to include these 10 broad categories. But at the same time the report clearly states:  Every service or item that might be classified  in the 10 categories is not essential.”

What does this mean?

The commitee is quite candid. In the report, it acknowledges that “Taken together, these provisions complicate the task of designing an EHB package . . . The Committe’s solution is to begin with what small employers cover, and then modify the package to include the list of ten–while keeping in mind that everything which logically would be included in one of these categories need not be in the package.”

Ultimately, the report proposes that HHS “build  on what currently exists” for employees working at small firms, “learn over time, and make it better. That is, the initial EHB package should be a modification of what small employers are currently offering.”

What Patients Want vs. What They Need

This morning, when I talked to Marjorie Ginsburg, I asked her to explain how one can reconcile the list of 10 essential areas with the notion that the scope of the benefits should mirror a typical employer plan.

Ginsburg replied:  “The ball is back in HHS’ court.”

She also emphasized that the committee was concerned, not just with “affordability” but with making sure that the benefit package promotes “evidence-based care.”

Here, of course, I wholeheartedly agree. “Patient protection” legislation was never intended to guarantee that all Americans will receive all of the health care that they may want. As I noted in a recent post, both Medicare and private insurers now cover many services and products that we are beginning to realize offer little or no benefit to many patients–and in fact may actually harm them.

Yesterday, for instance, the United States Preventive Services Task Force issued a draft recommendation saying that healthy men should no longer receive routine P.S.A. blood tests  to screen for prostate cancer. “Medical evidence has shown that the test does not save lives over all and often leads to more tests and treatments that needlessly cause pain, impotence and incontinence.” This advice is based on the results of five well-controlled clinical trials. The Task Force did not take cost into account when making its decisions. Its counsel is based solely on what medical evidence reveals. (I wrote about PSA testing back in the summer of 2007 when I began this blog.) I am impressed that the USPSTF summoned the political courage needed to announce this decision. Too many men have been hurt by unnecessary treatments for a cancer that grows so slowly that most will never experience symptoms.)

In the end, I would suggest, “essential benefits” should include all treatments that medical research suggests will benefit patients who fit a particular medical profile. This is the care that everyone needs– which may be different from what they think they need– when they don’t have the facts about risks and benefits.  ( “Shared decision-making” research reveals that when men are given straight information about the risks of PSA testing, and the possible benefits, as well as the low odds that their early-stage prostate cancer will cause problems in the future, a great many decide against the test.)

“Medicare for All” or “Medicaid for All” ?          

Still, I fear that there is a real possibility that “universal coverage” will wind up looking like “Medicaid for All.”

The report draws a parallel between “essential benefits” and “Medicaid benefits” when it points out that some people will move back and forth between Medicaid and a policy that they purchase in the Insurance Exchanges as their income goes up and down. The committee advises that HHS should strive for “consistency” between benefits covered by Medicaid and benefits that must be covered by all policies sold in the Exchanges.

Here, the panel raises a crucial question: Does this mean that “the Exchange benefits” should look like Medicaid, or that Medicaid should be changed (and presumably expanded) so that the benefits offered to the poor resemble benefits included in insurance plans sold in the Exchanges? The committee does not try to answer that question, but my guess is that if the states have anything to say about it (and they will), we are not likely not see Medicaid benefits enriched.

Moreover, the very first paragraph of the  Report Brief seems to suggest  that when we talk about “essential benefits,” we may be  talking about a “poor program for the poor.”  Under the PPACA, the Committee writes: “private health insurance plans will be offered to low- and moderate-income individuals and small employers through state-based ‘purchasing exchanges,’ often with financial help.”

“Wait a minute,” I asked Ginsburg, “won’t high income individuals who don’t have employer-based insurance(including the self-employed), also be shopping in the Exchanges?”

“Why, yes, they will,” she replied, sounding a little startled

Why, then, does the report suggest that “Essential Benefits” applies mainly to low-income and middle-income families? Probably because the Essential Health Benefit package package is meant to define “a minimum set of benefits that the plans must cover.” But, as the report notes, “insurers may offer additional benefits.” Presumably, wealthier Americans shopping in the Exchanges will pick richer plans that cost more, and offer more.

Meanwhile, there is the danger that “essential benefits” for most Americans will turn out to be “bare bones” coverage. No smoking cessation programs– even though the majority of U.S. adults who smoke are poor. If they develop lung cancer or emphysema, we all pay for their care through Medicare or Medicaid. Even from a purely economic perspective, this makes little sense. No hearing exams or hearing aids, despite the fact that low-income individuals are less likely be able to afford to pay for a hearing aid out-of-pocket. And if you cannot hear, most likely you will find it difficult to land a job. Research reveals that the poor also are more likely to suffer from mental health and substance abuse problems. Finally, consider children. Many low-income and middle-class children need eyeglasses, yet the report points out that insurance plans offered by smaller companies often do not cover pediatric vision care. Does this mean eye care for children will not make the cut?

What About Palliative Care?      

Let me add that the problem is not just that the ten areas that the PPACA names may not be fully covered; there are some notable holes in that list. First, the legislation explicitly mentions “vision care” for children in a way that suggests that eye care for adults need not be part of EHB. Granted, many commercial insurance policies do not reimburse for eye check-ups unless you are suffering from glaucoma or another disease. But how do you find out that you are developing glaucoma, or acute macular degeneration (which is likely to become the leading cause of blindness among baby boomers), unless you are able to afford regular eye appointments?

The other, more glaring, omission is palliative and hospice care. Ultra-conservatives smeared the idea of end-of-life counseling with the label  “death panels,” and Congress backed away from explicitly including such counseling in heath reform legisation– let alone making palliative care and hospice care part of the program.

Yet many would agree that we all should have the right to die as we choose– and this means that no one should have to die strapped to a bed in an ICU, or writhing in  pain in a hospital bed. Everyone should be offered a chance to take advantage of the comfort that palliative and hospice care can provide.

When I asked Ginsburg about end-of-life care, she replied: “Just because something isn’t listed in the 10 areas doesn’t mean it won’t be covered. We discussed adding to the list of ten areas that must be covered,” she added, but the commitee decided it just wasn’t feasible to try to make those decisions.”We met only four times,” she pointed out.

Public Deliberation

Ginsburg underlines the role that the public is supposed to play as HHS finalizes the list. HHS has called for “listening sessions” where Americans from across the country can express their priorities. “’Public deliberation’ asks people to weigh alternative options against what they value most and to consider the costs and consequences of their choices,” says Ginsburg. “A public deliberation process can help ensure that the final essential health benefits package reflects the perspectives of the American public who will be most affected.”

While I applaud the idea in the abstract, when it comes to questions of “value,” not to mention “values,” this nation is so polarized on so many levels, that I suspect it will be very difficult to reach a consensus on questions of end-of-life counseling, or whether smokers should show “personal responsibility,” and quit smoking on their own, without expecting help in the form of drugs or smoking cessation programs.

Ditch the Grocery Store Metaphor

Finally, I would suggest that HHS drop the notion that defining essential health benefits is a lot like shopping for groceries. As I argued in a recent post, Science should determine what care is covered, both under Medicare, and under universal coverage of younger Amerians. This means that all effective care should be included, using “comparative effectiveness research” to sort out which treatments will help which patients.

At some point down the road, will we have to look at “cost-effectiveness” as well as “comparative effectiveness,” and begin ruling out treatments that can help patients, but are, by some measure, too expensive?  Conceivably. For example a course of chemotherapy that costs $100,000 and gives the average patient only a week or two of additional life might well fall into the category of treatments that are not “cost-effective”–even though some patients might live for an extra six months. But what about one-on-one counseling for autistic children? Organ transplants for adults over 70? Costly, agressive interventions for premature or very sick infants when the odds that they will survive are slim–yet far from non-existent?

These are questions for medical ethicists. But I don’t believe that we, as a society, must face them today. Keep in mind that the consensus among both physicians and medical researchers is that one-third of our heatlh care dollars are squandered on unnecessary, redundant, over-priced, ineffective and sometimes unwanted treatments.

First, let’s see how much waste we can squeeze out of the system.  At that point, I believe that we will find that we have enough money to provide a new and improved evidence-based version of Medicare-for-Everyone– including everything now covered by Medigap and Medicare Advantage. This is what most other developed countries do now, while spending far less per patient than the U.S.

Those who believe that health care reform should begin by determining how much we are willing to spend usually don’t talk about removing waste from the system. This may be because conservative politicans often represent those who benefit from the excesses in U.S. healthcare– either by profiting from unnecessary treatments that they sell, or by receiving the overtreatment that they are convinced they need and deserve — whether in the form of PSA tests, fully body scans, or angioplasty to provide temporary relief from angina.

Many over-treated and well-insured Americans truly believe that they are entitled to all of the care that they think they need. After all, they–or their employers–are willing to pay for the most expensive insurance. Why shouldn’t they receive everything that 21st century medical technology has to offer?   What they don’t realize is that all of us help pay for their over-treatment–through our own higher insurance premiums, and eventually, through higher Medicare co-pays, deductibles and taxes.

One might resent that sense of entitlement, yet here is the irony: Those  who demand unnecessary care are, in fact, putting thier own health at risk.

21 thoughts on ““Essential Benefits” that Insurers Must Offer Under Health Care Reform

  1. Maggie –
    I think you significantly overestimate the potential to reduce wasteful healthcare spending. Four main categories of spending considered wasteful are excessive prices relative to charges for similar work in other countries, non-evidence based care, fraud and end of life care.
    Regarding excessive prices, in the case of hip replacement surgery, for example, German surgeons are paid 23% less than Medicare rates to perform this operation according to an article in the most recent issue of Health Affairs. German primary care doctors are also paid 23% less than Medicare rates for a routine office visit. Interestingly, the German population receives 67% more hip replacements per 100,000 of population than in the U.S., probably because their population is considerably older – 20.3% 65 and older vs. 13.3% in the U.S. Physicians in the U.S. earn substantially more than their counterparts in other countries which largely explains the difference in fees. The authors note that part of the reason is that in the U.S., smart people inclined to become doctors have a much higher opportunity cost based on the compensation they could have earned if they pursued a career in business or finance. Even if medical school tuition were free, doctors would still expect to earn higher incomes than are typical for doctors in Europe.
    With respect to non-evidence based medicine, I think the reluctance to have someone else looking over their shoulder is only part of the issue. Another part, as I’ve noted before, is the fear of malpractice suits for a failure to diagnose the patient’s condition. Even if the actual awards for a failure to diagnose are modest, the fear of being sued pervades the medical culture and has a huge impact on actual practice behavior, especially when it comes to ordering diagnostic tests that may be only marginally useful. This is why I keep saying that we need safe harbor protection from lawsuits for doctors who follow evidence based guidelines where they exist. They need to know that they can’t be sued for a failure to diagnose if they followed evidence based standards, It would also make it easier for hospitals and large physician groups to demand their cooperation in practicing evidence based medicine if we could remove the fear of being sued because they didn’t order that extra test or two.
    In the case of fraud, Pat S. in a recent thread, noted that often fraud is well documented and hard to detect unless a whistleblower comes forward. If we have to rely on whistleblowers, I don’t think a very high percentage of fraud will be uncovered and prosecuted. I think we need robust ID cards for all medical providers with the authority to bill government programs and broader access for outside analytics firms to the complete Medicare claims database including bills submitted by individual providers.
    Finally, I think there is plenty of room to reduce wasteful spending on end of life care. While I’m all for palliative care consults and the availability of hospice care, I think doctors could do a better job of having the honest but admittedly difficult conversation with patients and their families when the end is approaching rather than holding out false hope or grasping at surgical interventions that they can do to fix a problem but that won’t extend the patient’s life.
    Pushing doctors to consolidate into larger groups won’t make a meaningful dent in the problem of overtreatment in my opinion. Kaiser and Geisinger are large systems that you continually praise but their costs and their insurance premiums don’t seem to be any lower than anyone else’s. If they were, they should be steadily increasing their market share but they aren’t.

  2. Barry–
    Let me begin at the end of your comment: Kaiser offers significantlyl better care that other insurers for roughly teh same amount of money. As a result of Kaiser’s programs, heart disease is no longer a leading cause of death in Northern California. That is Value for our health care dollars.
    See how high Kaiser scores on the latest Consumers Report AHRQ ranking of insurance plans– it came out last week.
    Geisinger also offers high quality care.
    One judges a health insurance company not by its market share (though Kaiser has a large market share), but by the Quality of Care its network provides.
    Patient satisfaction among Kaiser patients is extremelly high. (Again see the poll).
    As for fear of malpratice driving overtreatment some very vocal physicians insist that this is the case, but a recent survey shows that less than half of all doctors agree: “The researchers say that 42 percent of physicians reported that “their own patients receive too much health care – tests and treatments that may result in overdiagnosis and drug-related adverse effects.”
    Nearly half of the physicians admitted they were overly ‘aggressive’ in providing care to their patients.The doctors who were surveyed said the major factor responsible for this practice was “malpractice concern.”
    This suggests that more than 50% of physicians realize that fear of malpractice suits is greatly exaggerated and don’t use it as an excuse for overtreatment.
    On end of life counseling: when a patient is suffering from cancer a physician often (though not always) can estimate how much time he or she has left. In many other cases, however, it is simply not at all clear which patients in an ICU will surive and go home and which will die.
    Diane Meier, a palliative care specialist who spends much of her life with dying patients often makes this point.
    I realize that you are not an M.D. (nor am I) but I wish you would believe people who are doctors and actually spend time with very sick and dying patients. (Most doctors don’t.) Approaching the end of life is simply not as cut and dried as you suggest.
    Yes U.S. doctors earn more than physicians in other countries and yes, this is to a very large degree because both pepople work in finance and CEOs are grossly overpaid. This started in the 1980s and has raised the bar for how much physicians feel they must earn. Money is always relative.
    In fact Ph.D’s often spend 6 year in graduate school, then another 3 or 4 years as post-docs. My sons fiance, for instance is getting a Ph.D. in neurology and will probably be in grad school for 8 or 9 years. She is brillliant (was an opera singer before deciding to get a Ph.D. in neurology) and could easily have had a very successful lucrative career on Wall Street if that was what she had wanted to do.
    The “opportunity cost” of going to grad school does not make her feel that see needs to make $200,000 or $300,000 (or more) a year.
    She loves what she is doing.
    Most Ph.D.s don’t think in terms of “opportunity cost” of their education. It seems to me that med students who fret about how much money they could be making if they were somewhere else should drop out of med school and go somewhere else. We don’t need more money-driven doctors.

  3. “It seems to me that med students who fret about how much money they could be making if they were somewhere else should drop out of med school and go somewhere else. We don’t need more money-driven doctors.”
    One issue here, of course, is the inexorable rise in the cost of going to medical school. Most students pay these costs, at least in part, through loans. I did that, but I had to borrow much less in 2011 dollars than students do today. So I had the luxury of choosing a relatively low-paying specialty because that was what interested me.
    I think young physicians would be much more realistic in their pay expectations if they could finish their training without hundreds of thousands of dollars of debt.
    There are various debt-forgiveness options available, most linked to practicing for a period of time in an area of high physician need. As far as I know all of these are for primary care specialties.
    My point is that medical student debt does skew the physician salary debate.

  4. Maggie –
    First, on the fear of malpractice and overtreatment, I think it’s significant that nearly half of doctors admit to overtreatment and that fear of lawsuits is the reason. The 50% or so of doctors that don’t view fear of litigation as a problem would probably say that they are adhering to the standard of care within their specialty and geographic practice area. The thing is that when the various specialty societies developed the care standards themselves, they most likely reflected the reality of the U.S. litigation environment and culture as compared to what exists in other developed countries.
    As an example of what I mean, some months ago I recounted an experience I had with a Manhattan neurologist that I consulted with regarding a balance issue. He thought that my problem was most likely due to normal aging but sent me for an MRI even though I specifically stated that if he thought it was just normal aging, I was perfectly willing to let it go. A neurologist in another part of the country sent me a detailed description of a neurologist’s thought process in evaluating a patient like me. His ultimate conclusion was that at least 90% of U.S. neurologists would have ordered an MRI based on the issues I inquired about and after examining me in the office. This doctor, who trained in Europe, also stated that the percentage of neurologists who would order an MRI in the UK would be far lower. There is a small chance that I could have had a serious issue. U.S. doctors will order the MRI and many more UK doctors won’t. We’re not going to change that anytime soon, especially without substantive medical tort reform.
    Second, on end of life care, the NY Times had an article in the last week or so about the surprisingly high percentage of Medicare patients who receive surgical interventions in the last year of life and even in the last week even though doctors often know that the intervention will not extend the patient’s life. I know that it’s not easy to predict when someone will die aside from cancer cases that often show a very rapid decline toward the end.
    Finally, with respect to physician compensation, money driven is a relative term. Many doctors know full well that they could make considerably more money in business, finance, real estate, etc. with fewer years of education required but they go into medicine anyway because that’s what they want to do. They may be perfectly willing to accept half of what they could have earned in an alternative career but they’re not willing to accept 10% or 20% as much. Even I could have gone to the “sell side” of Wall Street many years ago for considerably more money than I was making on the “buy side” but the lifestyle and the hours just didn’t appeal to me. I liked what I was doing and still do. It could well be that even though doctors in the U.S. earn considerably more than their European and Canadian counterparts, the percentage relationship between their compensation and what they could have earned in the business or finance world is roughly the same percentage as it is for docs in Europe and Canada where opportunity costs are lower. Even though they may not think specifically in terms of opportunity costs, they have a gut feel for the issue and expect to earn what they perceive as reasonable compensation in the country they practice and live in.

  5. Hi Chris-
    Hi Chris,
    As always it is good to hear from you.
    I agree that med school debt is an enormous problem which makes young doctors extremely anxious about money — and understandably so.
    This is one reason why I have often suggested that the government should subsidize med school, not just for primary care docs, but for doctors in all of the areas where society needs more physicians: geriatricians, palliaitve care specailsts, general surgeons, family docs, etc.
    I also would favor subsidizing med school education for kids coming from low-income families (not just minorities, but white low-income families)
    who become oncologists, cardiologists, intenstivest, etc. We need more diversity in these specialties, to mirror the diversity of the patients suffering from severe diseases.
    Or we could subsidize all med school education — and at the same time, use some sort of lottery to distribute docs more evenly around the country. (Perhaps, if you didn’t want to take part in the lottery, you wouldn’t get the subsidy)
    That said, when it comes to med school debt, it turns out that these days, Fewer and Fewer Med Students Are Taking On Debt.
    I found this surprising. But it turns out that that as med school tuition spirals, an increasing share of students who go to med school are coming from very affluent families– and don’t borrow at all.
    By 2007, 60% of med students were coming from households in the top 20% of the income ladder. Meanwhile, aIn 2009, families in that top 20% earned an average (median) of $170,000. Half earned more. http://www.healthbeatblog.org/2007/11/why-arent-more-.html
    Today, median income in that group is higher than $170,000 and my guess is that more than 60% of incoming med students are coming from the that top 20%.
    Meanwhile, an article published in Health Affairs in 2005 points out that many of these wealthier students have NO Debt:
    “While more than 90 percent of medical students who have reported parental income less than $75,000 graduate with educational debt, the data show that only 60 percent of students who have reported parental income between $200,000 and $500,000 have educational debt.
    Bottom line 40% of these wealthy students graduate with no debt. And they comprise a large chunk of an incoming class.
    What about the wealthy 60% who do take on debt? The authors of the article asks “ Why do they borrow at all? There are two possible answers, they write,”Either they are financially independent of their parents, or their parents simply take advantage of the highly favorable terms for educational borrowing. Wealthy people typically understand and use debt, and they may decide that these loans allow alternative uses of funds that return more in earnings than the interest on the loans. “
    In my experience, among wealthy people I have known, parents often have the children take the loans. The parents then invest the money, making say, 10%, while paying interest of only 2% to 3%. When the child graduates, the parents pay back the loan– it is , in essence, the parent’s loan, not the child’s. They take it out something to take advantage of the system.
    In my view, rather than lending money to wealthy families so that they can play the arbitrage, it make more sense to use that money for scholarships for middle-income and low-income students (the ones whose parents are earning less than $75,000).
    In fact, the Affordable Care Act does just that– moving away from loans for everyone and toward scholarships for less affluent students.
    Finally some med students amass huge loans ($200,000 or more), not because tuition is so high, but because they live very well whil in med school. My son observed this while a teaching at Johns Hopkins and at Wake forest in his late 20s. He had a number of friends who were med students who lived in great apartments, drakn only the best cognac, played high-stakes poker games, traveled to the Caribbean or Europe, women buying very expensive clothes etc. etc.
    This of course is their choice, and assuming that, in many cases, they came from wealthy familes this is the lifestyle that they were accustomed to.
    Presumably, their parents would pay off the loans or they knew that they would be in a position to pay them off later through a combination of high earnings and inheritances. In any case, they just weren’t that worried about the money– though they would grouse about how much they had borrowed and the lost “opportunity cost” when compared to a friend in the financial world.
    Finally, I recall talking to Med students in Manhattan when I gave a speech to a group of them a year or so ago. A couple of them were talking about how expensive it is to live in New York City–rents, etc.– and it was clear that they wouldn’t consider living in the sorts of apartments where a 30-year-old grad student might live.
    People are used to what they grew up with. Grad students tend to come from significantly less wealthy famlies. My son’s 30-year-old fiance, who is getting a Ph.D. in neurology, waitressed last summer (as she has many times) in order to make enough money to live on. (Her stipend didn’t cover the summer.)
    P.S. The 2005 Health Affairs article said that while loans may keep students from choosing primary care, when it comes to picking a specialty, the amount of debt you have doesn’t seem to be a deterrent. Their example: even students with high levels of debt choose pedicatrics where they know they won’t make as much money as in other specialties. My take is that pediatricians are a self-selecting group of people who are just not as concerned about $ as some others. …
    .
    On the other hand, there are of course the roughly 40% of students who aren’t coming from the top quintile and can easily amass $100,000 in debt (average, according to the stats) even while attending a public medical school. The majority are from families the 4th quintile (2nd from the top) comfortable, but not super-rich. So that debt is daunting.
    Bottom line: some med students are hard-pressed, but many are not.
    I found all of this eye-oepning, because I had assumed that something like 90% of med students graduated with debt that they expected to pay off themselves.

  6. Barry–
    A few thoughts.
    Of course many doctors say they over-treat becuase the lawyers make them do it (fear of malpractice).
    How many people do you think would say: “I overtreat because, why not?” It helps keep my solo practice afloat, a few extra tests don’t do any harm, and the insurance companies pay for it.” They probably don’t consciouslyl admit this to themselves, but candid doctors will tell you that this is how many think.
    In addition, med students and residents are taught to order every tests possible–you never know when you may turn up a totally unexpected diagnosis. Resdients who do that often are praised for being “through” and they feel like heroes. So it’s part of medical culture that has nothing to do with threat of malpractice.
    Secondly the fact that someone died within a year of having surgery does not
    mean that he shouldn’t have the surgery.
    You just don’t seem to get it: A grreat many very, very sick people have surgery and then live another 5 or 10 years.
    When looking at very sick people undergoing surgery it is impossible, in many cases to predict which ones will die within a year, and which ones will live. (The only major exception: cancer patients.)
    Finally, on med students, debt, and “opportunity costs” see my reply to Chris. Some surprising numbers.

  7. Maggie –
    Of course there are plenty of elderly people who get surgical interventions and live for years afterward. I get that just fine. The point I’m trying to make is to suggest that we probably treat very sick elderly people more aggressively than similar people in Western Europe, the UK, Canada, Japan and Australia are treated. If someone has advanced Alzheimer’s or dementia, for example, and his quality of life is largely gone, what’s the point of surgical interventions unless they will clearly relieve pain? The same is true for those with ESRD and advanced CHF, especially if they are well into their 80’s or 90’s. If we want to attack overtreatment and healthcare system costs more generally, end of life care deserves close examination in my opinion.
    On the defensive medicine issue, I can’t understand why you try so hard to attribute overtreatment to just about anything else. Sure, they say its defensive medicine but it’s really just driving their revenue to make more profit. Or, we’re taught in medical school to order lots of tests because that means you’re being thorough. There are significant differences in practice patterns both regionally and within regions and sometimes even within the same large physician group practice. As more employers embrace tiered networks, it should be possible to steer more patients toward the most cost-effective high quality providers which should also help to mitigate the unsustainable growth in healthcare costs.
    I’m all for evidence based medicine and eliminating unnecessary procedures like stents and back surgeries in patients who are not appropriate candidates for them but even if we have some success in that effort, it won’t be enough by itself to bend the healthcare cost growth curve. We need multiple approaches including tort reform and a more sensible approach to end of life care. I also think that CMS needs to be directed to specifically take cost into account in deciding what it will and won’t pay for, especially with respect to new treatments including ultra expensive specialty drugs. We probably have to agree to disagree but I don’t think there is anywhere near as much low hanging fruit as you do.

  8. Maggie:
    Thanks for all the information about medical school debt. It does look as if things have changed, if fewer students are taking out loans (or even need to).
    I agree with you that using the student loan system to make money is immoral, if not illegal.

  9. just because private insurers/ health care companies have been doing a terrible job doesn’t mean the government will do better…in fact the government is SO inflexible, so one-size-fits-all, that is is IMPOSSIBLE for them to do better!
    This needs reforms, sure, but not govt takeover, that’s just asking for a kick in the nuts.

  10. Andrew, Chris & Barry,
    Andrew–
    Talk to someone over 65 who is on Medicare, and they will probably tell you that they like it better than the private insurance they had before they turned 65.
    Medicare is NOT one-size-fits all. It covers a great many things under certain “conditions”– depending on the patient’s medical profile.
    I don’t know anyone who is on Medicare who wishes that they still had the insurance they had with their former employer.
    Chris–
    Yes it should be illegal to borrow from the govt and then invest the money. But people say things like “You would be stupid not to.”
    Barry,
    First, I ran into that article about people having surgery in the last year of life, and it turns out that the authors were talking about cancer patients.
    So I apologize. You’re right, in the case of cancer many of these patients suffered from an incurable cancer and it should have been apparent that they had only months to live. There is no point in putting them through a surgery unless there is some chance that it will actually cure the cancer.
    But sometimes, of course, cancer surgery saves lives. Many women who have mastectomies go on to live happy lives. At the same time, some will die within a year of the operation. It’s impossible to predict who will be saved, so they deserve a shot at surgery.
    On just how much low-hanging fruit there is, see this post by George Lundberg (former editor of JAMA) http://thehealthcareblog.com/blog/2009/08/11/how-to-rein-in-medical-costs-right-now/
    On fear of malpractice: the Dartmouth research shows huge variations in how doctors and hospitals practice medicine in different parts of the country. In some places care is far more aggressive and expensive. This has much to do with the local medical culture– and what doctors were taught in med school. (Many doctors tend to settle close to where they went to school.)
    Supply also is a factor: more docs and hospital beds means more intensive care.
    But there is no correlation between the amount of litigation in that state or area and intensity of care.
    Just one example: Pennsylvania is known as a particularly litigious state, but Geisinger (an intergrated non-profit in Pennsylvania) has a lower rate of lawsuits than other hospitals nationwide.
    Geisinger has an excellent patient safety program.
    This is why neither Lundberg nor the folks at Dartmouth talk about malpractice reform. They realize that even if we had no lawsuits but just
    a law requiring full disclosure by the doctor and hospital, followed by arbitration (if they did make a mistake) doctors and hospitals would still over-treat. (By the way, full disclosure is what I favor. Special courts where knowledgable judges decided things would still be way too expensive and time-consuming. The problem isn’t juries. In fact, they tend to find in favor of doctors and hospitals.)
    The much bigger problem behind “malpractice” is that fact is that there are so many preventable errors in our hospitals, and then they are covered up, so no one learns anything from the event. -We should have many more autopsies to reveal actual cause of death. (As Gawande points out in his book “Complications,” if you do that you will find that a great many patients were misdiagnosed and treated for the wrong thing. Sometimes that treatment killed them.)
    Finally, going forward what is going to be most expensive is the long-term care that a great many boomers will need as they develop Alzheimer’s and other forms of senile dementia.
    Many who, in the past would have died of a heart attack or stroke in their late 60s or early 70s will instead live past 75 (this is when the odds of developing Alzherimer’s really accelerate.)
    Then they can live for a very long time, ultimately needing complete custodial care, 24/7. In many cases, families cannot do this.
    I actually think that we probably should be thinking about creating assissted suicide laws which allow a physician to help a patient die if: he or she has clearly indiczated, in writing, that this is what he/she wants (while still mentally competent, but probably after being diagnosed) and two physicians who don’t know each other agree that the patient does indeed from dementia, that there is no hope of recovery, and that the patient has reached a point where quality of life is too low to continue. (We would need standards to define that point– probably not being able to recognize loved ones, not knowing who you are, etc. would help define that point. Psychologoists could create a test of some sort.
    Many people would not want this for themslves, for religious or other reasons.
    But some would. And if we could avoid the terrible suffering of Alzheimer’s for both patient and family, that would be wonderful. IF I were diagnosed with Alzheimer’s I would find it a great comfort to know that I wouldn’t have to go on forever . . .

  11. Maggie –
    I was surprised to read your comments about assisted suicide which I, by and large, agree with. I think Switzerland offers an approach similar to what you described. There could be some common ground here except among social conservatives.
    On Geisinger and sensible care in a litigious state, the most litigious parts of PA, as I understand it, are the cities – Philadelphia and Pittsburgh, especially Philadelphia. The culture (and the politics) is quite different in the rest of the state. Geisinger’s service area is primarily in central PA. Even more than health courts, I would like to see safe harbor protection from lawsuits for doctors who follow evidence based guidelines where they exist. If I could dictate just one change to the current medical tort system, that would be it.

  12. Barry–
    Yeah, I thought you might be surprised.
    I posed the idea to you because I think it might be possible to put together a coalition of progressives, libertarians and conservatives favoring assisted suicide for patients suffering from Alzheimer’s.
    I wonder how Michael Cannon might responsd?
    But it is a third-rail issue, and would have to be done very, very carefully with much protection for patients (particularly protecting them fron relatives who just can’t bear the burden, financially or emotionally. )
    This is why gov’t (Medicare) must care for these people. And there would have to be no penalities for A’s patients who want to hang on for as along as they can–for whatever reason.
    I think it would be very impt. to get them to declare their desires, in writing, after they have been diagnosed (when Alzheimer’s and the likelihood of suicide is a reality, not just an idea in the abstract) but while still competent. This is a pretty big window. A’s patients who can’t remember names easily and are begininng to have trouble balancing a check-book are still competent for quite a while. (This is one of the horrors of Alzheimer’s–you observe your mind disappear.)
    Patients who don’t choose physician-assisted suicide would have to get the best long-term care possible. It would have to be made very clear that we are not
    relegating them to sub-standard nursing homes or the idea would become an easy target for social conservatives and religious groups who feel that it just is not up to us to decide when it is our time to die.
    But we could afford to give these patients the very best care if there were many fewer Alzheimers’ patients who lived on for years and years. And with, time, I suspect, the idea would become more acceptable.
    Barry, I have nothing against “safe harbors” to protect docs against malpractice suits if they are practicing evidence-based medicine. Unlike so-called “tort reform” I believe this could be very useful.
    But I think you underestimate how difficult it would be to get these safe harbor laws through Congress. (And since they would be laws, they would have to go through Congress. This is not something HHS could do on its own.)
    Imagine how hard it would be, today, to pass a law that protected docs who didn’t recommend a PSA test for an average risk patient, if the patient then died of prostate cancer. And a few will, even though the “number needed to treat”–and the risks for those treated–are way too high.
    Imagine how difficult it would be to pass a law protecting physicians who didn’t recommend angioplasty for patients with stable heart disease, cardiac defribillators for patients who, medical evidence shows, don’t benefit, by-pass for patients who, medical evidence shows, don’t benefit, mammograms for younger women, surgery for patients suffering from regional low back pain, estremely expensive “proton” treatment for patients diagnosed with early-stage breast cancer . . . . I could go on and on.
    Congress represents many Americans who reject “science” and the idea of “experts” with great fervor.
    The one safe-harbor protection that might pass is the one that the state of Washington now has, protecting physicians who take patients through the full “shared-decision-making protocol.” It’s time-consuming; it takes more than 20 minutes.
    It means giving patients a brochure and video that they take home. It requires at least two meetings with patients (though trained nurse-practioners can do it.) The nurse or doctor has to make sure that patients understand the odds (most people who are not gamblers don’t understand odds very well. The patient needs to understand potential benefits, risks and side effects. Finally, the heatlh care provider must draw out the patient to express his own greatest desires and fears. This takes time.
    The point of the exercise is not to talk the patient out of elective surgery but to give him a chance to chance to decide what would be best for him. Some patients are more afraid of surgery. Others are more afraid of the low (say 2% ) chance that they wil die without it.
    But share-decison-making works. Once informed, a great many patients decide that the odds of benefits are too low to justify the risks, and the pain.
    And whatever they decide, they almost never sue– even if their decision doesn’t work out well. They were part of the decision, and emotionally invested in it. They don’t blame the doctor. They understand that they were makign a “wager” (just as honest doctors understand that they are making an educated guess when they do or don’t recommend elective procedures.)
    Hospitals and doctors who do it now have been very successful.
    But Medicare (and ultimately all insurers) would have to pay for the brochures, the videos and the involved. It would be well worth it– the money saved would more than equal the cost.
    And it would be hard for Congressmen to say “We don’t want patients to be fully informed. We want them to take blind risks.”
    Of course, they would still argue that they don’t trust the science (medical evidence) on risks and benefits but this would be much easier to pass than any other safe harbor legislation that I can think of.
    I wonder if enlightened libertarians and conservatives would be able to get behind this idea as well?
    Cannon??

  13. Maggie –
    I appreciate all too well how hard it would be to get safe harbor protection from lawsuits for doctors who follow evidence based guidelines through Congress. Trial lawyers have long been a key constituency for Democrats and they help raise a lot of money for political campaigns. It might be easier to pass at the state level where Republicans control the legislature and the governorship in quite a few states.
    If one or a few states passed such a provision, once a few failure to diagnose lawsuits were very quickly dismissed at little cost in time or money for defendants, it should start to gain credibility in the physician community that the law is for real and offers them genuine protection if they don’t order tests that the guidelines don’t call for. It’s like trying to develop a patient safety culture at a hospital. If a couple of arrogant rainmaker surgeons who don’t think timeouts are necessary and then make a mistake are dismissed if an employee or have their practice privileges revoked if they’re not, everyone else will quickly understand that a patient safety culture is for real and the top priority, at least at that hospital.
    As for Alzheimer’s patients who want to hang on as long as possible, I don’t think I could go along with what you seem to suggest should be AAA care at taxpayer expense. I think good enough care would be single A or BBB+ to use bond rating terms. It’s still investment grade care, not junk. That should be good enough. Alzheimer’s patients who are wealthy or have wealthy children can buy up to AA or AAA care if they want to. Put another way, it should be like a three star hotel as opposed to a four or five star facility or a Spartan German hospital without waterfalls and piano players and valet parking.

  14. Barry–
    The people who oppose evidence-based medicine are the conservatives.
    Look at what Newt Gingrich et. al. ns are saying about PSA testing: Medicare must cover it.. Everyone (who has insurance) has a right to it.
    Conservatives were also outraged by what the task force said about Mammogramas.
    Conservatives don’t want to hear that insured people like themselves shouldn’t get angioplasties and by-passes whenever their doctor recommend them.
    Conservatives also tend to reprsents physicians’ lobbies represeneting the wealthiest physicians, many of whom are fiercely opposed to evidence-based guidelines
    Finally, and most importantly, conservatives object to “government regulation.”
    When the govt sets out guidelines based on medical evidence it is, from a conservative point of view– “regulating”– standing in between the doctor and his patient, etc.
    Sure, many conservatives would like the idea that trial lawyers might have fewer cases if there were safe harbor regs–but they wouldnt’ want the guidelines needed to create those safe harbor regs in the first place.
    AT the same time, a couple of trial lawyers who I know would be perfectly happy to see evidence-based guidelines and safe harbor regs becase as they point out, the reserach shows that doctors are very, very, rarely sued when they are following generally-agreed upon guidelines.
    In all of these years, there has been only one lawsuit over PSA testing: the doctor didn’t recommend the test and the patient died of prostate cancer. No one has won a case on these grounds since. Nor has one gone to trial ( as far as I know).
    All of the legal writing on the case has said that the decision was wrong– an outlier. (A conservative court somewhere in the South–South Carolina, if memory serves. If there was a jury it was probably a conservative jury that doesn’t believe in “Science.”
    AFter all, if you don’t believe in Darwin, why would you belive in randomized controlled studies showing that risks outweight benefits?

  15. Data is required for comparitive effectiveness evaluations, but I note that you say the report explains that there is little data available on “typical benefits” in the packages small employers provide. But the group did manage to collect information from three major insurers.”
    This implies that few insurers have provided data on their customers’ health, use of medical services, or subsequent status. Seems to me that decisions made without such data are merely wild guesses, anyway.

  16. Harry-
    Yes. Insurers who do not collect data on quality really cannot add value to our health care system. So why are we paying them to serve as middlemen?
    This is the difference between many insurers, and places like Kaiser.

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