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By Charlie Eisenhood
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Wednesday, 08 July 2009 10:29 |
The participants expand on their thoughts from yesterday and begin to clash with each other as a new voice joins the discussion in today's round.
City Seeker would like to welcome Mario Burgos, a conservative blogger, to the discussion. His post today answers the questions I offered during yesterday's round. Go here to read the other participants' opening thoughts.
Be sure to take a look at the thriving comment section in yesterday's post, but leave any new responses on this post so we can begin a new thread. In addition to responding to each other, I will be asking each of the participants questions raised in the comments for tomorrow's third round.
There were no direct questions or prompts for today's responses.
 Todd Sandman serves as director of public and government relations for Presbyterian Healthcare Services, a New Mexico, not-for-profit healthcare system of hospitals, physicians and a health plan.
In my previous post, I highlighted how our current fee-for-service model of paying for healthcare fails to create the right incentives for health and wellness. Today, I want to describe two additional problems with our current payment system: 1) it encourages over-utilization of services and higher costs, and 2) it discriminates against states like New Mexico with smaller populations.
First, is the problem of over-utilization, a term to describe how the U.S. consumes more healthcare services and more expensive services. Over-utilization is one of the major reasons that, according to the Journal of the American Medical Association, in 2005 "the United States spent $6,401 per person, whereas the next highest spending was in Norway and Switzerland, $4,364 and $4,177 respectively." (JAMA, June 18, 2008)
We find over-utilization in the back surgery, when perhaps a course of physical therapy could be just as effective. Or with the heart stent, when cholesterol-lowering drugs might do the same job. I don't believe that physicians and hospitals set out to order unnecessary tests or procedures, but the problem is that all of the incentives in our fee-for-service payment system reward this behavior, so it becomes part of the culture of U.S. medicine. (Dr. Perrigo posted about defensive medicine, and that's certainly part of the picture as well.) There are a lot of factors that could lead to a situation in which two providers reach two different conclusions about the right course of care when presented with a patient with the same symptoms. But the data linking over-utilization to higher reimbursement is hard to refute. Dr. Elliott S. Fisher, M.D., M.P.H. wrote in the New England Journal of Medicine (February 26, 2009) about a study where physicians across the country were given standardized patient scenarios and asked what clinical interventions they would provide. "The researchers found that physicians in high- and low-spending regions were about equally likely to recommend specific clinical interventions when the supporting evidence was strong. Those in higher-spending regions, however, were much more likely than those in lower-spending regions to recommend discretionary services." Furthermore, Dr. Fisher found where the clinical evidence wasn't strong, in these diagnostic gray areas, clinicians in high-reimbursement regions of the country were much more likely to prescribe additional interventions.
How do we create the right incentives for the lowest-cost, most-effective treatments? I think President Obama has started on the right path with an investment in this year's stimulus bill to research evidence-based care and compare the effectiveness of similar treatments. More importantly, though, would be a payment system that rewards preventative care, management of chronic conditions and other methods that place a value on health and not just the provision of service.
The second weakness of our current fee-for-service payment system is the discriminatory way in which the federal government has set the rates that place New Mexico and other low population states at the bottom. Presbyterian's CEO, Jim Hinton, wrote about this payment disparity in an Albuquerque Journal op-ed a few weeks ago and I'll recap the main idea here. The federal government, through Medicare, sets the rates for payment of healthcare services around the country. And for reasons that have much more to do with politics than medicine, states like New Mexico see our low reimbursement "locked in." The result is that providers in places like Miami, Florida are reimbursed two-and-a-half times more for the same healthcare services than providers in New Mexico. We certainly don't believe that patients in New Mexico are worth less than patients elsewhere in the country and it's time that Congress insisted on fairness in the Medicare system.
The other piece to note about this geographic disparity in payment is that it does not produce any better quality in these high-cost regions of the country. The Dartmouth Atlas has studied these payment patterns for years and says conclusively that higher reimbursement has no link to quality. So what our policy-makers need to do is to hold these high-cost, low-effectiveness areas of the country to the same reimbursement and outcomes found in places like New Mexico. The savings from this change itself would be nearly enough to pay for health coverage for the 45 million Americans without insurance today.
Vicki L. Perrigo, M.D., MACP, FAAD, received her bachelor's degree in Biology from the University of Southern California in 1972 and her M.D. from UC Davis in 1976. Ms. Perrigo did her Internal Medicine residency at UCI/Long Beach VA from 1976-1979 and her Dermatology residency at the University of New Mexico from 1980-1983. She is licensed to practice medicine in California and New Mexico.
The arguments circulating at this time, in the media and the conference room, seem to be focused solely on money. The question appears to be, how do we pay for health care?, instead of ‘what health care should we be paying for? Paying for what we have already, only in a different way, will not really change anything. As Mr. Gessling points out, we already have a system in place for caring for the indigent and the seriously traumatized - our University based Health Centers, formerly known as County Hospitals. They are not fancy, and they lose money, but they take care of these patients and train young physicians. What about more government support for this existing system? We actually might be better served by attacking ourselves about why our healthcare is so expensive before we tackle finding different methods of financing.
One reason why we cannot afford health care is that we are an unhealthy society. Regarding the comment by cc on the day 1 post, it would be lovely if our country believed that the care of health was equivalent in importance to the care of disease. Unfortunately, to my understanding, only Pediatricians are reimbursed for ‘well baby care.' There is no coverage for ‘well adult care,' at least not for physicians. We could greatly improve the health of our population if we would mandate an increase in health education (the same way we mandate traffic school? you err, you attend school?) concurrent with a decrease in consumption of cigarettes, alcohol, recreational drugs, unsafe sex, and our number one vice, food. When someone smokes, drinks, over-recreates and overeats, their health problems are secondary to their lifestyle choices, not to their not having enough insurance. These are the people who are chronically ill, who as Mr. Sandman shares, are responsible for three quarters of direct medical care costs. A different payment system is not going to help this problem.
Another reason why we cannot afford our health care because of the many levels of administrators that have sprouted up in both the insurance and hospital industries. Both health insurance and hospitals are now for-profit entities. Someone should be addressing how to cut down on all of the layers of individuals who are paid to stand between the physician and the patient. Again, what we need to rebuild is the relationship between the patient and the physician.
A final thought is that when our healthcare is not perfect, we shift responsibility onto someone else and file a lawsuit. The fear of being found culpable for a poor result drives our overdependence on technology. We must eliminate profiting from illness. Not everyone gets better; not everyone survives.
The cost of healthcare will decrease for everyone if we improve the health of our people. Then we won't have to worry so much about who pays how much for what. I agree that every American should be cared for in any medical emergency, from trauma to stroke to appendicitis. What we have to decide, as a society, is how much money should be allocated to pay for the results of our self-indulgent gluttonous habits.
 Paul Gessing became the first full-time President of the Rio Grande Foundation in March of 2006. Since joining the Foundation, Gessing has been a prominent voice for limited government and individual liberties in policy areas including: taxes, health care, education, and transportation. Prior to joining the Foundation, Gessing headed up the lobbying efforts of the National Taxpayers Union (NTU) a respected taxpayer-advocacy organization in Washington, DC.
Paul graduated from Bowling Green State University in Ohio with a degree in Political Science in 1997 and he received his Masters in Business Administration from the University of Maryland in 2005. Paul is originally from Cincinnati, Ohio, but he has several family members in New Mexico and has spent a great deal of time in the state over the years.
Paul and his wife Krista were married in October 2007 in Algodones, NM. In his spare time, Paul enjoys playing basketball, golf, playing with the family dogs, and traveling.
In his comments, Brian Colón does a lot of writing without actually suggesting any specific ways in which Americans in general and New Mexicans in general can obtain less costly, better health care. This is not a surprise since Colón is not a policy expert, rather he is a party builder, and he may not want to step on any toes. After all, not all elected Democrats support "universal," let alone single-payer, health care.
Todd Sandman of Presbyterian rightly emphasizes the fact that 75 cents of every medical dollar goes toward chronic disease, many of which are related to lifestyle decisions (diabetes, congestive heart failure, and coronary artery disease). But as far as I can tell he doesn't really propose (at least in his first posting) any real solutions.
While there is no doubt that a more holistic approach to health in which doctors and patients collaborate to create wellness rather than simply treating individual diseases is optimal, getting from here to there is tricky.
It would seem to me that the best way to get people to care more about their own health would be to restore the patient-doctor relationship, not by replacing insurance companies with government bureaucrats, but instead by placing the economic decisions and responsibilities back where they belong - in the hands of patients. The simplest and most immediate way to do this is to either give individuals the same tax advantages relating to health care that are now given to their employers or to tax everyone the same (the latter is probably untenable in the current political environment, but I mention it because Congress is now considering taxing health care).
Dr. Vicki L. Perrigo sees lawsuits as a primary cause of rising health care expenses. She certainly has a point although there is no doubt that patients must have the ability to gain legal redress when doctors perform shoddy or even dangerous procedures.
The best solution for this is to get rid of much of the government paperwork and restore price competition among doctors. Prices are useful information that enables us to discern the collective opinion of a given good or service. With massive government intervention already in the system, doctors are simply not able to compete on price and health care consumers are left without this valuable information.
Many of her other points about the flaws in both the current system and some of the government-run proposals floating around Congress line up with what the Rio Grande Foundation would consider steps in the right direction.
Barbara Wold seemingly has lots of facts and polls to back up her position in favor of a single-payer system, but outside of her blanket assertion that profits are driving costs upward, she doesn't address any of the very real issues involved with government-run health care.
Ultimately, in a world of limits, somebody has to decide who receives scarce resources. For years this has been the insurance companies and they have certainly not been perfect. But what specifically does government do better? Profits are a minuscule part of our health care costs. In fact, the profits of the five largest insurance companies in the US account for a mere 0.5% of the nation's total health care spending. Clearly, eliminating the terrible specter of someone making money in health care in favor of socialism is not going to cure what ails American health care.
Advocates of socialized medicine also fail to mention that while both systems usually work just fine for those who are healthy, it is when you have a serious problem that you find out whether your health care system really functions.
Take the recent story from Canada of a 30 year-old man forced to travel from Windsor, Canada to Buffalo, NY for treatment because Canadian hospitals don't have the technology to handle the operation. Almost as bad as the disease itself is the fact that the man could have merely driven across a bridge to Detroit but instead has to travel hundreds of miles to Buffalo.
The fact is that all socialized systems worldwide are littered with examples of people who simply cannot obtain treatment under the socialized systems found in their countries. The US system now in place is by no means perfect, but it is far better than one that simply replaces insurance companies with government bureaucrats as our health care overseers.
 Brian S. Colón is Chairman of the Democratic Party of New Mexico. Mr. Colón was raised in Valencia County. He received his Bachelor's Degree from New Mexico State University in 1998 and graduated from the University of New Mexico School of Law in 2001. In 2004, Mr. Colón was named Outstanding Young Lawyer of the Year by the New Mexico State Bar Association and one of New Mexico's Forty Under 40 Power Brokers by the New Mexico Business Weekly. He was elected to his first two year term as Chairman of the Democratic Party of New Mexico in April of 2007. He was re-elected without opposition to a second two year term in April 2009.
Thank you everyone for your comments. It is clear we call all agree on one thing-the need for fundamental reform in our health care system. The time for that reform is now.
I was also happy to see the majority of people believe we need a public option. In 2008, our health care system paid $116 billion for care of those with no insurance. Of that, $42 billion was paid by those of us who have health insurance. As a result, folks with health insurance paid higher premiums. These costs represent an average of $1,000 per family.
We cannot afford to have reform that does not cover each and every American. A public plan is imperative in providing health care coverage to more Americans. Having at least one plan available in the market place that is not for profit will increase competition and drive down costs.
We also seem to all agree that decreasing the cost of health care must be the number one goal of reform. I'd like to lay out some specific areas where the President and Democrats in the House and Senate see cost savings.
We need to end overpayments to Medicare Advantage that are a windfall for insurance companies. Doing so would save $177 billion over the next decade.
We need to use Medicare reimbursements to reduce preventable and costly hospital readmissions. By changing how we reimburse hospitals, we can discourage them from acting in a way that boosts profits, but drives up costs for everyone else. That will save us $25 billion over the next decade.
We will save hundreds of billions by reducing overpayments to hospitals treating uninsured people as we cover more and more Americans.
We can save approximately $75 billion by getting better prices for drugs under Medicare and another billion by rooting out waste, fraud and abuse throughout our health care system.
Finally, I want to point out that President Obama has brought a lot of different players to the table to create momentum for reform. He's worked with hospital associations to come up with $155 billion in savings and he's worked with the pharmaceutical companies to find $80 billion in spending reductions to make prescription drugs more affordable for our seniors.
As I said at the outset, it's clear we all agree that reform is desperately needed. I am encouraged that the President, hospitals, doctors, insurance companies and pharmaceutical companies are all working together to forge reform that lowers costs, covers every American and improves the quality of health care in America.
 Mario Burgos writes about local and national politics at his blog. He resides in Cedar Crest, but has lived in more places than he can count on one hand.
What is the ideal way to expand coverage and cut costs in our health care system?
Let's look at the basic problem with this question. First, it is a contradiction. You can't expand coverage and cut costs. You can do one or the other, but it is not possible to do both at least not without degrading the quality of available care.
Moreover, it's a classic example of a one-size fits all type of question. The thing is that there in not a one-size fits all type of answer. In many cases the costs of health care are directly tied to the malpractice insurance doctors are required to carry as a result of lawsuits - some frivolous, some not. In other cases the rising costs of healthcare are the result of government regulation and mandates intended to reform the system or protect consumers. Then, there is the subjective nature inherent to providing "health insurance that covers all medically necessary care." To a family, it might seem that no expense should be spared to keep a loved one alive, but is it really society's responsibility to pay for that care? I would argue it is not.
Let's also examine the question of expansion of health care coverage. If someone smokes two packs of cigarettes a day, do they deserve the same access to health care and level of care as someone who does not? If someone chooses to live a rural lifestyle is it really the responsibility of society to build them rural health centers. If you choose to get cable television and a cell phone instead of paying for health insurance, should everyone else chip in to pay for your insurance. Again, I would argue not.
So, let's look at the latter first. The best way to cut costs in the health care system is on a case be case basis on the local level. Looking at the individual costs, be they hospital, doctor or individual, and coming up with solutions to reduce those costs. And, acknowledging that cutting those costs may very well involve making tough decisions about the type of health care services that will be made available. Incidentally, this is also the trick to expanding coverage. Get away from trying to provide the same level of coverage to everyone, everywhere. Health care is a service it is not a fundamental guaranteed right. Any more than than we should guarantee equal types of housing to everyone in America.
Does the current focus on costs undermine the importance of quality of care, as discussed in Win Quigley's article on Sunday?
Without moving to a barter system there is absolutely no way to separate costs from quality as it relates to health care. The two are inherently tied together. In our form of society the quality of every service or product purchased is related to price paid, up to the point of diminishing returns. Shifting to a government run health care system only shifts those costs from one entity to another (i.e. business-to-consumer to government-to-consumer). It is the demand for quality and quantity of care that is causing escalating costs. In a government run system the costs will only increase not decrease. In fact, I challenge you to find any government run program where costs do not increase year over year. They don't exist. Medicare, public education, public housing...pick a program and the costs always increase. Anyone who has ever worked inside a government funded institution understands why. Government run programs have no incentive to cut costs. Quite the contrary, they are incentivized to spend every last dollar in order ensure that they can receive the same level of funding the next year. This makes it all the more ludicrous for government to try and devise solutions for cutting costs. It's like asking a vegetarian what's the best way to cook a steak.
How can we change the incentive structure that leads to the use of expensive procedures that may not lead to optimal health outcomes?
There is only one way to significantly do this and that is at the consumer level. Something along the lines of health savings plans wherein individual consumer choices regarding the quality, quantity, and type of care they receive directly impacts the dollars in their pocket. Also, I believe that consumers should indemnify medical providers, so that we remove the burdensome costs malpractice has introduced into the system.
And, finally, what proposals or ideas in Congress strike you as smart and feasible?
All of the proposals in Congress are feasible. Feasible in that they can be implemented. However, implementing a program is never the same as achieving a goal. I'm not aware of a single smart proposal in Congress. Anything Congress passes is going to be a one size fits all approach for the nation, and that is a mistake - a very costly and ineffective mistake made time and time again.
 Barbara Wold has been providing news and opinion on local and national politics on the Democracy for New Mexico blog since 2004. She was the Democratic National Committee's official state blogger from New Mexico during the 2008 Convention in Denver, and is involved in Democratic Party politics and progressive grassroots activism.
Today I'll be discussing the issue of the cost effectiveness of the Medicare program, which currently serves 45 million elderly and disabled Americans. Yesterday, Paul Gessing of the Rio Grande Foundation claimed that the program was "broken." Many on the right make similar claims about Medicare due to projections that the program's trust fund will run out of funds in 2017 if nothing changes.
The program isn't broken, but it will be stressed because our huge baby boomer population will be coming into the program, significantly adding to its overall costs. What this means is that greater utilization -- not necessarily any flaws within the Medicare program itself -- will be driving up costs. More patients coming into the program means we'll have to spend more on coverage, but that says next to nothing about the true cost effectiveness of Medicare. Our seniors will be accessing health care coverage somewhere, somehow -- and Medicare is actually the cheapest way we have right now to serve them.
According to a recent article in the New York Times that examines the effectiveness of Medicare as a model for a public health care option, the program has many strong points:
Medicare's market leverage enables it to purchase medical care much more cheaply than private insurers do, and the government uses this clout to drive down prices as a way of controlling costs.
... Medicare's monopoly over the insurance market for the elderly also allows it to compel important changes in the way medical care is paid for. In the early 1980s, for example, the government pioneered a way of paying hospitals a fixed sum, based on a patient's illness, rather than simply for the cost of care. Hospitals stays dropped significantly, as did overall costs.
... Medicare is less expensive to administer than private plans, according to Karen Davis, the president of the Commonwealth Fund, a New York nonprofit group that favors the creation of a public plan. While Medicare spends only 2 percent to 3 percent on administrative expenses, large private insurers may spend 17 percent, she said. The private companies spend more on expenses like marketing, determining what to charge customers and, if they are publicly held, paying profits to their shareholders.
In fact, two measures shaped by the right and enacted by Congress under the Bush administration have driven up Medicare costs over the past few years. A prescription drug program eats up lots of cash because it uses the private sector for coverage and doesn't allow Medicare to negotiate on price. The Medicare Advantage program is very costly because it pays private insurers very generous fees to provide services to Medicare patients.
As Paul Krugman notes in a recent column comparing the administrative costs of Medicare and private insurers, "...the Congressional Budget Office (CBO) has found that administrative costs under the public Medicare plan are less than 2 percent of expenditures, compared with approximately 11 percent of spending by private plans under Medicare Advantage. This is a near perfect "apples to apples" comparison of administrative costs, because the public Medicare plan and Medicare Advantage plans are operating under similar rules and treating the same population."
A recent Associated Press article documents the problems with unstable and rapidly rising prescription costs under the privatized Medicare drug benefit, and urges that Congress adopt a public option with drug benefits:
The extraordinary instability of prices in these privately run drug insurance plans underscores the need for Congress to include a publicly run health insurance option in any reform plan, so Americans can have the choice of more stable health coverage that doesn't bait and switch or surprise with dramatic price increases.
Krugman provides a useful comparison between our health care system and those of other advanced nations, arguing that private insurance is the main culprit in the problem of rising health care costs -- not Medicare:
In international perspective, the United States spends nearly six times as much per capita on health care administration as the average for Organization for Economic Cooperation and Development (OECD) nations. Nearly all of this discrepancy is due to the sales, marketing, and underwriting activities of our highly fragmented framework of private insurance, with its diverse billing and review practices.
Bottom line: Medicare isn't broken, but it will face challenges from a growing number of seniors enrolling in the program. We'll have to spend additional funds to provide medical care to our aging population no matter how we cover them. There is significant data that demonstrates that Medicare -- with its similarities to a proposed public option within the current health care reform initiative -- is likely the most cost-effective way to serve our seniors.
Be sure to return to City Seeker tomorrow for the third round of the debate. You can leave comments and responses below.
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Last Updated ( Thursday, 09 July 2009 14:38 )
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