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Healthcare Costs Are All About Chronic Disease Management

 

Stanley Feld M.D., FACP,MACE 

The National Institute for Healthcare Management Foundation is a nonprofit, nonpartisan organization focused on healthcare. The foundation just published an excellent report on the distribution of  healthcare costs in the population.

The results indicate that reducing healthcare cost is all about reducing and managing chronic diseases.

U.S. healthcare spending has sharply increased between 2005 and 2009 by 23 percent from $2 trillion to $2.5 trillion per year.

This is a result of a combination of factors. Chief among them is the increasing incidence of obesity. 

Who spends the money?

 Five percent of the population is responsible for 47% of all health care spending in the United States. Ten percent of the population accounted for 63.3% of the expenditures.

Fifty percent (50% percent) of the population accounted for only 3% of the healthcare expenditures.

The low cost person spent $233 in 2008 for healthcare services. Those in the top half of spending cost insurers, the government, or themselves $7,317 a year. The top 1 percent cost $76,476 per year. These are discounted fees not retail fees.

Healthcare expenditures were concentrated among a small group of high-cost patients. These high cost patients were older patients (over 55 years old) with one or more chronic diseases. If they were young and they had one or more chronic diseases healthcare expenditures increased. The more chronic diseases a patient had, the higher the likelihood the patient would be in the top 5% of healthcare dollar utilizers.

Fifty percent of the top 5 percent of healthcare spenders had high blood pressure, a third had high cholesterol, and a quarter had diabetes. The incidence of hypertension, hypercholesterolemia and adult onset type 2 Diabetes Mellitus is directly proportional to the presence of obesity.

It is logical to conclude that as the incidence of obesity and its severity increases the complications of obesity (hypertension, hypercholesterolemia, and Type 2 Diabetes) will increase.

It follows that healthcare costs will increase as a result of the increasing incidence of obesity. America must control the obesity epidemic.

Little progress is being made to decrease the increasing incidence of  obesity or Type 2 Diabetes.

In a perfect world, if obesity could be decreased, the incidence of chronic disease would be decreased.

In a perfect world, if the patients with chronic diseases could be taught to self-manage their disease, healthcare costs would decrease because the incidence of complications of chronic disease would be decreased by at least 50%.

 The treatment of the complications of chronic diseases is the most costly healthcare expenditure.  

President Obama’s Healthcare Reform Act mentions prevention and chronic disease management. There are no concrete incentives for patients to learn how to manage their chronic diseases. There are no specific financial incentives for physicians to develop facilities to teach patients to mange chronic diseases.

Americans are in for a long and costly dysfunctional healthcare system to the disadvantage of consumers and physicians.

President Obama’s Healthcare Reform Act puts consumers in a passive dependent position. Consumers need to be put in a proactive position to care for and be responsible for their health and healthcare needs.

Physicians have to have incentives to teach consumers to be self-reliant.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone. 

 

 

 

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Where Is The Transparency and Accountability In Obamacare?

 

Stanley Feld M.D., FACP,MACE

President Obama where is your promise about transparency and accountability in Obamacare?

A major problem in the healthcare system is the lack of transparency and accountability. It has been unchecked for a very long time.

Both primary and secondary stakeholders act in their self-interest. These stakeholders have had ample opportunity to be non-transparent and non-accountable. All the stakeholders have abused the healthcare system. 

I hit a nerve with my last blog “Patients And Physicians Must Control Costs”. Multiple readers responded with the usual comments:

Patients are not smart enough to handle their own healthcare dollars.”

“Your basic idea makes sense, but in reality I doubt that a patient knows enough to make intelligent medical/financial decisions, because there are too many unknowns and variables.”

“Physicians over use the fee for service system in order to make more money.”

“If a physician tells a patient that there is only a 1/10,000 chance that an MRI will yield something useful, if the patient doesn’t have to pay for it, the patient wants the MRI. 

 Patients (consumers) must be taught and motivated to manage their own healthcare dollars. Patients’ choice can create competition among physicians and other stakeholders for the consumers’ benefit. Consumers can force the entire healthcare industry to be transparent and accountable with the appropriate government support. 

In 2011 with an ever-evolving consumer oriented Internet few consumers would  buy appliances or electronic gadgets without reviewing the many comparative reviews by experts and consumer peers on the Internet. 

If consumers feel their plumber is ripping them off, they would join Angie's List to find a new plumber. Angie's List has forced transparency and accountability on plumbers in order for them to stay in business. Angie’s List has empowered consumers.  Consumers who do not care about being ripped off can continue to use those non-transparent non-accountable plumbers.

The hotel and restaurant business has experienced the same with consumer driven Internet sites such as Trip Advisor and Open Table. Many other B-C Internet sites have empowered consumers to make choices for their advantage. 

This is called free market forces. It can happen in medicine. It must happen in medicine. It is not wishful thinking.

Americans do not want politicians and bureaucrats to make their healthcare decisions for them. 

President Obama and Dr. Don Berwick are not interested in market forces or in respecting congresses constitutional responsibility. They are interested in dictating healthcare policy by executive order. One such executive order has recently created a political storm in congress.  

“Democrats and Republicans are joining to oppose one of the most important features of President Obama’s new deficit reduction plan, a powerful independent board (independent Physicians Advisory Board) that could make sweeping cuts in the growth of Medicare spending.

"Last week, in his speech on deficit reduction, Mr. Obama said he wanted to beef up the board’s cost-cutting powers in unspecified ways should the growth of Medicare spending exceed certain goals."

President Obama’s goal is to have an unelected commission make healthcare decisions for the electorate without the check and balance of the electorate or congress. 

Representative Allyson Y. Schwartz, a Pennsylvania Democrat prominent on health care issues, said: “It’s our constitutional duty, as members of Congress, to take responsibility for Medicare and not turn decisions over to a board. Abdicating this responsibility, whether to insurance companies or to an unelected commission, undermines our ability to represent our constituents, including seniors and the disabled.”

President Obama doesn’t care. He is going to ignore the protests from both Democrats and Republicans.

Congress has given him the authority to do what he thinks best with its passage of his healthcare reform act.

Britain is turning away from the National Health Service and its Independent Physicians Advisory Board called the National Institute for Clinical Excellence (NICE). It has not saved money.   

Both Democrats and Republican have realized they have given President Obama too much power. 

 Because Britain is an entirely socialized medical system, NICE wields power over the health care options of all residents of Great Britain.  IPAB, initially, will make decisions regarding only the government-administered programs of Medicare and Medicaid. 

Americans have more freedom of choice at the moment. This freedom will disappear if President Obama gets his way.

 NICE is "health cost watchdog" that assesses everything medical, from new technologies to drugs and clinical procedures, and issues guidelines for their use by the NHS. These guidelines include criteria by which certain patients will be made ineligible for both routine and life-saving procedures. The method is known as Comparative Effectiveness Research and Evidence-Based Decision Making

“Our insurance companies weigh costs as well, but there is a difference. If your insurance company denies access to a procedure you feel you need, you have recourse through the company's own appeals process and, if need be, the judicial system. Both parties to the dispute have incentive to reach an accord: the patient wants to get well, and the insurance company's wants to avoid subverting its profit motive through legal action, which says nothing of the bruising a lawsuit lays upon its commercial image.

When you are denied a test or procedure in the British system, you get to ask them to reconsider…and then you are invited to go pound sand.” 

To President Obama this advisory board is the first step in his non-transparent quest for complete control of the healthcare system by the executive branch of government.

How many of you ever have reviewed a hospital bill or doctors bill after Medicare or private insurance have paid? How many of you have concluded that the bills are incomprehensible?  

Physicians, just as patients, receive EOB (explanation of benefits). Physicians’ EOBs are equally as incomprehensible.  

Physicians, hospitals, insurance companies, and pharmaceutical companies must be accountable for their charges and treatment recommendations. 

Why should a cancer treatment cost $37,000 per treatment? How much money did Medicare or Aetna pay that provider for that $37,000 treatment? How much did the provider pay to the pharmaceutical company for the medication? What should the true cost of the medication be? How much did the provider mark up the charges to the patient?

It is easy to remember the $45 dollar aspirin charges by hospitals.  What was the mark ups along the way? Are there providers in the area that charge less and get comparable results?

An Independent Physicians Advisory Board could do all the research for consumers (patients). It could help patients decide on the value of the treatment. It could allow for consumer input as does Trip Advisor and others.

All the information should be available to consumer on the Internet by either the   government agency or a private organization. 

There should also be an effective appeals process for the provider. 

 Consumers should make their own choices and not be forced to be dependent on the government for their healthcare choices.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone. 

 

 

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Patients and Physicians Must Control Health Care Costs

Stanley Feld M.D.,FACP,MACE

The primary stakeholders in the healthcare system are patients and physicians. The incentives for patients and physicians to save money are non existent. The secondary stakeholders have taken advantage of non existent incentives to create a healthcare system that generates ever increasing costs.

Patients and physicians are the only stakeholders that can control costs. They initiate the use of the healthcare system’s resources. 

Healthcare costs for medical procedures such as an MRI or CT scan have been found to vary by as much as 683% in the same town, depending on which physicians patients choose, according to a study by Change: Healthcare.

The implication is that individual physicians are responsible for the differences. Most physicians do not own MRIs, CAT scanners or PET scanners. Secondary stakeholders own the equipment. They price the procedures and profit from the equipment, not the physicians.

"There's been a barrage of studies that show differences from region to region," said Christopher Parks, founder of Change:healthcare. "That makes sense — California's more expensive than Alabama. But this 683% is within a 20-mile radius in your own town." 

This finding illustrates several dysfunctional issues in the healthcare system.  President Obama’s Healthcare Reform Act is causing these issues to surface as secondary stakeholders are beginning to adjust to the upcoming changes.

For a pelvic CT scan, they found that within one town in the Southwest, a person could pay as little as $230 for the procedure, or as a much as $1,800. For a brain MRI in a town in the Northeast, a person could pay $1,540 — or $3,500. 

The social contract in medicine is between patients and physicians.  Patients should choose physicians and physicians should care for the patients the best they can with integrated healthcare team approaches. Physicians should be the captains of this team approach. 

Patients should be at the center of medical care and be educated to make wise medical decisions.

Physicians should be the coaches and advisors to patients on how to make wise decisions and attain better health.

In the beginning, patients’ employers provided first dollar healthcare insurance coverage. Patients were not at any financial risk. There was no need for patients to care about medical costs. The healthcare costs were their employer’s problem. 

Healthcare insurance companies enjoyed this setup. The more they paid out in benefits the higher they could raise the insurance premiums. Premium increases resulted in higher profits. It worked until employers said stop.

The insurance companies take 40-60 cents out of every healthcare dollar. Medicare and Medicaid outsource administrative services to the healthcare insurance industry. The healthcare insurance industry also takes 40 to 60 cents out of every Medicare and Medicaid dollar.

In anticipation of a reduction in government reimbursement for Medicare and Medicaid, the healthcare insurance industry has raised private insurance premiums, decreased covered illnesses, increased deductibles and increased co-pays.  

The Healthcare insurance industry is also moving toward  "reference-based pricing."

These changes have increased the liability of consumers for out of pocket expenses as opposed to having first dollar coverage. 

Medicare has different allowable fees for procedures in different regions. Medicare pays 80% of the allowable fee after a patient meets his deductible. Providers are only allowed to bill patients 20%.  By law balanced billing is illegal. It does not matter what providers charge for a procedure. Providers cannot bill patients for the balance of beyond the allowable fee. The Medicare fee is the most the provider can receive for a procedure.

“The Medicare Balanced Billing Program works to protect Medicare beneficiaries from being billed by healthcare practitioners for amounts beyond those approved by Medicare. The program investigates and takes action against those practitioner who violate the law.

Many providers are refusing to accept Medicare payment as Medicare reimbursement decreases. These providers can charge patients their fee. It is the patient’s responsibility to know if providers accept Medicare reimbursement. If providers do not accept Medicare, patients should understand their liability for the fee. Patients are liable for the total bill.   

Providers also contract with private healthcare companies. Some providers try to get the highest fee possible for the procedure. Private insurance companies pay different amounts depending on their need to build physician networks. This results in the wide spread in price in the same area. When providers are under contract with private insurers they cannot collect more than the contract price for a procedure. 

"It was eye-opening," said Howard McClure, CEO of Change:healthcare.

McClure said health plans are moving toward "reference-based pricing," in which they look at the average price of a procedure for a region, then say that's all they'll reimburse. But if a patient does not know how much a procedure costs, he or she gets stuck with the remainder of the bill if it goes above that average price.

"It helps the small business," McClure said, "but the consumer's left out in the cold."

Healthcare insurance coverage is changing with “reference-based pricing.”  Consumers are getting stuck with the retail price for procedures. The healthcare industry is using this to keep premiums down for business and compete for employer business.

Only consumers owning their healthcare dollars can stop this. President Obama cannot unless he controls the entire system and dictates prices. It never works because people figure out how to get around restrictions.     

Patients are led to believe that physicians are sending patients to higher priced providers for procedures because physicians will make more money.

Most physicians do not know the prices patients are charged for referred procedures.

Most physicians do not own MRIs, CAT scans or Pet Scanners. It is against the law to receive kickbacks.

It is essential that providers make their fee transparent to all providers and consumers.  Then consumers can choose wisely and create price competition.

Consumers must drive this process to create competitive pricing. Third party payment does not work.

 Consumer driven healthcare using the ideal Medical Saving Account will make it happen. It is the only model that makes economic sense.

 Consumers would start caring about the price of services when making healthcare decisions.

The challenge is to teach consumers to change their mentality toward healthcare costs and force providers through competition to be accountable for these costs.   

This will never happen under President Obama’s administration.  His goal is to empower the government and not consumers. Under President Obama’s administration the healthcare system will become more dysfunctional and further increase the deficit to unsustainable levels.

 

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone. 

 

 

 

 

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Obamacare Unraveled

 

Stanley Feld M.D.,FACP,MACE 

It is hard to remember all the defects in President Obama’s Healthcare Reform Act at once.

President Obama’s Healthcare Reform Act is so flawed it cannot possibly work as it was intended. It must be repealed. A serious, thoughtful, practical and common sense way to “Repair The Healthcare System” must be enacted before all the stakeholders have adjusted to President Obama’s coming changes that will create a more dysfunctional system.

A reader sent me a photo of a poster hanging in his local ice cream store. It is a reminder of previous criticisms of President Obama’s Healthcare Reform Act.

  Harrys ice cream 2

 

I predicted and discussed all the defects it the Healthcare Reform Act that will come back to haunt President Obama and  America’s consumers.

The last month the cracks in President Obama’s Healthcare Act have started to widen. Some of the cracks are starting to look like the entire Healthcare Reform Act is falling apart.

1.  President Obama’s selected model Clinics for his integrated care “experiment” (ACOs) have turned down applying to this pilot study. The goal of these pilot projects was to demonstrate that Accountable Care Organizations (ACOs) will reduce the cost of medical care and increase the quality of medical care. ACOs are a primary tool in proving that President Obama’ Healthcare Reform Act will be effective in reducing cost and increasing quality of medical care. There are too many impractical and costly regulations. There are too many logistical barriers to creating ideologically effective ACOs.

2. Individual States are refusing to set up federal directed State Health Insurance Exchanges as directed by President Obama’s law. The insurance exchanges’ economic burdens will be shifted to the state at the direction of the federal government. The end result will be to increase state budget deficits and decrease state control over their local healthcare delivery systems. Texas is planning to set up its own Health Insurance Exchange under Texas rules even though Governor Perry believes “Obamacare” will be repealed.

Governor Perry firmly believes that Texans should be in charge of our health care programs.”

There is great antipathy between Governor Perry and President Obama. Texas officials have concerns that President Obama’s administration in the end will say,

 “You all didn’t bother to make a significant effort with the lead time you had,’ ”

 “I wouldn’t put it past President Obama’s administration not to certify what we come up with.”

President Obama’s advisors at the Urban Institute have told him that he is creating an additional entitlement and increasing hidden taxes with his Health Insurance Exchanges. Once the America people discover that this is President Obama’s intention they will oppose Healthcare Insurance Exchanges. The exchanges are not going to put a muzzle on the healthcare insurance industry’s devouring of the healthcare dollar. One must question why the healthcare insurance industry is in favor of Healthcare Insurance Exchanges. The answer is they will increase their share of the healthcare dollar with Healthcare Insurance Exchanges.

 I suspect few people understand this.

President Obama is once again decreasing states’ rights and limiting personal freedom to choose. President Obama’s exchanges will increase states’ budget deficits. The result will be an increased tax burden for all.

"The exchanges don't just handle health insurance. Rather, they are expected indirectly to operate an entirely new "tax" system that collects another 9 or 10 cents from most insured household for every additional dollar earned and a new "welfare" system that tries to determine in advance and at various later stages households' eligibility for different subsidies."  

3. A discovery of a quirk in the law would allow an additional 3 million who earn over $64,000 to $80,000 a year to enrollee in Medicaid. Medicaid cannot attract enough physicians for its current enrollees. Physicians refuse to participate because its reimbursement is less than physicians’ overhead. Adding 16 million new enrollees plus an additional 3 million is untenable.  

4. The lawsuits by 24 states challenging the constitutionality of President Obama’s Healthcare Reform Act is slowly proceeding to the Supreme Court. The Supreme Court might have tipped its hand as to the direction it is leaning last week by another decision in favor of “States Rights” and “individual rights.”

Justice Kennedy wrote in an opinion,

 "The whole point of separation of powers, the whole point of federalism, is that it inheres to the individual and his or her right to liberty; and if that is infringed by a criminal conviction or in any other way that causes specific injury, why can't it be raised?"   

5.  Last week McKinsey published an in-house survey that showed that at least 30% of corporations would drop employee sponsored healthcare insurance (ESI) and let employees buy the government’s  “affordable and subsidized” healthcare insurance (the Public Option) through government’s Healthcare Insurance  Exchanges in each state.The government criticism of the survey was unjustified. The criticism weakened President Obama’s support even further because it became apparent that he was going to try to intimidate his distractors and not heed reality.

All of these defects in Obamacare are becoming more apparent to all consumers. Public support is decreasing daily. It is going to take the Supreme Court to declare it unconstitutional or a Republican President with a Republican House and Senate.

President Obama remains oblivious to the defects and unpopularity of his Healthcare Reform Act. 

 

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President Obama Tries To Intimidate Critics

Stanley Feld M.D.,FACP, MACE

Last week McKinsey published an in-house survey that showed that at least 30% of corporations would drop employee sponsored healthcare insurance (ESI) and let employees buy their own “affordable” “government subsidized” healthcare insurance (Public Option”) through the Government’s Healthcare Insurance Exchanges in each state. Adding thirty percent of the corporate work force to Healthcare Insurance Exchanges would place states and the federal government in deeper debt.

The McKinsey survey echoes what Doug Holz-Eakin (economist and former head of the CBO) and John Goodman (a healthcare economist and CEO of NCPA) have said about the impact of President Obama’s Healthcare Reform Act.

“If Mr. Holtz-Eakin is correct that there will be 11 million more people in the exchange, then costs could be nearly 40% higher than the $511 billion price tag. If between 78 million and 117 million people are moved into the exchanges the NCPA predicts the costs could more than triple to $2 trillion dollars more than expected over the first decade.”

“Most of this extra expense would come from workers losing their employer-sponsored insurance.” 

Immediately, President Obama’s administration attacked McKinsey’s honesty. The Obama administration accused McKinsey of patronizing their clients and working for the sponsors of the survey.

The administration had no proof to support any of its accusations against McKinsey. Its aim was to tarnish McKinsey’s reputation as well as intimidate McKinsey and other organizations that might draw negative conclusions about his healthcare law.

Nancy Parmalee, the deputy chief of staff who is running “ObamaCare” from the White House in her Whitehouse blog, launched a ferocious attack on McKinsey.

 Unfortunately, the study misses some key points and doesn’t provide the complete picture about how the Affordable Care Act will strengthen the health care system and make it easier for employers to offer high quality coverage to their employees. Here are the facts:

She said the McKinsey survey is an outlier. She also accused the survey of being fixed. The results of the McKinsey survey were the opposite of the results of respected independent organizations and the CBO.

She said “McKinsey says they obtained their data after they “educated respondents” about reform and that their survey used proprietary research. We don’t know what respondents were told or whether they had the chance to check with their colleagues or crunch the numbers for their business before responding.”

In Ms. Paralee’s mind McKinsey cooked the survey in favor of a negative result about Obamacare. She then quotes the findings of three independent surveys.

Respected independent organizations have examined whether employers will continue to offer coverage. Here’s what they found:

The Rand Corporation: "The percentage of employees offered insurance will not change substantially, but a small number of employees in small firms (defined as those with under 100 employees in 2016) will obtain employer-sponsored insurance through the state insurance exchanges."

The Urban Institute: "Some have argued that the Patient Protection and Affordable Care Act would erode employer-sponsored insurance (ESI) by providing incentives for employers to stop offering coverage. Others have claimed that most businesses would face increased costs as a result of reform. A new study finds that overall ESI coverage under the ACA would not differ significantly from what coverage would be without reform."

Mercer: "In a survey released today by consulting firm Mercer, employers were asked how likely they are to get out of the business of providing health care once state-run insurance exchanges become operational in 2014 and make it easier for individuals to buy coverage. For the great majority, the answer was 'not likely.'" 

 The White House has routinely tried to intimidate its health-care critics. Nancy Parmalee’s facts in the administration’s campaign against McKinsey are wrong. She misread the studies she quoted.

  1. The White House sponsored the Urban Institute study cited by Nancy Parmelee. Bowen Garrett who now works for McKinsey wrote it.
  2.  Some of the notable work on employers discontinuing to sponsor healthcare insurance and pay the penalty comes from Eugene Steuerle of the Urban Institute. His paper predicts a mass discontinuation of ESI by corporation of all sizes.

 Even so, droves of employees—potentially tens of millions—are likely to shift out of employer-provided insurance over the next decade or two, especially as newer firms and their employees find it more profitable to get the exchange subsidies than the subsidies for health insurance provided by the employer.”

 Eugene Steuerle of the Urban Institute wants universal coverage run by the government as the single party payer. I could just see President Obama saying, “Don’t worry Gene we will get there.” 

Nancy Parmalee also misstated the Mercer findings.  The graphs show exactly what Mercer reported. It is not dissimilar to McKinsey’s survey.

  Mercer

  Mercer 2

David Brooks expressed common sense in a recent New York Times article.

He said,

 "Obamacare incentivizes companies to drop health coverage for their employees. Employers who drop coverage have to pay a fine, but the fine is cheaper than offering health insurance. Employees will be able to buy their insurance on state-based “exchanges,” where they can take advantage of the law’s new subsidies.

(Americans making less than 400 percent of the federal poverty level are eligible for subsidized coverage on the exchanges.) AT&T has calculated that it would save $1.8 billion a year by dumping its workers into the government’s lap.

Other companies are keeping quiet about their plans for now, but make no mistake: If Obamacare remains the law of the land, nearly every corporation in America will do what AT&T has contemplated. So will cash-strapped state governments." 

McKinsey released the entire methods, detail and results of its survey. The survey was non biased, well designed and answered each of President Obama’s administration’s criticism.

1.McKinsey and not clients funded the survey. 

2.Ipsos, a well-established neutral opinion research firm, conducted the survey. 

3.The companies surveyed were representative of corporations and businesses from the broader economy. 

4.Respondents were required to be either the “primary decision maker” or “have some influence in the decision-making process” for employee health benefits. 

5.Respondents were informed of Obamacare’s exchange subsidies in a neutral, factual manner.

6.Employer surveys (McKinsey survey) and economic simulations (CBO’s analysis) are different. CBO analysis has underestimated the result by a factor of five.

The attack on McKinsey was unfounded. Hopefully, McKinsey’s reply will not inhibit others from revealing the truth about President Obama’s policies not only in healthcare but in other areas.

 

 

 

 

 

 

 

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Economic Incentives Motivate!

 

Stanley Feld M.D.,FACP,MACE

The use of economic incentives to motivate behavior is neither a Democratic or Republican idea. It is human nature to be motivated by economic incentives. The concept of individual responsibility is an American idea. It has been tarnished in recent years.

There is no question in my mind that government has the responsibility to be compassionate and help the needy. It is my view that government should help individuals help themselves.

The costs associated with Medicare and traditional healthcare insurance are rising. Every stakeholder points a finger at the other stakeholders as the cause.

President Obama’s Healthcare Reform Act is raising costs higher in anticipation of cuts in the future. He is in the process of forcing individuals to be more dependent on the government rather than promoting individual responsibility.

Obamacare will fail to control costs.

All anyone has to do is look at a Rand Corp. study of 29 years ago to see what works and what doesn’t work. After all that is said what matters are results in decreasing costs, not your political ideology.

The Rand Corp’s political leanings are more left of center than right of center. The Rand Corp tries not to be biased by these leanings in its scientific studies. Its conclusions from its own data are sometimes skewed to the left ignoring its own evidence.

The Rand Health Insurance Experiment looked at consumers’ healthcare consumption in healthcare plans with different deductibles as well as an HMO. It monitored the results and reported its findings in 1982.

The findings were:

  1. Patients are responsive to out-of-pocket costs (the more they have to pay, the less health care they buy).
  2. Changes in the amount of spending have no apparent impact on health care outcomes in most cases.
  3. Judging from the difference in behavior between HMO doctors and fee-for-service doctors, physicians are also very responsive to economic incentives.
  4. Consumers with high deductibles were as likely to cut back on useful health services, as they were to cut back on unnecessary care.
  5. The critics of the consumer driven model have used this last point as proof that consumer driven healthcare doesn’t work. They claim that these consumers will not get appropriate care if they have a high deductible and try to save money.

If health care was free, spending soared with no improvement in health status. In the government controlled model government has to limit individual choice of care and access to care in order to keep consumption of care down.

The 1982 RAND study proved to me that consumer driven healthcare can work. Healthcare consumption is driven by the economic incentives the healthcare system offers consumers, physicians, hospital systems, pharmaceutical companies and healthcare insurers. Consumer driven healthcare patients used services they felt were essential to them and did not spend money on services they felt were not essential.

A consumer driven healthcare system would stimulate the growth of full-service diabetes centers that would force physicians into competing for diabetic patients because patients would be managing their own healthcare dollars. CDHC could energize the chronic disease healthcare market. It would create specialized centers competing for the care of patients with chronic diseases. Preventing the complications of chronic disease with education about self-management is in the interest of patients with the disease as well as society. The medical care of the complications of chronic diseases consume 80% of all healthcare dollars. Consumers and physicians respond to economic incentives. The healthcare social contract is really between consumers and physicians not government and hospital systems.  

A 2011 Rand study of more than 800,000 families from across the United States found when people shifted into health insurance plans with high deductibles their healthcare spending dropped an average of 14 percent compared to families in health plans with lower deductibles.

In October 2010 Cigna released a report covering 5 years of real-world experience with 897,000 plan members, about half in “traditional” coverage plan and the rest in consumer-driven plans. 

All of the results show that CDHPs are working beyond anyone’s expectations.

  1. CDHPs save 15 percent in the first year, 18 percent in year two, 21 percent in year three, 24 percent in year four, and 26 percent in year five.
  2. All this while individual out-of-pocket exposure is about the same (17 percent) in both types of plans.
  3. Using Cigna’s quality measurements (which are wrong), there is 8 percent to 10 percent higher use of preventive services in the CDHPs.
  4. CDHP enrollees are 9 percent more likely to get evidence-based treatment in the first year and 14 percent more likely in the second year of enrollment.
  5. CDHP enrollees are five times more likely to complete a health risk assessment.
  6.  CDHP enrollees are19 percent more likely to work with a health advocate.
  7. CDHP enrollees are 40 percent more likely to use on-line cost and quality tools when making decisions.
  8. CDHP enrollees have a 13 percent decrease in the use of emergency rooms.
  9. CDHP enrollees are 9 percent more likely to switch to generic drugs.
  10. CDHP enrollees have a 14 percent lower prescription costs.
  11. CDHP enrollees are 21 percent more likely to participate in a disease management program.
  12.  CDHP reduce their costs by 21 percent for joint disease, 8 percent for diabetes, and 7 percent for hypertension.
  13.  CDHP enrollees are slightly more satisfied with their plans than people in traditional approaches (83 percent versus 82 percent).

Finally according to the Employee Benefit Research Institute(EBRI), 22 million people are enrolled in consumer-driven and high-deductible health plans.

In 2010 EBRI conducted “Consumer Engagement in Health Care Survey” (CEHCS) analyzing the behavior and attitudes of 4,509 adults ages 21–64 with private health insurance coverage.

The findings were;

  1. People who enroll in these plans are more cost-conscious than those who have traditional health insurance policies.
  2. 53 percent routinely check to see whether their plan would cover specific care, compared with 47 percent of traditional policyholders.
  3. More than 50 percent check if a generic drug is available, compared with 44 percent in traditional plans.
  4. CDHP enrollees were more likely than traditional plan enrollees to choose doctors based on their use of health information technology.
  5. CDHPs enrollees also were more likely to exercise and less likely to be obese compared with traditional health plan enrollees.

President Obama’s Healthcare Reform Act will eliminate consumer driven health care plans.  I believe this is ill advised. CDHPs have decreased the cost of healthcare by motivating consumers to drive their healthcare decisions. A government directed system will not achieve this goal.

The results above were gotten with Health Savings Accounts. The use of my Ideal Medical Savings Account increases the economic incentives for consumers.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

  • Emily

    I agree with the idea of CDHC, but as a consumer, I’m frustrated by the execution. I absolutely pay attention to price with the plan, but it is frequently a problem to know what the price is. I took my son to the ER after a fall and when I asked about price, they had NO IDEA. Not even a ballpark. In fact, by reading a sign posted in the room, I was more clear about the billing process than the woman collecting my billing information. Doctors often don’t know either when it comes to tests and meds. I don’t hold them entirely responsible or think cost can always be a leading consideration, but you can’t really even consider costs if you don’t know even know them. It’s a hassle to find them out too.
    If you want to look at prescriptions, look here http://www.frugalpharmacies.com/ The prices vary considerably from pharmacy to pharmacy. Who would pay over $600 for Topamax at Walgreens when you could buy it for $440 from Walmart? But, I’m guessing few would even consider that a great option if they realized it was under $25 at Costco. This is one of the more breath-taking examples, but it is not unique.

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If President Obama Cannot Get A Public Option One Way He Will Get It Another Way

  

Stanley Feld M.D.,FACP,MACE

 

McKinsey Quarterly has reported its survey concluding there will be a radical restructuring of employer-sponsored health benefits (ESI) as a result of President Obama’s following the 2010 passage of the Affordable Care Act.

Healthcare insurance rates have already skyrocketed as a result of anticipating the conditions of Obama care. President Obama has been powerless to do anything about the increases. 

Thirty percent (30%) of companies providing ESI to their employees will drop healthcare insurance coverage once Obama care takes effect in 2014.

The survey included 1300 employers providing ESI across industries, geographies, and employer sizes. Other surveys have found that as we get closer to 2014, President Obama’s Healthcare Reform Act will provoke a much greater number of employers to drop employer sponsored healthcare insurance.

The penalty for not providing healthcare insurance coverage is much cheaper than providing healthcare coverage. 

 McKinsey’s survey suggests that when more employers become aware of the new economic and social incentives embedded in Obamacare the percentage of employers dropping ESI will come closer to 100%.

The Congressional Budget Office estimated that only 7 percent of employees currently covered by employer-sponsored insurance (ESI) will have to switch to government subsidized-exchange policies (Public Option) in 2014.

The McKinsey study concluded;

 

  • Overall, 30 percent of employers will definitely or probably stop offering ESI in the years after 2014.
  • Many Human Resources officers and CFOs do not know the implications of Obama care.
  • Among employers having a high understanding of President Obama’s Healthcare Reform Act more than 50% will stop offering employee healthcare benefit and more than 60% will make some kind of change.
  • At least 30 percent of employers feel they would gain economically from dropping coverage and paying the penalty. They would even gain if they increase their employees’ salary or other benefits.
  •  The insurance coverage is in excess of $15,000 per year per employee. The government penalty is $2,000 per employee.
  • The difference in cost will force employers to drop ESI and force employees into the Public Option.  This was President Obama’s plan all along.
  • The survey also showed that more than 85 percent of employees would remain at their jobs even if their employer stopped offering ESI.
  • Sixty (60) percent of employees would expect an increase in compensation from their employers
  • Who are these rules in favor of? They are not in favor of the employee.

 

Health care reform fundamentally alters the social contract inherent in employer-sponsored medical benefits and how employees value health insurance as a form of compensation.

 “Obamacare” guarantees the right to health insurance regardless of an individual’s medical status or ability to pay. In doing so, it minimizes the moral obligation employers may feel to cover the sickest employees, who would otherwise be denied coverage in today’s individual health insurance market.

The logical result is healthcare insurance premiums would increase for the individual and benefits would decrease to keep the premium cost down.

In 2014, people who are not offered affordable health insurance coverage by their employers will receive income-indexed premium and out-of-pocket cost-sharing subsidies from the government.

The highest subsidies will be offered to the lowest-income workers. It enables these low paid workers to obtain coverage they could not afford in today’s individual market.

The government will pay the subsidies for the increasing premiums in this Public Option. The government would then pass the increased premium cost on to the taxpayer on a means tested basis.

This is what Don Berwick and President Obama meant by redistributing wealth. 

The next step is government’s complete control of the healthcare system using a single party payer system. 

Employers will no longer be able to offer better healthcare insurance benefits to their highly compensated executives. Obamacare requirements will increase medical costs for companies.  Companies will be forced to discontinue employee healthcare coverage. The penalty is set low to further encourage companies to discontinue coverage. President Obama’s goal is to have most people in the “Public Option” This will lead to government control of the healthcare system.

 State insurance exchanges will be paid for by the states with a federal subsidy. These exchanges will offer individual and family policies of set benefit levels (bronze, silver, gold, and platinum) from a variety of insurance companies.

The effect on the federal deficit will be much greater than the original CBO’s estimate of 10 million people, or about 7 percent of employees, currently covered by ESI.

Seventy (70) million people will be added to the “Public Option”. This increase in numbers will add to the deficit. The result will mean higher taxes for the middle class.

President Obama wins his ideological goal. Consumers will have less control over their decision-making and choices.  The healthcare insurance industry will gain more control over pricing and profit. President Obama will continue to outsource the administrative services to the healthcare insurance industry.

 The losers will be consumers and physicians.

 

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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    Repairing the Healthcare System: If President Obama Cannot Get A Public Option One Way He Will Get It Another Way

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Mayo Clinic Rejects Accountable Care Organization(ACO) Provisions

 

Stanley Feld M.D.,FACP,MACE

 

The sooner President Obama’s Healthcare Reform Act (Obamacare) is repealed the faster we will be able to get on with healthcare reform that will work for all stakeholders. President Obama was figured that 30 existing and successful integrated medical care organizations would be in the first group of clinics to join and be included in his Accountable Care Organization (ACO) system of care.

ACOs are a critical part of Obamacare’s goal to provide affordable, universal and quality healthcare. ACOs are really HMO’s on steroids. ACOs are supposed to be better versions of HMO’s.  The public and physicians despised HMO’s because of its control over patient choice and access to care.  President Obama thinks Medicare will save over $500 billion dollars a year with ACOs.  Unfortunately for President Obama, neither the CBO nor the Medicare actuaries believe it.

So far at least 4 of President Obama’s premier integrated healthcare organizations have withdrawn from applying for ACO status. The stage 2 ACO regulations produced by CMS and CMS’s chief Dr. Don Berwick make clear President Obama’s intentions to control medical care and shift the risk of care to hospital systems and physicians.

Each organization has withdrawn with a slightly different excuse. It looks are if no one is going to show up at President Obama’s party.  

 “The Mayo Clinic says it will not be part of a critical piece of national health care reform under the government's proposed rules.”

 The Mayo Clinic announced that the proposed regulations “conflict with the way it runs its Medicare operations.” Mayo treats about 400,000 Medicare patients a year. The bottom line is that Mayo figured out that they would assume too much risk, lose too much money and relinquish too much control over its processes to the federal government.

Dr. Douglas Wood, Mayo's chairman of health care policy and research said Mayo "is not going to participate in a Medicare accountable care organization under the circumstances proposed."

Mayo Clinic’s public reasons as expressed by Dr. Wood are;

 

  1. Mayo does not want to significantly change what it believes is an efficient, patient-friendly program. President Obama has used Mayo’s program as an model.
  2. The gap between Mayo's way of staying accountable and the government's regulations may prove too wide to bridge.

3. Mayo objects to the government's demand that patients be included on oversight boards to judge performance. Mayo doesn't do that now and is not eager to change. Dr. Wood said, "You don't have to have a [patient] on the board to make [treatment] patient-centered,"

4. The Mayo Clinic’s lawyers decided that the antitrust rules that are part of the ACO proposal would be violated. Mayo already provides most of the health care in most of Minnesota's rural counties. Dr. Wood believes it could not operate ACOs in those areas without violating the proposed regulations.

5. The Mayo Clinic objects to the way the government plans to measure effectiveness and quality of medical care. The effectiveness measures proposed by the government include such things as 30-day mortality statistics and the number of diabetes treatments.

The Mayo Clinic believes that the way CMS proposes to measure quality will be ineffective. They will only waste money without improving outcomes.

"They don't get you close to measuring health," Wood maintained. "The simplest measure for consumers is: How effectively did the organization keep me functioning?

    6. Mayo Clinic also objects to the CMS’ way of assigning patients to ACOs.

Mayo is confident in its current approach to accountable care. It has asked CMS "to take an entirely different approach to implementation of ACOs in the country." Mayo wants the government to contract directly with groups that are already providing accountable care programs.

"We're not looking to intentionally give [health care reform] a black eye," Wood said. "We're working to implement accountable care."

President Obama’s healthcare team has stated that they are not going to be influenced by Mayo’s practical demands. They will decide on the correct course based on their theoretical ideology. 

Elliott Fisher, director of population health and policy at Dartmouth Institute in New Hampshire as spokesman for the administration said,

"Every affected stakeholder said it's not good enough yet," Fisher said. "This is how the process is supposed to work."

Dr. Fisher is statement is meaningless and non-committal.  

 Michael E. Chernew, PhD is a Professor of Health Care Policy in the Department of Health Care Policy at Harvard Medical School. He is a disciple of Dr. Donald Berwick and a member of the Medicare Payment Advisory Commission (MedPAC), which is an independent agency established to advise the U.S. Congress on issues affecting the Medicare program. He is also a member of the Institute of Medicine’s Committee on Determination of Essential Health Benefits.

 He said in response to Mayo’s announcement, "I don't think the success or failure hinges on one participant."

Mayo’s Clinic decision was the correct one. CMS wants to control every aspect of medical practice. It wants to shift the risk of care to the providers and control the criteria to judge providers. It is a no win situation for providers. “Cooperative” providers are finally starting to understand the trap President Obama has set.

The best way to win a war is not to show up.

 

 

 

 

 

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    It’s fantastic that you are getting ideas from this piece of writing as well as from our dialogue made at this time.

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Paul Ryan Will “End Medicare As We Know It

 

Stanley Feld M.D.,FACP,MACE

 

The battle cry of the Democratic Party in its opposition to Paul Ryan’s Medicare plan is “It Will End Medicare As We Know It.” 

If you are told a lie enough times it becomes the truth.

Paul Ryan’s plan will not end Medicare, as we know it for people over 55 years old. I do not know how many times Mr. Ryan Has to repeat his point.

Paul Ryan’s plan is not going to push grandma off the cliff.

President Obama’s Healthcare Reform Act and the Democratic Party have already “Ended Medicare As We Know It” in 2011. The changes in Medicare will only get greater when fully implemented in 2014.

How has “Medicare Ended As We Know It” under President Obama?

1.    President Obama’s Healthcare Reform Act cut $145 billion over 10 years from Medicare Advantage. The cuts start in 2012, at first slow and then build up yearly. Insurers are going to shift the burden of payment from government to beneficiaries in the form of fewer services and higher out-of-pocket costs. Insurers will then stop offering Medicare Advantage coverage.

In April, President Obama used another trick political move to appease seniors who have Medicare Advantage coverage. He is going to give a  $6.7 billion dollar bonus to above average Medicare Advantage plans. The bonus is only 4.6% of the total Medicare Advantage cut and will only be good until 2015. I wonder when he is going to realize that seniors are not stupid and another trick will not work to gain political favor. 

2.    Medicare deductibles have increased as has the cost of base premiums and means tested premiums for Medicare Part B. Medigap premiums have also increased. Nevertheless, the most recent Medicare trustees’ report declared the system is going be bankrupt in thirteen years, five years earlier than predicted last year. They have used the term unsustainable.         

3.     Tim Geithner explained  the reason the alarming update was the result of "technical changes in the economic assumptions underlying the projections."  "We were counting on our economic policies actually working”.                                                                                              

Richard Foster the Medicare actuary said this would happen before we saw the failure of President Obama’s economic policies.

Paul Krugman wrote an article entitled “ Medicare Is Sustainable In Its Current Form”. He then goes on to describe sustainable in its current form.

4.     “Medicare American-style is very open-ended, reluctant to say no to paying for medically dubious procedures, and also fails to make use of its pricing power over drugs and other items.”  Paul Krugman is saying government should say no to paying for government defined dubious procedure. The Democrats made that mistake in paying for “dubious procedures” with the Medicare entitlement program at the onset. Patients should decide on “dubious procedures” with government input and not government.

5.  "So Medicare will have to start saying no; it will have to provide incentives to move away from fee for service, and so on and so forth." My interpretation of this statement is government will have to start restricting access to care, interpret the value of care and pay providers a lump sum rather than fee for service for their services to patients.

6.     "But such changes would not mean a fundamental change in the way Medicare works". I do not get it. Paul Krugman’s statement means it changes Medicare as we know it, doesn’t it? Doesn’t Accountable Care Organizations mean it changes Medicare as we know it?

President Obama, America’s seniors are not stupid.

7.     "So this business about Medicare in its present form being unsustainable sounds wise but is actually a stupid slogan. The solution to the future of Medicare is Medicare should be smarter, less open-ended, but recognizably the same program.”  Republican politicians did not introduce the term unsustainable. The Congressional Budget Office and Medicare Actuaries and the Medicare Trustees introduced the term before Paul Ryan’s plan existed. Paul Krugman is incorrect.

The difference in philosophy between Republicans and Democrats is clear. Both sides are proposing to "end Medicare as we know it."  President Obama has done it already.

Paul Ryan and the Republicans are offering solutions to give individuals more control over their healthcare decisions. Paul Krugman and the Democrats are suggesting and implementing changes to give the government more control over individuals and their healthcare decisions.

Americans must understand the problems Medicare faces. They must see through the Democrats’ demagoguery.    

I believe my position is a libertarian position if labels are needed.  Only the consumer will solve our healthcare systems problems. Government must empower consumers to make choices about their health and healthcare. The government must give consumers control of there healthcare dollars. If the government did this it would generate competition for among stakeholders for consumers healthcare dollars. These actions would cleanse the dysfunction of the healthcare system rapidly.

 

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

 

 

 

  • Senior Planning NJ

    Interesting article, it really makes someone think. I always like to read thought provoking articles about things like this. Keep the great posts coming. Thanks again for sharing it with us.

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