Cost

IN THE STATES: San Francisco's Ride on the Health Reform Trolley

Paul Testa — Thu, 03 Jul 2008 16:54:00 -0400

Rice-A-Roni may be the San Francisco treat, but health reform has been the topic du jour of late for the Bay City. As the San Francisco Chronicle noted, yesterday marked the one-year anniversary of Healthy San Francisco—the city’s ambitious plan to make health care accessible and affordable to its uninsured residents.

Like a cable car descending Nob Hill, there have been a few bumps along the way—the growing pains health reform—as well as uncertaintity because of a pending decision from the Ninth Circuit regarding the legality of the city’s efforts. Still, the plan is an innovative effort from one of the cities described in a recent Families USA report as being on the front lines of America’s health care crisis.

The key elements of San Francisco’s plan are laid out nicely here, but we’d like to highlight two points from the initiative:

An emphasis on medical homes in which a participant chooses one of 27 participating clinics to coordinate their care.
Shared and individual responsibility represented by income-based cost-sharing on the part of individuals and an employer contribution for firms with more than 20 employees.

New America health policy program director Len Nichols provided a positive and realistic assessment of the plan for the Chronicle article:

For a city to try to do it at all is pretty amazing. Ultimately, we're going to need federal help to make health care access a reality in this nation, and it's impressive San Francisco is trying to do it in whatever patchwork way they can.

COST: Weighing in on the Value of CT Scans

Guy Clifton M.D. — Wed, 02 Jul 2008 20:39:00 -0400

Sunday's New York Times's article, the first in a series on evidence-based medicine, got me thinking about how we set standards for the practice of medicine, and what it will take to get doctors to follow voluntary ones.

The extensive front-page article examed the prevalence and value of computed tomography (CT) angiography. In brief, CT scanners can generate a complete image of the heart (see NBC's Matt Lauer's here and Oprah Winfrey’s here).The technology is impressive. So is the price. A CT scanner costs about $1 million. Doctors and hospitals that make the investment have a large incentive to recoup their costs by ordering CT scans, ($500-$1,500 a test). In some specific circumstances, CT angiography provides more information than other heart studies. The Times noted certain situations in an emergency room where it could be highly useful. But in most circumstances it is more like a screening tool to search for hardening of the arteries. But the CT scan doesn't say whether someone needs the blockages opened. That has to be determined by coronary angiography, placing a catheter through a vessel in the groin and then threading it up to the heart. That's an invasive procedure that provides necessary details on the exact location and extent of blockages.

The question raised in this article is, "What is the value of CT angiography of the heart as screening tool for heart disease?" How many people have no symptoms of heart disease but have some risk of developing it? Almost any adult. With the possibilities for using the imaging technology virtually unlimited, how do we set limits? Don't assume Medicare will. As the Times noted, Medicare did say last year that it wanted more evidence before paying for these scans, but backed off after extensive lobbying of the agency and Congress by cardiology groups.

Some of the cardiologists in the Times article describe detecting lesions that they otherwise might not have discovered; others, more critical of the spreading technology, countered that they hae other tools to monitor and diagnose their patients. The American College of Cardiology has established some general guidelines for the use of CT angiography of the heart based upon the limited information that is available. The use of CT angiography to detect heart disease in patients with low risk for heart disease is considered "inappropriate". Its use to detect heart disease in patients without symptoms who are at high risk (such as those with high cholesterol and a family history) is of "uncertain" value.

One risk of this procedure is that the level of radiation delivered has a cumulative effect on a patient's risk of cancer. Another is that it can give either false positive or false negative results leading to either unnecessary additional procedures or a potentially dangerous sense of false security. Therefore, the American College of Cardiology considers its use "appropriate" under only very specific circumstances.

These and other guidelines like them are issued by organizations, but an individual doctor's adherence to them is neither measured nor reported. Such guidelines, therefore, have almost no impact on medical practice and pretty clearly have not influenced the debate over the use of this technology.

Not surprisingly, the article generated a rash of responses almost all of them decidedly critical of the current environment in which CT scans are used. The Health Care Blog picked up on an especially interesting section of the article, in which a Dr. Harvey Hetch responded to criticism of his decision to order a CT angiography saying: "it's incumbent on the community to dispense with the need for evidence-based medicine. Thousands of people are dying unnecessarily."

The irony of Dr. Hecht's words is that the opposite is more likely true. I would say that the lack of measured and reported standards of medical practice kills people. The adherence to evidence-based standards of practice could saves lives and a lot of money.

As it is now, a patient that goes to a doctor has only about a 55 percent chance of receiving treatments that are the standard of care.

We in medicine must know what care our patients need -- and then we must provide it. We shuld not provide unneeded care. Thinking about coronary CT scans, and medical innovation in general, raises the following issues:

What is the relative weight of risk to benefit of new technology in specific patient groups?
Since no agency or company is required to determine the value of new technology, only its safety, who should do it?
Doctors can use new technology as they wish, even if they profit from ownership of the equipment. Should use of new technology be restricted to circumstances in which its benefit is proven?
If there were reliable standards for the use of technology such as CT angiography, who will measure the pattern of a doctor's practice to determine if he or she is practicing mostly within standards or far outside of them?

As a neurosurgeon, I do not want to impede the development of new technology. I have seen what technological breakthroughs have done for patients. But appropriate assessment and use are not impediments. They serve to protect the public.

COST: Jumping on the Wellness Bandwagon

Elena Harman — Mon, 30 Jun 2008 20:55:00 -0400

The Cleveland Clinic is using wellness programs to practice what it preaches. The clinic, well known for its quality cardiac care, stopped hiring smokers in September 2007, banned trans-fats from its menus and vending machines earlier in 2007, and has now announced its plans to offer Weight Watchers programs to employees for free, according to an AP report. But it’s not just large companies with mammoth health care costs and doctors who constantly see the effects of unhealthy lifestyles that are investing in wellness efforts. Small companies and insurance providers are starting to jump on the bandwagon too.

Small Businesses. Many small businesses already have trouble meeting rising health care costs,so how can they afford to add wellness and prevention programs? Last week, the Wall Street Journal examined programs that even employers on a tight budget could consider workable. Suggestions included discounts for healthy living (using screening tests provided by some insurance companies), online wellness programs, care advocates (to help employees with claims questions, treatment options, or locating a doctor), disease management, nurse hotlines, and purchasing cooperatives (banding together to gain the bargaining power of a large company).
Insurance Providers. WellPoint has recently adopted a wellness and prevention program—but not one aimed at improving the wellness of its own employees. Instead, the insurance company gives financial incentives to its employees for improvement in the quality of preventive care received by plan members or beneficiaries. WellPoint’s 42,000 employees received bonuses linked to improvements in the quality of prevention, screening, and care management of their 35 million members in 2007, according to a recent article in the Chicago Tribune. It’s a different approach to be sure, but an interesting one.

Data to support cost savings of wellness programs is scattered. There is some debate over whether the wellness programs will prove to be a good investment for businesses in the long-term, as workers change jobs so frequently. It's possible that having health plans invest in a healthier population might turn out to be a better economic model. We're just beginning to think about how to shift our health care system from one oriented to chronic disease, not just acute episodes. The more that providers, employers, insurers—and individuals who can avail themselves of things like Weight Watchers or smoking cessation—think about how to achieve this transformation, the better.

REFORM: Health Care Financing (Part II)

Elizabeth Carpenter — Fri, 27 Jun 2008 14:37:00 -0400

I thought maybe Paul's "meat and potatoes post" on health care financing could use some dessert. So here it goes (and I promise to avoid food analogies in the future).

Part two of the Better Healthcare Together event on Wednesday (webcast here and a transcript will be posted alongside it soon) featured an impressive panel, which included CBO Director Peter Orszag. One of Orszag's most compelling comments focused on something central to the debate about the future of employer-based health insurance. Many Americans simply do not know how much their employers pay for health care. Orszag mentioned that making an employer's contribution towards employee health benefits more transparent might help elevate workers's understanding of the dire state of our health care system, its rising cost, and its impact on both workers and employers.

Adding the perspective from labor and management, Tony Daley from the Communications Workers of America (CWA) and Ellen Blackler from AT&T lamented the strain the health care crisis is placing on their respective jobs. Daley emphasized that labor negotiations are no longer about hours or wages, but predominantly about health care. Blackler described how employers are taking what she believes is too much time away from improving their companies to deal with health care. Both are nervous about health care's impact on international competition and the ability of corporations to invest in infrastructure.

Sound familiar? We heard similar worries from across the political spectrum at New America's recent event on employer health costs in a global economy. For an in depth look at this issue, check out a recent policy paper by our colleagues Len Nichols, Ph.D. and Sarah Axeen. (Issue brief here).

COST: One in Five People Report Skipping or Delaying Health Care

Joanne Kenen — Thu, 26 Jun 2008 21:48:00 -0400

One of the myths about health care in the United States that really bugs us is that everyone gets good care, rich and poor, insured and uninsured. Well, tell that to the one-in-five people—59 million people, some of whom are insured—reported skipping or delaying care in 2007. Cost was the biggest, although not the only, factor.

It’s a big alarming jump from the one in seven who reported access problems in 2003 when the Center for the Study of Health System Change did a similar survey.

In 2007, more than 36 million reported delaying care and 23 million people skipped care. That’s 59 million people reporting access problems, according to findings from the center’s 2007 Health Tracking Household Survey. The group has done the survey five times since 1997, and this is the biggest jump in a decade, particularly among Americans with insurance.

Cost was cited as the main access problem, along with rising rates of health plan and health system barriers, such as a doctor or hospital not accepting their insurance, or a health plan not covering a treatment, the study found.

“This is the most up-to-date snapshot of the access problems Americans are facing when seeking medical care, and it’s not a pretty picture, especially for insured people, who increasingly are finding that the access to care once guaranteed by insurance is declining,” said Peter J. Cunningham, Ph.D. co-author of the study funded in part by the Robert Wood Johnson Foundation.

People in poorer or fair health had more access problems than healthy people, and uninsured had more problems than insured. No surprise there. But what’s alarming is that the rate at which the insured reported problems rose by 62 percent.

And—saving what's arguably the worst news for last—the plight of poor kids. Low-income kids had experienced a lot of gains between 1997 and 2003 but that progress has been wiped out. “Low-income children encountered the greatest increase in unmet needs among all children,“ the center reported, reversing the gains they experienced between 1997 and 2003.

“The deteriorating access to care, particularly for vulnerable groups—the uninsured, people in the worst health, and low-income children—are especially disturbing,” said David C. Colby, Ph.D., vice president for research and evaluation at the Robert Wood Johnson Foundation.

Read more about the survey in this Wall Street Journal story.

REFORM: The Meat and Potatoes of Financing Health Reform

Paul Testa — Thu, 26 Jun 2008 20:16:00 -0400

The typical D.C. menu is often full of your standard meat and potato fair. (Red meat, in election years). And while we like our steaks medium rare, we prefer our health reform well done. So we were pleased to see the Bipartisan Policy Center serve up a bipartisan menu of options for financing health reform at an event hosted yesterday by the Better Health Care Together coalition.

Crafted by some of the top chefs of health reform, Jeanne Lambrew of the Center for American Progress, Joseph Antos, of AEI, and Meena Seshamani, of Johns Hopkins, the study said there was "broad-based agreement on the urgency of change, and the types of changes needed," to address the challenges of cost, coverage, and quality in our current system. But as there's no such thing as a free lunch, we need to think about the financing options. The report, in an even-handed fashion, lays out five possibilities:

Continue Current Financing Structure
Roll back High-Income Tax Cuts
Reform the Health Benefit Tax Exclusion
Institute a Play-or-Pay Model
Implement a Value-Added Tax

Each has its strengths and weaknesses—both as politics and policy. None is a panacea, and each must be considered within the context of the large goals of a sustainable reform that addresses issues of cost, coverage, and quality. The report doesn't choose one over another, but it lays them out and defines the terms in ways that we hope will make future discussion more concrete and productive.

The take home point—especially given the current fiscal and economic outlook—is that financing concerns should be an aperitif to discussion. Not an appetite-killer for reform. Now please pass the ketchup.

COST: GAO Joins the "We Can't Go On Like This" Health Care Spending Choir

Joanne Kenen — Thu, 26 Jun 2008 13:42:00 -0400

More gloom and doom on the health care economics and fiscal sustainability front. Or, choosing a more cheerful perspective, more great incentives for fixing our health care system.

The GAO in a recent report to the Senate Finance Committee added its voice to the Washington choir (in which CBO chief Peter Orszag and Fed chairman Ben Bernanke are the star soloists) warning that we are on an unsustainable fiscal path, and "over the long term, health care spending is the principal driver." That "we" is a big "we"—federal, state, and local governments, as well as the private sector. Like other top government agencies and experts, the GAO has recognized that the challenge is not merely demographics. Yes, with the Boomers retiring, we will have more older people, and older people develop health problems. But it's how they use costly (and sometimes unnecessary) health services, what the GAO calls "increased costs per beneficiary" not just sheer numbers of people that counts.

Growth in health-related spending is the primary driver of the fiscal challenges facing state and local governments as well. Unsustainable growth in health care spending also threatens to erode the ability of employers to provide coverage to their workers and undercuts their ability to compete in a global marketplace. Public and private health care spending continues to rise because of several key factors: (1) increased utilization of new and existing medical technology; (2) lack of reliable comparative information on medical outcomes, quality of care, and cost; and (3) increased prevalence of risk factors such as obesity that can lead to expensive chronic conditions. Addressing health care costs and demographics—and their interaction—will be a major societal challenge.

Rethinking patterns of utilization. Developing comparative effectiveness. Promoting wellness, controlling obesity and managing related diseases. Sounds like an agenda. And from all accounts, Senate Finance is listening.

COST: How Much Does This Back Surgery Cost? It All Depends

Joanne Kenen — Tue, 24 Jun 2008 20:31:00 -0400

You've heard a lot about how health spending can vary tremendously from one part of the country to another, say, Minnesota versus Florida.

What about when costs vary in one corner of southeastern Wisconsin? As Guy Boulton in the Milwaulkee Journal Sentinel points out, they certainly do. For instance, the cost of spinal fusion surgery can range from $25,000 to more than $50,000 depending on the doctor and hospital. That's just for patients covered by one insurer.

The reasons for price disparity are complex, as are the answers. One oft-cited solution is better information. But even that has its limits.

"Everybody says, let's get the information out there," said Paul Keckley, executive director of the Deloitte Center for Health Solutions. But it's slow, complicated, and hard to apply or interpret what it will mean for one specific patient under one specific plan. A few health plans have started disclosing some costs on a limited basis; 17 health insurance companies in Wisconsin last month pledged to tell consumers their estimated out-of-pocket costs, although that information doesn't give the whole picture about efficiency, cost, or quality of the overall system or the changes we have to make to improve it.

"It's critical for us to move forward if we are ever going to get control of the cost of health care," the paper quoted Pat Whitmore, vice president of human resources for Hufcor Inc., which employs about 500 people in Janesville, as saying. Whitmore and a plan administrator did a study a few years ago that found the cost of a colonoscopy ranged from $1,500 to $5,000 in southeastern and southcentral Wisconsin.

"It was a huge differential," she said.

Information is one aspect of creating "a value-based plan design." These plans contain incentives to encourage patients to get care from the hospitals or doctors with the best quality at the lowest prices. But again, it's still hard to measure what the true cost is for an "episode" of care, and determine exactly how much and what kind of care is appropriate. Which tests are necessary and which could we (or should we) live without? Whether one patient's spinal fusion is at the high or low end of the cost spectrum is irrelevant if the patient doesn't need the operation in the first place.

So we're all for disclosure and transparency and good information and helping consumers know what they are buying and whether they are getting it. We also need comparative effectiveness research, health IT, and payment reform. We need to know when we're comparing apples to apples in health care, and when we're just looking at one apple when we need to be checking the whole bushel.

REFORM: Senate Summit on the Health of the Economy and the Economy of Health

Joanne Kenen — Tue, 17 Jun 2008 18:59:00 -0400

Usually, when the chairman of the Federal Reserve speaks, the subject is the health of the economy. This time, it was the economy of health.

"Health care is not only a scientific and social issue; it is an economic issue as well. The decisions we make about health care reform will affect many aspects of our economy, including the pace of economic growth, wages and living standards, and government budgets, to name a few," Federal Reserve Chairman Ben Bernanke said as he kicked off a Senate Finance Committee summit on the cost, quality, and coverage challenges in health reform.

The Fed chief neither endorsed nor opposed any particular policies for health reform, but he did link the problems of cost, quality, and coverage, and joined in the growing chorus of medical and economic experts who argue that when it comes to health care dollars and services, more is not always better. "Cost-effective approaches may be at least as useful as more costly approaches in delivering good health outcomes," he said.

The day-long, bipartisan event held at the Library of Congress wasn't an official hearing, but it was a chance for the committee members and other members of Congress to hear from a variety of experts (including New America's Len Nichols), and spend time talking and thinking about how to move ahead in addressing the health care challenges of cost, quality, and the uninsured. (See the webcasts here)

Bernanke said spending on health care already consumes more than 15 percent of the nation's economy and about a quarter of the federal budget—and unless Congress acts, it's going to get worse. It is already "the single largest component of personal consumption," Bernanke said, "larger than spending on either housing or food." He added, "A piece of wisdom attributed to the economist Herbert Stein holds that if something cannot go on forever, it will stop. At some point, health-care spending as a share of GDP will stop rising. But it is difficult to guess when that will be, and there is little sign of it yet."

Bernanke acknowledged the complexity of health care, which has prompted a number of politicians and policymakers to suggest creating a health equivalent of the Federal Reserve, a "Health Fed" that would make technical decisions about government spending on health care and services, protected from home-town politicking and lobbying.

The lawmakers didn't try to pin down details; that's for next year. But there was significant degree of consensus across party lines. As the Robert Pear of the New York Times summed it up, the lawmakers generally believe "that Americans should be insured, but they should have a choice of private health plans competing in the market alongside government programs."

"Democrats are right in saying that if you are going to fix the system, you have to cover everybody," said Senator Ron Wyden, an Oregon Democrat who is a lead author of a rare bipartisan health reform bill. "Republicans are right in saying that you have to have markets, choices and private alternatives."

At the summit's closing session, Senators gathered to report on the day's events. We found an exchange between Senators John Kerry (D-MA) and Bob Bennett (R-UT) particularly interesting (and we are paraphrasing here.) After much talk about the need for bipartisanship, Senator Kerry highlighted the damaging effect of the "socialized medicine'" rhetoric that he said he often hears from Republicans during health care debates. Senator Bennett responded that he believes that most Senate Republicans are willing to have a serious conversation about covering all Americans, but that they are very resistent to the idea of a new entitlement program. Both Senator Bennett and Senator Gordon Smith (R-OR) emphasized that in order to get Republican buy-in, individual responsiblity will need to play a central role in comprehensive health reform. So while there was no grand bargain at the end of the exchange, we were impressed wtih the overall level of constructive and honest dialogue from Kerry, Bennett, Smith, and others. This is progress.

Nothing was decided but that wasn't the point. The point was to stop, listen, and learn. Senator Kent Conrad (D-ND) got a good laugh out of the crowd when he joked that when he was elected to the Senate he expected thoughtful policy-rich events like the summit to be the rule, rather than the exception. Finance Committee chairman Max Baucus, a Montana Democrat, expressed his commitment to addressing health care seriously next year. Iowa's Chuck Grassley, the top Republican on the panel, complained that Congress often doesn't follow through on the really complex and challenging problems like health care. Grassley, nevertheless, set quite an example, managing to find the time to attend at least a portion of the summit, despite the flooding emergency back home in Iowa.

To read more about the summit, see the Washington Post, and AP articles, and also the WSJ's blog.

COST: Health Care Costs Continue to Rise

Elena Harman — Tue, 17 Jun 2008 17:53:00 -0400

A new study by PricewaterhouseCoopers’ Health Research Institute indicates that health care premium costs will rise almost 10% in 2008, and then again in 2009. The survey of more than 500 group health plans, covering 11 million individuals, aimed to determine the anticipated cost increase and common strategies to combat growth, according to the Associated Press. Key findings include:

The growth rate of health care costs has been decreasing since 2003, and it is expected to keep decreasing through 2008. (Costs haven't gone down, but the rate of increase has slowed.) However, the growth rate is expected to level off in 2009, dropping only 0.3 percent from 2008 (from 9.9 percent to 9.6 percent)
Factors in that decrease include a wave of new disease management programs and more use of generic drugs.
Factors that contribute to the overall cost increase include a boom of healthcare construction—including more outpatient centers—and cost-shifting from the uninsured.
Common strategies to keep cost growth in check include health plans becoming more sensitive to member satisfaction (and working harder to attract and retain large contracts), and employer wellness and prevention programs.
Trends to expect in the next 5–10 years: costs can be expected to begin to increase again (following historically cyclical trends); the long-term trend in costs may be lower than historical rates, but the lack of policy solutions for the uninsured and underinsured could increase premium growth rates beyond medical cost growth.

This study is a great reminder that the country cannot afford to maintain our health system status quo. Instead of waiting for the next cycle of cost growth, let's get working on covering the uninsured, improving the quality of care, and controling costs.