The Alternative To Health Care Reform

The Robert Wood Johnson Foundation just published a report by the Urban Institute using a simulation model to show what would happen to insurance and cost of health care assuming that there is no meaningful health care reform.  More to the point, the report shows what would happen if unbridled cost increases continue.   The simulation includes assumptions about unemployment (varying from 5.1-7.1% until 2014, and stable at 5.1% form 2015-2019) inflation (varying from 1-2.5%), changes in consumer price index (low at 2%) and increase in a variety of types of health care spending (ranging from 5%-8%).  


The results are not pretty.  Even the rosiest scenario shows decrease in employer sponsored health insurance (below 50% in the worse scenario), and all 50 states show an increase in the uninsured under all scenarios.   Uncompensated care goes up, and Medicaid and SCHIP  (children's health insurance) costs skyrocket.  


This is the study to support Obama's contention that "When it comes to the cost of our health care, then, the status quo is unsustainable" (AMA speech, 6/15/09).  

Smoking Bans Associated with Decrease in Heart Attacks

Last month's Journal of the American College of Cardiology has a meta analysis of 11 studies (10 geographic sites) where cigarette bans were implemented and researchers used this natural experiment to determine the impact on heart attacks.

Harvard full-text link (requires HU login)

The impact is impressive!  In the ten communities, rate of MI decreased by 17% (confidence interval from 8% to 25%), and the decline continued with subsequent years of observation. The impact was most pronounced for the young (which means more averted years of life lost) and nonsmokers.

This is strong evidence indeed -- and a good example of a community-wide intervention that can save lives (and costs) AND improve care.

How inexpensive is the Mayo Clinic (and Pervasive Fear of Financial Ruin from Medical Costs)

Dennis Cortese, CEO of Mayo Clinic, has been making the rounds talking about the cost-effectiveness of the Mayo Clinic model.  He has a Perspective piece to be published in NEJM next week.   The Mayo model has a lot going for it, including

            - Salaried physicians
            - Integrated systems, including full electronic medical records
            - Multidisciplinary teams of clinicians
            - Impressive evidence from the Dartmouth Atlas of cost-effectiveness of care
            - Excellent quality numbers
            - Excellent reputation

 I'm personally convinced that multispecialty group practice can provide excellent care and excellent value. 

An article in the Washington Post points out that there are some other reasons why Mayo looks more cost effective than it actually is.

- Population of Olmstead County, MN is overwhelmingly white and relative prosperous
- Mayo charges additional fees to Medicare beneficiaries coming from outside of its area.  This is important because it means the Dartmouth data understates full cost of care.  It’s also important because it means that patients in poverty are highly unlikely to travel to Rochester for care.  The well-off have impressive social support networks and other resources – and honestly cost less to care for.

Here's a link to a past blog on some of the potential flaws of using Medicare claims data to infer total cost-effectiveness 

Mayo offers great care – and its teams of physicians are known for their quality and innovation.   It’s pretty likely that Mayo offers good value.  It’s just not as inexpensive as it might appear.

The Washington Post today ran a frightening article about how the uncertainty of health care coverage hovers over the middle class in Gaithersburg, MD.  The health care debate in Washington can appear sterile and clinical –but you don’t have to probe deeply to discover pervasive fear of financial ruin associated with medical care in America.

If Everyone Hates Baucus' Plan, Does That Mean It's Good?

Howls of complaints from the left and the right might make you believe that the Baucus health plan is downright good.  I mean, if it aggravates both sides that much – it must be good, right?

The Congressional Budget Office has already weighed in –and there are some surprises here.  The Baucus plans lowers (that’s right, lowers!) the federal deficit over the next 10 years – while cutting the number of uninsured by over half.  How does it do this?

The Baucus plan does not offer especially rich subsidies for the middle class, and includes a flawed employer mandate (maximum penalty, $400, framed so that employers who hire low wage workers might be disproportionately penalized) and a robust individual mandate (penalties up to $3800 per family, which could scare many supporters off). 

What does the Baucus bill say about managing health care costs?

Not a lot.  (WSJ Headline: “Proposal’s Cost Savings Seem to be Elusive.”)

Here is the CBO ten year estimate of impacts of the Baucus bill. As always, the CBO’s focus is the impact on the federal deficit.

New costs (subsidies, etc)                                    $774 billion             

Excise taxes on high premium plans                 $215 billion

Other revenue                                                     $59 billion

Spending changes                                              $409 billion

Other taxes                                                         $139 billion           

That $409 billion is the actual decrease in federal spending on health care – whereas all the other changes represent only shifts of costs.

The CBO estimates cuts of $182 in fee schedule payment updates, $123 billion in cuts to Medicare Advantage programs, $48 billion in cuts to hospitals that care for a disproportionate share of the poor, $23 billion in cuts based on recommendations of a future Medicare Commission, and $33 billion in other spending cuts. 

The Washington Post estimated that the total cuts to hospitals are $155 billion, to nursing homes is $40 billion, and cuts to other providers are smaller.  

How would this work?

The Massachusetts experience with cuts to “disproportionate share” hospitals is troubling – the government subsidies evaporated more quickly than insurance for the impoverished kicked in.  The insurance industry  has been vilified by the Obama administration in recent weeks, and it’s likely that pushback against Medicare Advantage cuts will continue.   Hospitals, as I’ve mentioned before,  are the largest employer in most communities –and these kind of cuts will really hurt.  I see a lot of community nonprofit trustees making a pilgrimage to talk to their congressional representatives.

There is a lot of good in this bill - including consumer protections, a pool for those difficult to insure, and value-based Medicare purchasing for starters.   There is a lot that’s mediocre in the bill too – such as support to start up health cooperatives – which is unlikely to make much difference in the insurance market. There are some real worries - like the potential that cross-state health plans could undermine meaningful consumer protections currently available in states like Massachusetts which have had activist consumer-friently Divisions of Insurance.

The Baucus plan (with 0/3 Republican cosponsors) is off to a rocky start in Washington today.   Hopefully, the ultimate bill will include more provisions that are likely to actually diminish the rate of health care inflation.