Medicare for All won’t work in 2020. We have an insurmountable path dependency problem.
We can, however, implement the ACA public option. It should be based on the VA model for healthcare delivery, which is basically the American version of the UK’s NHS. It’s not luxurious, but it’s more than good enough healthcare.
I had no idea this situation had improved — and I follow health care fairly closely ….
The Pricing Of U.S. Hospital Services: Chaos Behind A Veil Of Secrecy Uwe Reinhardt
… Until recently, only uninsured, self-paying U.S. patients have been billed the full charges listed in hospitals’ inflated charge masters, usually on the argument that the Medicare rules required it.21 This is how even uninsured middle-class U.S. patients could find themselves paying off over many years a hospital bill of, say, $30,000 for a procedure that Medicaid would have reimbursed at only $6,000 and commercial insurers somewhere in between.22
Because uninsured patients often are members of low-income families, many of them ultimately paid only a fraction of the vastly inflated charges they were originally billed by the hospital, but only after intensive and morally troubling collection efforts by the hospital.23 After a series of searing exposes of these collection efforts in the press—notably by staff reporter Lucette Lagnado of the Wall Street Journal—Congress held hearings on these practices.24 Partly under pressure from consumers and lawmakers and partly on their own volition, many hospitals now have means-tested discounts off their charge masters for uninsured patients, which bring the prices charged the uninsured closer to those paid by commercial insurers or even below.25 Some very poor patients, of course, have received hospital care free of charge all along, on a purely charitable basis…
The whole article is essential reading for journalists and anyone working in health care policy or as a healthcare executive. Hell, I didn’t know California mandated publication of hospital charge masters. Progress really is being made.
Reinhardt, by the way, is 80 years old. Long may he write.
The health insurance industry is consolidating. Aetna acquired Humana and Anthem bought Cigna. That leaves UnitedHealth, Aetna and Anthem as the mega-corporate rulers of US healthcare. Unless, of course, the US Justice Department blocks these mergers.
Like most people who pay attention to healthcare policy I very much hope the DOJ does its job properly. I’m glad we have the Obama DOJ to stand up for us, at least now we have a fighting chance. That’s not why I’m writing this blog post though, and it’s not the reason why I’ll be writing Senator Klobuchar to ask her to work against these mergers.
I’m writing this because, of course, I’m personally mad at Aetna. I think I know why Aetna and Anthem are in a position to do the acquiring, and it’s not because they’re better at delivering health care. I think they’re winning because they excel at both strategic incompetence supported by a tobacco-industry class executive culture.
In my case a physician ordered a radiology procedure for me that requires pre-authorization by my insurance company - Aetna. The order, alas, was placed in early December — perilously close to the end-of-year period. A period where cost can shift, depending on deductibles, from the insurance company to the insured, or from one carrier to another.
Aetna could decline the authorization. That might have been a reasonable act — not every physician recommended procedure is a good idea, particularly when the physician owns the imaging process. I’m guessing they don’t have grounds for denial, so instead they simply stall. Information is provided … and Aetna can’t find it. They ask for the same information several times. They will succeed in running out the clock. My physician’s staff tell me Aetna excels at this game, even by industry standards they’re good at not delivering what we pay for. Which is usually considered theft.
Aetna’s executives don’t have to write up a formalize this profitable process. They don’t need to put anything in writing. All they have to do is underfund their pre-authorization process (a “cost center”), or provide financial incentives to delay payments, or not staff for the holidays, or promote executives who are good at cost control. Most likely they do all four.
I suspect Anthem has the same skill set, but Humana and Cigna probably aren’t quite as good at being evil. There are so many ways in healthcare to do well by doing wrong; it’s a rough rule of thumb that the more profitable a healthcare operation is the less good it’s doing.
Aetna is going to win their little battle with me. The best I can do to get even is write Senator Klobluchar (I know Senator Franken will oppose) and complete their legally mandated complaint form.
And I can write a blog post.
See also
Update 12/30/2015
After completing the official complaint form, and separately posting a public message to Twitter @aetnahelp and follow-up email to socialmediacustomerservice@aetna.com, I received this message on the morning of 12/30:
Of course it’s too late now, Aetna ran out the clock. As we knew they would. Even though the bad guys won this one, I would try public Twitter messages and email to socialmediacustomerservice@aetna.com in future. A kind of special service track for the geek elite.
Even with rather generous tax breaks, wellness programs cost corporations money. So why pay companies like South Africa's Vitality Group to run them?
It's not because they save money on health care expenses. A Rand study of long tenure employees found that over 7 years PepsiCo got 48 cents in savings for every dollar in expenses. Other recent studies have had similar results; better results with older studies may reflect higher smoking rates back in the 80s.
So why do it?
One reason is that current implementations do a great deal of cost shifting from the young and/or healthy to the older and/or sicker. With Vitality programs a low cholesterol healthy slender non-smoker pays less each month for health insurance than the average employee. (A "3000 point" gap -- enough to qualify for @$1000+ yearly insurance cost reductions.)
These programs follow the same logic as a briefly infamous 2005 Walmart healthcare memo. They shift costs to employees with family or personal health risks....
Wellness programs don’t save money | The Incidental Economist
Horwitz, Kelly et al ....Our evidence suggests that savings to employers may come from cost shifting, with the most vulnerable employees—those from lower socioeconomic strata with the most health risks—probably bearing greater costs that in effect subsidize their healthier colleagues. ..
Is that enough of a shift to make wellness programs covertly cost-effective? Or are corporations just being irrational? I suspect a bit of both, but we gotta remember that Walmart memo. At the very least, they shift costs from the blessed to the unblessed.
The Incidental Economist has covered this topic in some detail ...
See also
In healthcare, only the uninsured pay list price. They actually pay the crazy amounts that show up on their healthcare bills. Other payers, like insurance companies, pay a steeply discounted amount. Sometimes 70% off.
Pretty outrageous eh?
It's not new though. That's how it worked when I was a country doc in the early 90s and it was old and outrageous then. Now it's getting more attention; but it's not new. The weird thing is that this 'secret' has been in plain view for decades.
That's not the end of the story though. At least when I was in practice, we couldn't do a cash discount. The insurance price was based on list, and if we lowered list the insurance payments would fall. Indeed, our 'customary' charge rating would also fall, and in the bizarro world of healthcare finance what insurers were willing to pay us depended in part on our past charges.
Back then we wrote off many cash charges, but times have changed. For one thing, the Bush GOP made it much harder for regular folk to declare bankruptcy and escape healthcare debt.
So now that this story is getting traction, I wonder if Americans are ready to learn about how Evaluation and Management CPT codes (E&M Coding) destroyed primary care. Hint: "What gets measured gets done" doesn't mean "what is good gets done".
Many Americans still think we have a great healthcare system. It's probably not our only mass delusion.
Few people will have noticed new rules around corporate "health-contingent wellness programs" (emphases mine):
Administration Defines Benefits Under Health Law - NYTimes.com
... The rules also give employers new freedom to reward employees who participate in workplace wellness programs intended to help them lower blood pressure, lose weight or reduce cholesterol levels. The maximum permissible reward would be increased to 30 percent of the cost of coverage, from the current 20 percent.
The rules would further increase the maximum reward to 50 percent for wellness programs intended to prevent or reduce tobacco use.
Rewards could amount to several thousand dollars a year, officials said, because total premiums in employer-sponsored health plans now average more than $5,600 a year for individual coverage and nearly $16,000 for family coverage...
The Hill's Healthwatch has more details. It is remarkable that CNBC can have a general freakout about an increase in marginal federal tax rates for persons earning over $250,000 a year, but say nothing about a program that costs middle-class workers $2,000-$3,000 a year.
Let us take a moment to contemplate this curious silence.
Yes, I said costs, because the money for these programs has to come from somewhere. In this case it comes out of take home pay - either as a direct benefit cost or as a reduction in future income. In some cases the money might come out of ACA mandated health insurance premium rebates ...
Health Insurance Refunds May Stall in Employers’ Hands - NYTimes.com
... while some employers are returning the money directly in paychecks, or planning “premium holidays” that increase take-home pay, others are weighing different options, benefits consultants said, like reducing next year’s premium, or spending the refund on so-called wellness programs that reward workers who lose weight or quit smoking.
Yeah, that's a bad sign.
In theory the money we're losing now might be offset by reduced healthcare costs over time, which might in theory reduce insurance costs and maybe one day the lost income might trickle back down again.
*cough*
Right. That's not going to happen.
It is also possible that, regardless of impact on health care costs, and after considerable administrative overhead is deducted, these programs will make some workers healthier than they might otherwise be. In that sense they might be considered a form of social transfer; all employees pay for improved health habits for some employees.
That wouldn't be so bad - if we knew the programs worked. But we don't know that; these programs were launched with very little research. What little I could find showed some surprises ....
... while a reduction in employee health risks leads to immediate cost savings, the accumulation of additional health risks soon leads to substantially higher medical and pharmacy costs...
I don't know why corporations are so keen on these programs, but I suspect there are sound business reasons. They may not be obvious; I'm reminded that Walmart liked defined contribution plans because they discriminated against unhealthy (and costly) spouses. I have read that some states offer tax credits for the programs, and I assume that the $2,000 a year or so I'm paying for our corporate program is treated as a tax deductible health care benefit.
Which brings me to the GOP. They're looking to cut money from the ACA. Why not do something useful and ask about corporate wellness programs?
Right. I bet this is one of those things that made it into the ACA as a sop to the GOP...
See also:
Obama raised mileage standards for my industry.
Ok, so it wasn’t him personally, and it’s not mileage, and I don’t exactly own the health care “IT” industry. Even so, I can better imagine now what it was like to work for GM in the 70s when mileage standards were first set.
For my industry the ‘mileage standards’ are known as ‘meaningful use’, as in MU1, MU2 and MU3. Despite the confusing name these are effectively increasingly stringent performance standards for electronic health records, akin to mileage and emission standards for automobiles. They’re reshaping the industry, sometimes for better and sometimes for worse. (Should we, for example, measure the value of all of our measuring before we do more measuring?)
The industry has moved through MU1 and is now digesting MU2 with MU3 on the horizon (assuming Obama wins, though Gingrich was a great fan of this sort of thing.) MU3 is still under construction, but one consideration is the inclusion of ‘usability standards’.
For various reasons I’m not thrilled with the idea of setting usability standards, but the term is broad enough to include something I think we really ought to study: The impact of complex clinical documentation and workflow systems on the limited cognition and decision making budget of the human brain…
I’ve written about this before …
Gordon's Notes- Electronic health record use and physician multitasking performance 4/2010
Llamas and my stegosaurus: Living with a limited brain
Some interesting research has come out recently about the processing capacity of brains. For example, that the medial prefrontal cortex can only handle two tasks at once, or that working memory can only handle about 7 items at a time (but what's an item?), or that when people are actively trying to remember something complicated, their impulse control is reduced…
Since then this topic has gotten a bit more attention, particularly from a study of Israeli judges …
Do You Suffer From Decision Fatigue- - NYTimes.com 8/2011
… There was a pattern to the parole board’s decisions, but it wasn’t related to the men’s ethnic backgrounds, crimes or sentences. It was all about timing, as researchers discovered by analyzing more than 1,100 decisions over the course of a year. Judges, who would hear the prisoners’ appeals and then get advice from the other members of the board, approved parole in about a third of the cases, but the probability of being paroled fluctuated wildly throughout the day. Prisoners who appeared early in the morning received parole about 70 percent of the time, while those who appeared late in the day were paroled less than 10 percent of the time…
… Decision fatigue helps explain why ordinarily sensible people get angry at colleagues and families, splurge on clothes, buy junk food at the supermarket and can’t resist the dealer’s offer to rustproof their new car. No matter how rational and high-minded you try to be, you can’t make decision after decision without paying a biological price….
… These experiments demonstrated that there is a finite store of mental energy for exerting self-control. When people fended off the temptation to scarf down M&M’s or freshly baked chocolate-chip cookies, they were then less able to resist other temptations….
Patient care is an endless series of decisions (though over time more behavior, for worse and for better, becomes automatic). All physicians start with a cognitive budget for decision making, and every decision depletes it. Unfortunately using an EHR also consumes decision making capacity – perhaps far more than use of a paper records. There’ve been a few studies over the past fifteen years hinting at this, but they’ve gone largely unnoticed.
So, if we’re going to study ‘usability’, let’s specifically study the impact of various electronic health records on cognitive budgets. We now know how to do those experiments, so let’s put some of that MU3 money to good use, towards supporting tools that enable better decisions – because they’re less tiring.
Think of it as meeting mileage standards through aerodynamic design.
William Baumol was born in 1922. In 2012, 90 years later, he's listed as first author on a new book: The Cost Disease: Why Computers Get Cheaper and Health Care Doesn't.
Damn. It's one thing to win the brain lottery, but winning the longevity lottery is really piling on. Even if all he did is read the page drafts he's doing pretty well.
That's not the most irritating thing about Baumol though. The most irritating thing is that I keep forgetting about his fundamental insight, one that I first blogged about 8 years ago...
... The disparity between rapid productivity growth in mechanized sectors and slow productivity growth in human-service jobs produces Baumol's disease—named after the economist William J. Baumol. According to Baumol, in a technological economy falling prices for manufactured goods and automated services eventually increase the relative cost of labor-intensive services such as nursing and teaching. Baumol has predicted that the share of gross domestic product spent on health care will rise from 11.6 percent in 1990 to 35 percent in 2040, while the share spent on education will rise from 6.7 percent to 29 percent.
The shifting of relative costs need not in itself be a problem. If Americans in 2050 or 2100 pay far more (as a percentage of their spending) for health care and education than they did in 1900, they may still be better off—if they pay correspondingly less for other goods and services. The problem is that as the relative cost of services like education and health care rises, more and more Americans will find themselves in service-sector jobs that, unlike the professions, have historically been low-wage...
Today Education and Health Care are famously afflicted by Baumol's disease. Law used to be, but then full-text search decimated legal employment (and yet, legal costs have not fallen ....).
Baumol argues that even if these professions remain labor intensive, and even if health care comes therefore to claim 50% of our GDP, that we'll be able to afford it nonetheless.
His argument is persuasive, but is that likely to happen? College education today is experiencing widespread disruption including iTunes U, coursera (Caltech, University of Toronto and many more), edX (MIT, Harvard, Berkeley), California open-source eTexts, Stanford Online, Khan Academy and numerous for-profit ventures. Education is deep in whitewater times.
Health care, particularly medical care, isn't changing as quickly. The fundamental tasks of sorting out what's going on with a particular patient, and how best to manage that problem in their personal context, and then how to manage the patient's psyche and health -- those haven't changed much [1] over the past century.
We're accumulating more health care data though -- for better and for worse [3]. "Analytics" is the "hot" area in health care IT now, including running Google/Facebook style algorithms against large clinical and financial data sets [2].
That doesn't necessarily sound disruptive, unless you know that the techniques used in extracting meaning from large data sets are the same technologies that power our post-AI world. (Yeah, I used the forbidden acronym.) If you know that, then you know "Analytics" can be thought of as the current pseudonym for "Medical AI". Whether it's disruptive or not remains to be seen, but I suspect that we'll get to health care cost disruption well before health care hits 50% of a much larger future GDP.
[1] It's interesting to read articles written in the 1970s during the early days of diagnostic lab testing. They imagined patients walking into a series of lab test queues staffed with low wage workers, then emerging with a set of diagnoses and plans. Similar plans arose during the last period of genomic enthusiasm. They will come again ...
[2] The base stats is generally pretty simple stuff, if only because more complex algorithms don't scale well to terabyte data sets. The trick is that simple stats on large data sets enabled by cheap computation can produce surprisingly useful answers. This is best described in the terrific Halevy, Norvig and Pereira paper: The Unreasonable Effectiveness of Data.
[3] In 1996 I was part of a theater-style presentation called "Dark Visions: 1996-2010" that included a fanciful and intentionally dramatic timeline of dystopic data sharing. By 2005 India was the world center of clinical AI, and by 2006 elite health care providers had moved to more private paper records. Maybe we were a bit hasty :-).
See also:
Roger Ebert wrote a column on gun control and received 650 comments.
He read them all.
Then he responded, with one of his best columns ever. Some of the lines are so well said I've excerpted them below. I've written about this many times, but, of course, not with his eloquence.
A shot in the dark - Roger Ebert's Journal
Catie and Caleb Medley went to the doomed midnight screening of "The Dark Knight Rises." It was a movie they'd been looking forward to for a year, her father said. Gunfire rang out. The bullets missed Catie, who was pregnant. Caleb was shot in the eye. On Tuesday, their son Hugo was born. Caleb is listed in critical condition, and the cost of emergency treatment for his head wound has already reached $2 million. The Medleys were uninsured.
... Many of the comments were about health care, and one of the arguments frequently heard was: "I don't want the federal government taxing me to pay for the medical costs of people who don't care enough to provide for their own costs."...
... In our imagination it's always other people who get sick. I have a reader who tells me he's never been sick a day in his life. I tell him that's interesting from an autobiographical point of view, but otherwise not relevant. I can assure him that unless he's killed in an accident, sooner or later he will most surely get sick, and sooner or later he will most surely die.
Are we our brothers' keepers? Many people who resort to scripture are under the impression that we are not. They forget that it was Cain who said he was not his brother's keeper, after murdering Abel. In a similar sense, if our fellow citizens die because they have no access to competent medical care, they argue that we are not their keepers...
... I quote from the Bible for a particular reason. Many of the opponents of Universal Health Care identify themselves as Christians, yet when you get to the bottom of their arguments, you'll find them based not on Christianity but on Ayn Rand capitalism...
Ebert is talking about prosperity theology (wikipedia, see also Prosperity Theology | Christian Bible Studies [1]), a belief that wealth is a sign of god's approval, and poverty of god's disapproval. Since sin earns god's disapproval, the poor are sinners.
Although American Christians have brought prosperity theology to new heights, it's not unique to Christianity or to Mormonism. Hinduism's justification of caste maps well to the idea that poverty goes with sin, and wealth with grace.
In 2012 the fundamental difference between the right and the liberal is how we answer the question: "Am I my brother's keeper". Ironically, avowed Christians often give the answer of Cain and Ayn, while secular humanists often give the answer of Abel.
Cain and Abel. Romney and Obama. Some things never change ...
[1] Probably the only time I've ever linked to Christian Bible site.
Stanford's Chad Jones and Robert Hall tell us health care spending really is different ...
Why Americans want to spend more on health care (Louis Johnston, MinnPost, 7/6/12)
... Income elasticity measures how much more of a good or service a person will buy if their income goes up by 1 percent. For most goods and services this number is less than 1; that is, if income rises then people will buy more of most goods but they will increase their purchases by less than 1 percent.
Years of life are different. If you have a medical procedure that extends your life, then the first, second, third and however many extra years you receive are all equally valuable. So if your income rises by 1 percent, you will increase your spending on medical care by at least 1 percent, and possibly more.
Jones, along with Robert E. Hall (also of Stanford) embedded this idea in an economic model and found that it does a good job predicting the path of health care expenditures from 1950 to 2000. Further, they show that if this is true, then the share of GDP we devote to health care could easily rise to 30 percent or more over the next 50 years as people choose to spend more on health care to obtain more years of life.
Thinking about the rise in medical spending this way puts health care policy in a different light. People want to live longer, better lives, and they are willing to pay for it. They don’t want more stuff, they want more life...
Life extending [1] health care is an inexhaustible good. That's what simplistic happiness studies, like a pseudo-science [2] article claiming that $75,000 is "enough", usually miss. They implicitly assume, or indirectly measure, good health [3].
Years ago, when health care spending was a mere 12% of GDP (we're about 15% now), my partner, Dr. John H, saw no reason why it wouldn't, and shouldn't rise to a then unthinkable 15% or more. His point was that people like being healthy, and to the extent that health care works, they will want more of it.
Health care that is perceived to be effective is the ultimate growth industry.
That's why this is where we'll end up. We could do much worse.
[1] A shorthand for extending life that we care about, particularly life-years of loved ones. More years of dementia don't count, though significant disability has less impact that many imagine. I assume there's some amount of quality lifespan that would, depending on one's memory, have an income elasticity of less than one. Science fiction writers often put that at somewhere between 300 and 30,000 years.
[2] I read the published study; "Participants answered our questions as part of a larger online survey, in return for points that could be redeemed for prizes." Can you image a less representative population? Needless to say they didn't define what household income meant, yet they turned this into a NYT article.
[3] The Jimmy Johns' insultingly stupid parable of the mexican banker is a particularly egregious example.
Thirty years ago I was distressed by the NIH's relative disinterest in demential research. Anyone who could do arithmetic knew what was coming; the time for major action was 1982.
Now we have an "urgent" NIH program focusing on dementia [1] -- but it's 25 years too late. Post-boomers will face a deluge of former-people whose bodies outlast their brains. You'd call us Zombies, except that there will be a cure of sorts ...
... after due consideration, I decided on my own that I plainly would never want what LTC insurance buys, and, too, that this would be a bad deal. My bet is that, even in America, even as screwed up as our health care is, we baby-boomers watching our parents’ long and agonizing deaths won’t do this to ourselves. We will surely, we must surely, find a better, cheaper, quicker, kinder way out.
Meanwhile, since, like my mother, I can’t count on someone putting a pillow over my head, I’ll be trying to work out the timing and details of a do-it-yourself exit strategy. As should we all.
Things that can't go on don't. One way or another, America will figure out how to shorten the duration of Boomer dementia. My own plan is to buy a cottage by a cliff with no railings.
[1] "Better treatments by 2025", a meaningless goal that is sure to be met. Funded with $50 million, or what modern CEOs make every four months. Wake me up when it's funded with $50 billion.
America is a dog that's been beat too much.
Our publicly traded corporations can't get much pull from America's dwindling middle class. Their growth and future is abroad. The vast compensation of their executives will build higher walls around the estates of the new aristocracy.
Left Behind, we are the Detroit Windows 7 of nations.
So now what?
Now we need to climb out of of the ruins. Because we're not dead yet.
We could use some help. Roosevelt style investments in infrastructure and schools would be a good thing, but they are not enough and the Tea Party is too powerful to allow them.
So instead we need lots of small to medium privately held businesses [1]. It would be great if we could get something like a national small business generation service, but good-enough health insurance, an accelerated and expanded loan program for small businesses, reduction of the tax and accounting scams that favor large corporations [2], rationalizing regulatory frameworks and providing startup education programs would all help.
Who will start these businesses? The usual suspects - the young, the immigrants [3], the restless. They're not enough though. This time America needs geezer entrepreneurs - geezepreneurs. In a global economy where talent is plentiful and cheap, we have a surplus of the undead gray without hope of retirement. Might as well use 'em.
The forty plus set aren't going to do all nighters any more, but we have learned a lot about leading and managing people, and about how the world works. I admit, even as a geezer myself, I'm surprised by how productive 60+ software engineers are. Maybe it's selection bias -- perhaps by that age only the very best are still coding. Whatever, these guys are really good, even if they need flexible schedules to help their kids, grandkids, and parents.
Small business growth driven by geezer entrepreneurs and the underemployed young. It's different. Try it.
--
[1] In theory these measures are GOP friendly. Alas, that's confusing rhetoric with reality; to the extent that the modern GOP has any guiding philosophy it would be directing short term benefits to its voters, donors, and office holders. They are at least compatible with past GOP rhetoric, so that might help a bit.
[2] Removing those advantages from large corporations helps level a currently very uneven playing field. On the other hand, they will never surrender the fruits of their political investments. So, perhaps disguised as deficit reduction, we try for reduction rather than removal.
[3] Canada mitigated its social security problem largely by importing wealthy and/or highly educated citizens. I'm amazed this isn't talked about in the US.
Update 8/17/11: See also - Tillman and Phelps, National Bank of Innovation
The good news is that Kateva's creatinine is back where it should be and her stomach is holding out. The bad news is that, even if all goes well, her feast on a friend's Rimadyl will end up costing over $1,500 for a straightforward 3 day hospital stay.
Please remember this. Rimadyl, an ibuprofen-like drug sold in the US veterinary market, is beef flavored. It's dog candy, just like the yummy children's aspirin that poisoned my childhood peers. We're used to our evil canine cur stealing food, but we misclassified the drugs as ... not food. She had a different classification. (Unfortunately, she's learned to hide food wrappers, so it took us a day to figure out where the Rimadyl went.)
Poisoned medicinal candy precautions are one lesson from Kateva's folly. It's not the only lesson though.
Once upon a time $1,500 would have covered the costs of a similarly routine human hospitalization. Around that time a time a similarly troublesome dog would have received much less care for much less money.
Health care inflation in the US applies to humans, dogs and cats alike.
Which suggests a natural experiment. We know a lot about rising human health care costs in the US. Why not compare those costs to rising costs of companion animal (aka "pet") care? American dogs and men, for example, have similar health care habits and obesity rates. American dogs and men get the same medications for roughly the same costs.
On the other hand, veterinarians are paid substantially less than physicians. Veterinary care has much less regulatory overhead, and is much more efficient. There is minimal marketing, very simple billing, and a largely market based payment system.
Most of all, the care of the aged is very different. A demented incontinent dog gets a brief and painless house call. A demented incontinent human meets a far crueler and more costly fate.
It would be interesting to plot the trajectory of American veterinary and human health care cost inflation. I think the curves would look quite different, largely due to lower end of life costs. I don't know though; there may be surprises. Curiously, I don't think this study has been done.
My understanding of the financing of social security, and perhaps of medicare, was that we took some of the wealth of the future to make the present better.
This can be a reasonable trade. America of 2030 ought to be much wealthier than America of 2011. Why not share the wealth -- especially as we are borrowing from our future selves just as we gave to our parents.
But what if America stops getting wealthier? Or what if that wealth is concentrated in a small slice of the population, a disproportionately powerful segmented that is disinclined to share its wealth -- and has the power to say no.
Then we have a deep problem with the way we have historically financed our social insurance.
Today's DeLong is about bond prices, and, in part, about the effect of uncertainty on savings decisions (emphases mine) ...
... Let me give you the Hicksian argument about what happens in a financial crisis--a sudden flight to safety that greatly raises interest rate spreads, and as a result diminishes firms' desires to sell bonds to raise capital for expansion and at the same time leads individuals to wish to save more and spend less on consumer goods as they, too, try to hunker down...
The economic event currently known as the "Great Recession" started and ended within the past 3-4 years. The period of economic uncertainty for many of us is older than that ...
Manufacturing collapse - Karl Smith - The Washington Post
... manufacturing did collapse. Yet, it’s hard not to look at the graph above and think that the real manufacturing recession began in 1999 and simply never stopped. What’s amazing is that we had any recovery at all....
I'm in the business of producing software; I believe for the purpose of US statistics I'm in manufacturing (we can capitalize production for example). For my sector the 1990s were a golden era. Since the 1990s things have been ... different.
The times have not necessarily been bad at leasts in terms of work income [1]. Many of us have similar or even higher incomes than we had ten years ago, even adjusting for inflation. The times have not been bad, but they have been turbulent. Close calls are frequent. Even if yearly winnowings have been modest, employment options have been comparably modest. "Lean" investments means there are no reserves, no excess capacity. Business infrastructure is shaky; IT departments are cut to the bone. Predictable small disruptions have major impacts on a weakened enterprise. Projects go slowly, and are easily derailed. Productivity falls.
I suspect most sectors of the US economy have had similar experiences, even in years of relatively good GDP growth. Even growth sectors, like healthcare, face enormous regulatory uncertainty.
Uncertainty has become endemic, and the outcome is, of course, that households spend less, save more, and save more as cash. Instead of being able to go for 6 months without income, we aim for 1-2 years. When millions of us reduce consumption, the economy shrinks.
What could the US do to reverse these trends, and climb out of Long Depression II?
The US could do a lot. Health care cost and access is a major contributor to economic anxiety. Obama's ACA is better than nothing, but it left coverage tied to employment in general, and employment with large corporations in particular. This was a necessary political compromise, but it has hobbled the ACA and made it easier for the GOP to sabotage America's future.
Beyond health care, economists like DeLong, Krugman and Jared Bernstein have a wide range of ideas.
Unfortunately, nothing will happen as long as the GOP can paralyze the US government [2]. The bursting of China's bubble and the Euro crisis will make things particularly interesting leading up to Nov 2012.
See also:
[1] Investments have been utterly lousy however -- and we avoided all but the real estate crash. The reason we were relatively lucky, however, is due to uncertainty making us more conservative.
[2] Though it's certainly unjust, given the sheer wrongheadedness of today's GOP it's entirely possible that a Romney or Huntsman would be able to do more than Obama -- simply because they're only pretending idiocy and today's Dems are far higher quality than today's GOP.
One year ago, against enormous resistance, Barack Obama and his allies muscled RomneyCare, aka the Patient Protection and Affordable Care Act, into law. It will come into full effect by 2014 assuming the GOP doesn't get complete control of Congress in 2012 (even if they do, the ACA will survive albeit with much less coverage for the poor and disabled).
The ACA was very much a political compromise. A Democratic controlled Congress was barely able to pass a GOP designed health care reform bill against hysterical GOP opposition.
Nobody is happy with RomneyCare, though I believe it was the best that could be done in for our time. A lot of palms had to be greased to get it through (I suspect the AMA was paid off with a CPT deal).
These days the GOP is talking a lot about RyanCare, which has some remarkable resemblances to RomneyCare. Sadly, like RomneyCare, and unlike McCain's half-hearted proposals, both plans keep health care insurance tightly coupled to employment.
The differences between RyanCare and RomneyCare are predictable. The ACA provides support for the poor and the weak and protects people with disabilities and illnesses. RyanCare does not ...
... The Republican plan offers additional (often inadequate) assistance only to very poor elderly and disabled persons, and to very-low-income pregnant women and families with children. The ACA, by contrast, offers assistance to uninsured Americans with incomes as high as 400% of the poverty level.
Second, the plans differ in the protection they afford against health-status–based discrimination. The Republican Roadmap assures guaranteed issue, requires risk adjustment among insurers, and offers high-risk pools, but the ACA prohibits insurers from varying coverage or premiums on the basis of health status and bans preexisting-condition exclusions altogether...
Like RomneyCare, RyanCare puts healthcare firmly into a large corporate framework. This isn't surprising, large corporations have robust control of their ecosystem. This isn't to my tastes.
There are three poles of service provision in the US - diverse market, corporate, and government. My preference for service provision is "diverse market" - small business, large business all with active competition. My second choice, and it's rather a distant second, is governmental provision. My last choice, far behind the other two, is provision of goods and services strictly through large minimally competitive corporate entities. Both RomneyCare/ACA and RyanCare drive all healthcare provision towards large minimally competitive corporation. There's more regulation in the ACA, and less regulation in RyanCare. In the case of Verizon/AT&T/Goldman Sachs like corporate entities lack of regulation is not a feature.
Overall RyanCare is, in some ways, an improvement on healthcare of 2008. It's a huge step backwards from the ACA. There's only one aspect of it for which I have some mild sympathy ...
... vouchers limit federal expenditures by shifting the risk of inflation in health care costs to the states, Medicare beneficiaries, and ordinary Americans ...
Vouchers are not necessarily evil. There are some voucher plans worth considering ...
A Comprehensive Cure: Universal Health Care Vouchers - Emanuel and Fuchs - Brookings Institution
... The Universal Healthcare Voucher System (UHV) achieves universal health coverage by entitling all Americans to a standard package of benefits comparable to that received by federal employees. Enrollment and renewal are guaranteed regardless of health status, as is the individual's right to buy additional services beyond the standard benefits with aftertax dollars. Health plans would receive a risk-adjusted payment based on their enrollment. UHV is funded entirely by a dedicated value-added tax (VAT) with the rate set by Congress. A VAT of approximately 10 to 12 percent would insure all Americans under age 65 at a cost no greater than current public and private health care expenditures.
UHV offers true universality, individual choice, effective cost control, and competition based on quality of care and service. To foster accountability and efficient administration, the voucher system creates a National Health Board and twelve regional boards with a governance structure and reporting requirements similar to the Federal Reserve system. ... UHV is relatively simple compared with other reforms that have similar objectives. Most importantly, it is congruent with basic American values: equality of opportunity and freedom to pursue personal goals.
Ezekiel Emanuel's UHV system looks now like a cross between RomneyCare and RyanCare. It would have been intensely disruptive, it is not necessarily corporate friendly and it would have severed health care coverage from employment. In a world where the GOP had not gone insane, and where corporations were less powerful, the UHV might have been a compromise solution.
Disruption is what we need, and markets can be good at that. Governments, and especially large corporations are much better at stasis. The ACA is much better than RyanCare, but the disruption it promises will be mediated by large, powerful, senator-owning corporations. That's not going to go well.
Health reform discussions are boring. I wish could resist health care reform posts. It's a compulsion, but at least I only do them every few months.
We've known for decades where will end up. We will guarantee every American good enough health care. Good enough care means 21st century American versions of "barefoot doctors" using relatively cheap technologies that have been fully depreciated. People with money will still buy more luxurious care; sometimes it will be genuinely better care.
Good enough care will use more physician assistants, not because they're wonderful people [2], but because they're paid like teachers instead of like radiologists [1]. It will outsource pathology and imaging to New Zealand and Israel. It will negotiate cut-throat prices with manufacturers of off-patent drugs, and it will fight patent law dodges. Good enough care will have simple contracts and pricing, reducing the overhead of care provision.
ObamaCare is a significant first step to good enough care [4], and, unlike ClintonCare, it leaves lots of room for the concierge-care end of the luxury health market.
Darn, this isn't quantum mechanics. It's not even relativity. It's arithmetic. So it's agonizing that we Americans are such sheep. We elected a House of loonies dedicated to preserving this status quo (emphases mine) ...
Money Won’t Buy You Health Insurance - Donna Dubinksy [3] - NYTimes.com
... Unlike many others, my family can afford medical care, with or without insurance.
Instead, this is a story about how broken the market for health insurance is, even for those who are healthy and who are willing and able to pay for it.
Most employees assume that if they lose their job and the health coverage that comes along with it, they’ll be able to purchase insurance somewhere. The members of Congress who want to repeal the provision of last year’s health insurance law that makes it easier for individuals to buy coverage must assume that uninsured people do not want to buy it, or are just too cheap or too poor to do so.
The truth is that individual health insurance is not easy to get...
... An insurance broker helped me sort through the options. I settled on a high-deductible plan, and filled out the long application. I diligently listed the various minor complaints for which we had been seen over the years, knowing that these might turn up later and be a basis for revoking coverage if they were not disclosed.
Then the first letter arrived — denied. It never occurred to me that we would be denied! Yes, we had listed a bunch of minor ailments, but nothing serious. No cancer, no chronic diseases like asthma or diabetes, no hospital stays.
Why were we denied? What were these pre-existing conditions that put us into high-risk categories? For me, it was a corn on my toe for which my podiatrist had recommended an in-office procedure. My daughter was denied because she takes regular medication for a common teenage issue. My husband was denied because his ophthalmologist had identified a slow-growing cataract. Basically, if there is any possible procedure in your future, insurers will deny you.
... As I filled out more applications, I discovered a critical error in my strategy. The first question was “Have you ever been denied health insurance”? Now my answer was yes, giving the new companies reason to be wary of my application. I learned too late that the best tactic is to apply simultaneously to as many companies as possible, so that you don’t have to admit to a denial.
I completed four applications for each of the three of us, using reams of paper. ... I was accepted by exactly one insurance company. So was my daughter, although at a 50 percent premium over the standard charge for a girl her age. My husband was also accepted by one insurer but was denied by the company that approved me.
Our premiums, which were reasonable at first, have increased substantially over the last six years; the average annual increase has been 20 percent. I now am paying premiums that are more than double what they were initially. And because these are high-deductible policies, we still are paying most of the medical bills ourselves...
... If members of Congress feel so strongly about undoing this important legislation, perhaps we should stop providing them with health insurance. Let’s credit their pay for the amount that has been paid by the taxpayers, and let them try to buy health insurance in the individual market. My bet is that they all would be denied. Health insurance reform might suddenly not seem to them like such a bad idea.
Americans tolerate this. We have tolerated a broken system for a decade.
It's worse than mere tolerance though. Against enormous resistance, with zero help from the Opposition, the Obama administration manages to get some form of health insurance reform done. So what do Americans do? We elect bozos who can do nothing but strive to preserve the status quo that feeds them.
We are such sheep. We deserve the GOP.
[1] Many family physicians are closer to teachers than to radiologists than teachers, however. Also there should be a way for PAs to train up to a medical degree, but that's a different story.
[2] The ones I've personally known were pretty fine people.
[3] This Donna Dubinsky. A legend in the Palm days. She is wealthy and can self-insure if she prefers.
[4] It only lays the groundwork. Politics and economics will do the rest.
From 1910 to 1984 medical progress was extremely swift. After 1984, not so much. As I wrote in 1998 ...
Gordon's Notes: Challenges to medicine and science – medication invention hits a brick wall
... I can vouch for the lack of progress. I’m wrapping up a review of roughly the last 7 years of changes in medical practice.
To put it delicately, progress has sucked. If you put a good physician to sleep 7 years ago, and woke her up today, she’d be reasonable competent on day one. A week later she’d be fully up to speed.
My med review conclusions are:
- Lots of new combinations of old drugs, maybe due to co-pay schemes Many new drugs have suicidal ideation as a side-effect.
- Lots of failed immune related drugs re-purposed with limited focal impact on a few disorders. Probably some improvements in seizure meds.
- Lots of new Parkinson’s and diabetes meds, but they’ve had limited value. (metformin was a home run, but that was more than 7 years ago).
- Really lousy progress in antibiotics; there are fewer useful therapies now than 7 years ago. Actually, fewer every year...
Twenty-five years ago it was reasonable to criticize physicians for failing to keep up with a rapidly expanding medical literature. I used to lecture on that topic in residency and beyond, teaching "Grateful Med" [1] use with MEDLINE [2] before the internet went public.
By 1992 though I was getting suspicious. Many exciting journal findings were being reversed within 2-3 years. I planned out a small research study, looking at ten year success measures for novel therapeutic recommendations published in leading journals.
I never did that study, instead I moved from academic to industry. Later John Ioannidis did something similar [3]. Writing in 2010, he demonstrates that modern medical progress is slow with many reversals and lateral moves. The era of rapid progress in medicine is over.
Some of the consequences of slow progress are obvious. Nobody in 1984 would have predicted that by 2010 we still wouldn't be able to cure or prevent multiple sclerosis, rheumatoid arthritis, Alzheimer's disease, or diabetes mellitus. Even as recently as 2000, nobody would imagine the near total failure of clinical genomics. Such negativity would have been considered irrational pessimism.
Other consequences are less obvious. True innovation produces bigger results for less effort. In the absence of innovation there's only raw effort. That translates to more money spent on health care to achieve smaller results. Without genuine innovation, health care cost control is exquisitely painful.
So why has medical progress slowed so much?
One can imagine a lot of cultural explanations, but it's not just US health care innovation that slowed. It slowed everywhere.
I suspect it's more like what happened to aeronautical or automotive engineering or cars or, with the death of Moore's Law, CPUs. The period of medical progress from 1910 to 1984 was an anomaly, an explosive renaissance arising from a "perfect storm" of emerging technologies and cultural receptivity. It was wonderful, but it's been over for a while. The gasoline engine gets a little better every year, and so does medicine.
One day there will be another renaissance in medicine. We just can't predict when.
There's a silver lining of course. Physicians needn't feel guilty about not keeping up with the literature.
See also:
-- footnotes
[1] A terrific DOS and Mac Classic app, named by a terrific National Library of Medicine project leader who was also a Grateful Dead fan. It was the successor to today's PubMed, but I think it was, in several ways, better than PubMed. Grateful Med was a graphical shell over a terminal interface; in 1996 Internet Grateful Med took over. The 1993 version was the best though.
[2] I am just entropic enough to remember the vast shelves of paper-bound "Index Medicus"; dozens of yards of books listing research publications.
[3] Thinking is easy. Doing is hard.
There are superb French (and other) pastries all around the island of Montreal, but Minneapolis St. Paul pastries peak at mediocre. The Twin Cities are richer than Montreal, but money can't buy everything. In health care terms we'd call this a kind of variability.
The pastry variation is cultural. Minnesotans don't love the chocolate, flour and licquer pastries I grew up with, so there's no competitive market in my favorite food.
There's cultural variation in health care quality too. The best description of the causes of this variation, better than any prior academic publication, appeared in a 2009 New Yorker essay by Atul Gawande.
There's a different kind of variation that Gawande doesn't talk about. It's the difference between "Cicely" Alasaka and Rochester Minnesota.
Rochester is the home of the Mayo Clinic. It's the champion of conventional health care delivery. The combination of a small city and an international service business generates enough revenue to support a full range of health care technologies and care givers. There's a culture of process monitoring and improvement that kicks it up a level above most referral centers.
Cicely is a mythical rural community. It's the archetype for communities with small populations that can only support a limited range of local health care delivery. At its best this will involve a reasonable number of family physicians, PAs and nurses and a smaller number of specialists. There may be only 1-2 pediatricians, maybe some hospitalists, 1 orthopedic surgeon, 2-3 general surgeons, and so on. There's unlikely to be a colorectal surgeon. There's probably 1-2 obstetricians, but obstetrical epidural anesthesia may be hard to get.
Care in this mythical Cicely, the care experienced by 17% of Americans, is different from care in Rochester.
In some ways Cicely is better. Primary care physicians are experienced. Care communication is much better than in large centers. Reputations are known, and they matter. Patients don't get missed or lost as easily. Most of us don't want to die, but we particularly don't want to die miserably. If I'm ready to die, I'd rather be in Cicely than at the Mayo.
In other ways Rochester is better. Cicely is probably not the best place for a child with Cystic Fibrosis. When there's only 1-2 specialists in a community that needs at least one, choice may be limited. Many procedures aren't available, or shouldn't be available, outside of specialty centers. Health care will often involve travel to a place like Mayo (back in the day I liked Marshfield Clinic -- almost as good as Mayo, and a lot closer).
It's good to understand that there are different kinds of health care variability. The pastry-kind of variation is fixable. The Mayo model, or a cheaper variant that's 80% as good, could be applied elsewhere (it's not the water). Other kinds of variability are much more persistent; they're driven by local market size more than culture. Cicely will never be a good place to have a glioma removed; though it's the place I'd want for care of an untreatable glioma.
