The Utah Healthcare Initiative

Robert Huefner on Single Payer

2011-04-18T08:27:00.001-07:00

Peg McEntee, in her SL Tribune column (find it here), reports on retired UofU Professor Robert Huefner's speech to the League of Women Voters about health system reform. (Prof. Huefner has recently been featured on this blog responding to the Utah Healthcare Initiative proposal.)

Excerpts:

Robert Huefner begins with a few startling statistics: In any given year, 1 percent of the U.S. population receives more than a quarter of health care nationally. Two percent get more than a third, and 5 percent more than half.

The reason boils down to two kinds of medical conditions: acute, meaning someone who has had a heart attack or a bad accident and the like; and people with continuing conditions such as diabetes. Both will require hospitalization or other kinds of institutional care.

Those statistics, Huefner says, are precisely why the United States needs a single-payer system of health care, whether it’s run by the government or through regulations that require insurance companies to join together in universal coverage.

Huefner, a University of Utah professor emeritus, spoke about options for health care reform last week at the League of Women Voters’ annual luncheon.

In 1950, when Blue Cross and Blue Shield were the only insurers covering hospitalizations and medical services respectively, overall health care costs amounted to about 5 percent of the gross domestic product. But as other insurers got into the game, costs rose, and today amount to 17 percent.

There are models elsewhere: In Germany, France and other European nations, insurers are what Huefner calls virtual single-payer because they must work as a coalition to keep costs under control.

That might not be a popular option here, but Huefner believes it’s either that or a government single-payer.

“It can be said that in the U.S. we are sliding toward a single payer — a government single payer,” Huefner says. “Government now pays more than half of all health care costs, and as much per person as any other country pays for all its health care.”

Under pressure, President Barack Obama set aside the single-payer option to get the Affordable Care Act passed. But because of the nature of the health care market, Huefner says, “the government is the safety net, and the net keeps catching more.”

Now how does Huefner, a retired political science professor, know all this? He took his bachelor’s in civil engineering at the U., earned a master’s in city planning from the Massachusetts Institute of Technology and a doctorate in finance from Harvard.

He joined Utah Gov. Edward Clyde’s office as the state planning coordinator working on public health issues and continued in the Calvin Rampton and Scott Matheson administrations. At the U., he directed the Matheson Center for Health Care Studies, bringing together medical professionals with the social science and engineering departments.

Here in Utah, health care is relatively successful regarding cost and quality. Institutions tend to cooperate, there are plenty of skilled professionals and administrators, technology is growing ever more sophisticated and our lifestyle is good if you don’t count our terrible air quality. We also have few income disparities and a good education system, although it’s certainly not perfect.

The nation, though, has trouble with the cost of care and quality, not least because of the market-driven system that puts burdens on those enrolled in an insurance plan.

Meanwhile, hospitals cost about twice that of physicians, but it’s the physicians who decide who goes to the hospital. And, Huefner says, there is “a significant amount of care that is either unnecessary or harmful.”

My comment:

Every American family will sooner or later have someone in need of expensive medical care for acute or chronic health care conditions. Whenever that occurs, even if the family has health insurance, the financial obligations for the care will threaten the family finances. Health care costs are the most common cause of family bankruptcy and two-thirds of Americans who file bankruptcy because of health care costs had health insurance at the time that the health care problem occurred. Something that every American family needs yet is apparently too expensive for family financing sounds like it belongs within the purview of community infrastructure, like highways, libraries, fire fighting, and law enforcement. And, as Prof. Huefner points out, we Americans are already taxing ourselves as if health care is public infrastructure. About $1.5 trillion of our $4 trillion annual taxes in America will go to health care. We are the most taxed citizenry for health care in the world. We just aren't regulating well how those tax revenues are spent.

There is a flip side to this coin. If we don't fund our health care providers consistently and adequately, no matter how much money an individual has, the needed health care won't be available, because the hospital and personnel infrastructure requires continuous sustenance in order to be sustained. There is a reason that Arabian sheiks seek health care in Europe and the US: health system infrastructure in their homeland has not been consistently built and supported. They have vast wealth, but do not consistently support care for all citizens and so their money can not buy the care at home when they need it. The truth is: when we pay taxes for health care we are not buying someone else's care, we are assuring that the care we need in the future will be there for us and our family members. So, if we don't regulate well what the health system does with our tax revenues, they will underfund our care providers, like doctors and hospitals, and leave us in want of good facilities and professionals. When we fund community infrastructure we are not only being charitable, we are making our own lives better.

These principles are at the heart of the health system reform proposed by the Utah Healthcare Initiative. Thanks to Prof. Huefner for highlighting them and to Peg McEntee for publishing his remarks.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

Response from Drew Quinn JD-Administrative Law Judge

2011-04-16T07:44:00.000-07:00

One question I have is whether you will be able to get waivers from CMS to take Medicaid and CHIP away from the health department (as specified in CFR) and put it into the cooperative. The concept sounds good, and although I understand your point about market forces not being applicable to health care, I still have concerns about one large entity making decisions for all Utahns and kicking the private insurers out. One size doesn't fit all, as I have found in working with Medicaid rules and policies.

My comment:

Ms. Quinn is an administrative law judge who handles claims filed by Medicaid beneficiaries. She knows from experience that the unintended consequences of administering government rules and regulations can be harsh. People who have private health insurance policies also have complaints about the way their benefits are administered. Denials are a way of doing business in health insurance. But, when the insured have a complaint against their insurance company, they must file it with the company itself, which then adjudicates that claim. Not surprisingly, those complaints generally do not change the original company decision. For Medicaid beneficiaries, however, the complaint is heard by an independent administrative law judge (i.e., no jury) such as Ms. Quinn. She has the authority to independently order Medicaid to change its behavior concerning a particular case. To use her analogy, she can alter the size of the benefit, within certain parameters, to make it better fit the situation. The Utah Healthcare Initiative, inspired by Ms. Quinn herself, proposes that the proposed payer for all Utah health benefits, the Utah Health Cooperative, be subject to a similar administrative law review, organized by the Utah Health System Commission. By including a fair, equitable, independent administrative law review for all complaints in its proposal, the Utah Healthcare Initiative guarantees that Utah's residents go from the current system of private health insurance, which offers a benefit befitting nobody, to a system where a single set of benefits are financed for all with a size adjustment as necessary through case review.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

This Generation's Challenge

2011-04-15T08:23:00.000-07:00

That is what former Utah Gov. and HHS Secretary Mike Leavitt called health system reform in a speech he delivered in Colorado (find the Greeley Tribune report about the speech here). Excerpts:

LOVELAND — While our nation’s approach to health care is grounded in compassion, today’s economic realities are driving decisions into dollars-and-cents dispassion in which networks, bundled prices and new ways of delivering care will be necessary.

He said options to deal with the rising costs include raising taxes and cutting benefits — both of which are unpopular.

“Then you only have one choice, and you can begin to drop what you pay health care providers,” Leavitt said. “There will be substantial downward pressure on (how much is paid to) health care providers in the next five to 10 years. Hospitals and clinics will have to learn to do things they haven’t had to do because they’ll be feeling this global economic dispassion. … This is happening in state governments, all around. They have to try to balance their budgets. So this pressure is very much being felt.”

“This isn’t a management fad. This is a Darwinian response,” Leavitt said. “No one would join up with their competitors naturally. You do it to survive.”

With burgeoning expenses tied up in health care — and networks and tiers of health care coverage developing in response, from Medicaid to self-pay “Cadillac” plans — running the system without government order “would be a problem” and result in inequities, Leavitt said. He said many dilemmas confront health care — end-of-life care, offering affordable access and the ballooning costs of Medicare and Medicaid — and at the root of the debate is whether government should organize or operate the system.

Last year’s passage of the Affordable Care Act moved the nation toward an operating system, Leavitt said, but “I think we’ll find something more in the middle, where government is involved with organizing the space” and allowing the market to take it from there.

“We’ll all work on this all the time. These forces are going to compel us to change,” he said.

Ultimately, there will be winners and losers.

“Not every hospital will survive, not every clinic will survive,” Leavitt concluded. “It will be those who position themselves and skillfully navigate the changes of the next decade. Every generation of American has had to deal with something like this to prove we are the number one economy and culture and power in the world. I would suggest this is this generation’s challenge. Because it really does require sacrifice and a willingness to adapt.”

My comment:

I agree with former HHS Sec. Leavitt that health care costs will force change on the way Americans do health care business. But I disagree with him that the change will be primarily focused on hospitals and doctors, though I agree that change must occur at the bedside. The real losers in health system reform must eventually be the insurers whose business model can not survive. Americans do not need to either raise taxes or cut clinically effective benefits in order to respond to the financial forces impacting health care. We do need to eliminate wasteful health system spending, including the $400 billion/year wasted on administrative overhead and $700 billion/year in quality waste, both caused by the private health insurance business model.

Let's get on with this challenge. Join the Utah Healthcare Initiative.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

Infections Not An Unavoidable Cost of Hospital Business

2011-04-14T07:12:00.000-07:00

The New York Times, reporting on two studies published this week in the New England Journal of Medicine (find the NY Times article here), cited Centers for Disease Control statistics that should alert every American: "The Centers for Disease Control and Prevention in Atlanta still estimates that one in every 20 patients will acquire an infection while hospitalized. Using data from 2002, the agency concluded that hospital infections were associated with 99,000 deaths and costs of $28 billion to $34 billion a year."

And hospital acquired infection is only one of several categories of patient injury that currently devastates American patients.

Response from Kent Farnsworth MD-Retired Obstetrician

2011-04-13T08:47:00.001-07:00

Dr. Kent Farnsworth has responded to the Utah Healthcare Initiative proposal for health system reform (find the proposal here). Dr. Farnsworth has retired from active OB-Gyn practice, though he continues to volunteer his clinical care skills in Utah and around the world and he serves as adjunct faculty in health policy at both the University of Utah and Utah Valley University. His comments:

I agree with your concluding observation that because of the lobby influence of special interests groups, the only feasible way to implement the Utah Healthcare Initiative is by a ballot initiative. I am in support of making this a state endeavor rather than national because of the unique positives already in place in Utah. I understand the argument of making the proposed sweeping changes but wonder because of the many vested interest groups effected if critical adequate support of many of these same groups can ever be mustered. It would be very convincing if there was a body of data to show that a "Health Benefit Commission" could really keep up in managing the tasks of establishing and maintaining a Uniform Benefit Package with the inherent load of claims and refereeing of insurance companies.
On the cost/funding side, how soon would we see a $6 billion savings from waste elimination? Hopefully soon, to sustain public support since there are a significant number of citizens who are currently paying so little of their health care bill.
The critical strategy it seems will be to gain general public support by presenting these proposals in a way that can be easily understood to be fair and equitable and will result in better care which you and I would define at the best outcome at the lowest cost. Most understand the first part of this formula and not the second.

My comment:

When people question the feasibility of doing health system reform by ballot initiative, I generally respond by noting that real reform is unlikely by ballot, but impossible by legislation. And, further, what is unlikely by ballot today can and will become more likely as the financial disaster of American health care financing continues to unfold. Our national way of life literally can not survive unless we change the way we do health care business. As Dr. Farnsworth notes, Utah is in a particularly good position to try out comprehensive state based health system reform, with lowest in the nation per capita health care costs driven largely by best in the nation (in many regards) health system performance. Be we become too self-congratulatory, however, we should remember what Dr. Brent James says about Utah's successes in health care: "Utah is the cream of the crap" by which he means best in a nation known for its poor and wasteful health system performance. It is difficult to muster the support of health system players, as Dr. Farnsworth notes, because health system reform requires reducing wasteful spending in health care but one person's waste is another person's profit. Sweeping change, however, is the best course to attempt because these entrenched health system interests will politically fight incremental, small changes with the same vigor they will battle a comprehensive health policy proposal. Of course, there is a convincing body of data that a uniform benefit package can be maintained if one looks to the international community. Other first world nations have been limiting the care people can get while handling the claims (or their equivalent) for many years. Some of the savings anticipated from the UHI proposed changes in our health system could be realized immediately. For instance, the wildly expensive overhead of the private health insurance business model, accounting for as much as $1 billion in health system waste in Utah, could be eliminated overnight by replacing many private insurers with the Utah Health Cooperative.

Thanks to Dr. Farnsworth for a thoughtful response. The Utah Healthcare Initiative encourages all Utahns to carefully consider our proposal and post a response.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

Response from Robert P. Huefner, Health Economist

2011-04-12T07:41:00.000-07:00

Here is another in a series of responses to the Utah Healthcare Initiative proposal for health system reform (find the proposal here):

I agree with the seriousness of the problem. I also agree with your statistics re cost, and often defend your accounting of government expenditures when it is challenged.

As we've discussed before, the politics of establishing a Utah single payer, without significant state government expenditures, seem to me to be overwhelming barriers to a reasonable state-level single payer plan. That in turn means that a state-level plan would be a serious (even catastrophic) drain on resources for public education and a likely race by states to the bottom for not only public education but also health care benefits.

Still, I appreciate your efforts, as they help inform the public of the seriousness and nature of the problems. While you work for a state-level single payer I press for federal responsibility for access and for a combination of federal and state and private initiatives for quality improvement, efficiency, and cost/expenditure controls.

My comment:

Prof. Huefner is a well-known health economist and therefore his agreement with how the Utah Healthcare Initiative frames the discussion about health care costs is significant. Take it from him, then, that the US is on the verge (within a few years) of economic collapse due to wasteful health care spending.

His principle objection to the UHI proposal seems to be political: he finds little evidence that such a dramatic change in how we do health care business can ever pass into statute. Up to this point in American history he is, of course, correct. However, as the financial nightmare related to health care costs further develops and becomes increasingly inescapable, who knows what will become politically possible?

He also believes that state budgets can not handle health care costs inevitably leading to a drain on public education. In response, let the reader note that Medicaid funding alone is already compromising Utah's public education budget. We have the system Prof. Huefner argues for, i.e., federal responsibility for access and a combination of federal, state, and private responsibility for quality, efficiency, and cost control, and opportunity costs are already killing our economy through poor funding of education and lackluster investment in new products. The combination of federal, state, and private supervision of the health care system has meant that no one actually takes responsibility. The health care system, left to itself, has become a massive public trough for corporate welfare.

Thanks to Prof. Huefner for his thoughtful comments.

Best,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

More On SB 294

2011-04-11T12:16:00.000-07:00

When last we checked in on the SB294 saga, Kirsten Stewart of the SL Tribune had written about how Gov. Herbert's veto of this legislation may be overridden (find our blogpost here). You heard here first how this legislation is actually a direct attack on the Utah Health Exchange, orchestrated by the insurance industry. Now comes an op-ed by Shelly Braun, Reform Initiatives Director for the Utah Health Policy Project, Utah's premier Obama-care booster organization, confirming the assault on the Utah Health Exchange (find the op-ed piece here). Excerpts:

SB294 was a back-room deal that should set off your alarm bells if you care about public accountability and the state’s progress on health insurance reform. It was introduced on the last day of Utah’s legislative session and screamed through the Legislature in less than 24 hours!

The bill undermines Utah’s private market health system reform and the Utah Health Exchange, undoes legislation passed just last year, favors young people and single-parent families with only one child while increasing costs for other families and people over 45, and, even worse, it doesn’t come free — the bill was unfunded even though the estimated cost to implement the bill was quoted at $109,000 by the fiscal analyst.

SB294 started out as a completely different bill carried by Sen. Stuart Adams, R-Layton.

It was hijacked on the session’s last day and filled with content that undermines years of progress on Utah’s Health Exchange. It by-passed all rules, had no public debate and passed at literally the last minute of the last day — 11:58 p.m. This end-run push is bad public policy and is not how our legislative process is supposed to work.

nstead of overriding the veto, legislators should have that debate.

What they will learn is that small-business owners, providers, consumers — Utahns from all walks of life — desperately want affordable and quality health insurance and health care, not closed-door deals between the industry and lawmakers.

All we ask is that the investment we make in our health insurance plans will be there when we need it. We voted for our representatives and they should work for us.

The discussion about health insurance should be a public one.

Utah’s Health Insurance Exchange is just starting to build steam, showing steady growth since its 2011 re-launch.

The same representative who pushed through SB294 at the last minute fought for his key state health reform bill by arguing that the exchange needed to hunker down and really focus on serving the small-business market.

But SB294 would force the Utah Health Exchange (at its own expense) to back-track and re-tool to accommodate the new pricing tier and the 6:1 rate ratio it creates.

This sets Utah’s efforts in the small group market back by months, if not longer. State reform has been slow and incremental at best, and SB294 chips away at earlier reforms, undermining the entire process.

My comment:

First, a comment to the Utah Health Policy Project. You chose to back various health 'reform' proposals which feature the private health insurance business model. Having done that, your protests against this and other examples of how this business model harms people and makes real reform impossible are useless.

Second, clearly SB294 is a frontal assault on the Utah Health Exchange, which is floundering anyway. (To say, as Ms. Braun does, that the Utah Health Exchange is 'just starting to build up steam' is ridiculously euphemistic. There are hundreds of thousands of uninsured Utahns and a few dozen people have purchased a health insurance policy on the Utah Health Exchange.) The health insurance industry, which is principally responsible for SB294 and the ongoing attempt to override the governor's veto, does not want the Utah Health Exchange interfering with the most profitable business of selling benefits to large employers. They also don't want the Exchange to somehow force them to sell benefits to the most expensive sector of Utahns (when it comes to health care) in the individual market. And, when it comes to small businesses, they want the freedom to pick and choose customers by pricing their useless product so that unwanted business will be priced out.

Third, let's be clear about who runs health policy at the legislature. Big corporate health care interests can always get their business done in the Utah legislature, as this episode clearly points out. Health care interests are by far the biggest donors to politics in the US, counting both federal and state political donations. They have the ear of elected officials. Therefore, they are in the room when the bills are written, the budgets are balanced, and the nose counting is done. We do have a welfare problem in American health care and it is corporate welfare. Fiscal conservatives need to have a health care budget epiphany and help get health insurers, Big Pharma, hospital systems, and medical device manufacturers out of the public trough.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

A Warning

2011-04-11T12:12:00.001-07:00

The Deseret News ran the following story (find it here):

OGDEN — The family of an Ogden woman who died from meningitis has a warning for the public.

They're asking people to not ignore or minimize symptoms they're experiencing and to get checked out. By the time their daughter did, it was too late.

Shaelyn Skeen, 28, came down with a cold a couple weeks ago, which turned into a sinus infection. She didn't have insurance, so she held off going to the doctor until late last week, when the infection moved into her ear.

Shaelyn's mother says she appeared to be doing better, and then her boyfriend went to check on her.

"He found her on the floor, not responsive," DeEtte Skeen said. "(She was) awake, just not really there."

The hospital diagnosed Shaelyn Skeen with bacterial meningitis — a serious illness categorized by high fever, headache and a stiff neck. Shaelyn Skeen's health went downhill quickly, and doctors pronounced her brain-dead Sunday.

The family kept her on life support, so her organs could be donated. Her kidneys and pancreas went to patients in Utah, and her heart and at least one lung went to people in Texas.

"She's my hero," DeEtte Skeen said.

The outpouring of love and support has been overwhelming, the family said. In exchange, they're asking her friends to take better care of themselves.

"You know when you have a problem, you know what your body is doing. Take care of it. That's what I told her friends. Please don't ignore the symptoms. Go in, get looked at," DeEtte Skeen said.

My comment:

There are several lessons to be learned from this story. First, the obvious one. Not having a means to pay for health care will cost some people their lives. The published data indicates that the total is about 45,000 American lives each year. Those who argue against finding a way to fund care for all Americans must explain why we should not care about the loss of this young life with so much potential. Second, generally, patients can not tell which symptoms need medical attention and which are benign. So-called consumer oriented health insurance forces patients to make decisions about what is necessary care despite the fact that several studies of patient behavior in the face of financial risk demonstrates that lay persons are likely to forgo necessary care, as was the case with Ms. Skeen. Consumer directed health plans will waste money, because too many people will forgo preventive and early care which is less expensive, and lives, as happened this time. Finally, the current health care financing scheme in the US is penny wise and pound foolish. We allow the private health insurance business model to exclude/deny care in the name of small savings (going to their bottom line) which we pay for by losing the productivity of American citizens in many ways, starkly illustrated by the loss of this life in her prime.

Let's take this warning seriously. The opportunity costs of our present health care financing scheme are killing our economy, threatening our government budgets, bankrupting our families, and literally killing our citizens.

Yours,

Dr Joe Jarvis

www.utahhealthcareinitiative.com

Response from Kent Michie-former Utah Commissioner of Insurance

2011-04-09T10:07:00.000-07:00

I sincerely wish you well on this proposal. The current system (the Health Care Mess) is a Gordian Knot of special interests and your economic figures present a compelling argument as to why we must move forward with comprehensive reform. It is not rocket science as to how to fix it. But it will take the sovereign to do it. The sovereign is, of course, the people. The problem cannot be fixed at the national level but could be greatly aided by the passage of certain encouraging and enabling Federal legislation as you describe. But the basic question must be put directly to the people. I have always trusted a majority of Utahns to be able to see through and do the right thing. When presented with the facts in an unemotional way, they will do the right thing.

This is a fabulous idea which if enacted, would show the nation how the problem can be intelligently addressed.

Kent Michie

The Utah Healthcare Initiative: Our Proposal

2011-04-08T08:44:00.000-07:00

BRIEF OVERVIEW OF THE ISSUE: Health System Reform

Health care costs are busting government budgets in the US at all levels. Federal deficits on into the future, given current health care spending trends, will be principally due to rapidly rising costs for Medicare, Medicaid, CHIP, and other federal health programs. All fifty state budgets are threatened by the growth of demand for Medicaid funded health services. A state senator in Utah stated that ten years ago Medicaid required 9% of the state budget, but doubled to 18% this year and is expected to double again to 36% by the end of this decade. Total health spending in the US was $2.5 trillion in 2009, accounting for 17.6% of the GDP. As illustrated in the table below with data from 2007, health spending on a per capita basis in the US is approximately two to three times higher than is the case in other developed nations. Remarkably, public spending (i.e., derived from taxation) for health care is higher in the US than anywhere else in the world and, in fact, constitutes 60% of American health care spending, or $1.5 trillion (out of a total US tax revenue stream of less than $4 trillion). Public spending on health care comes at an opportunity cost. For instance, at the state level, education budgets are threatened by increasing Medicaid costs. In 2010 Utah’s lowest in the nation per pupil spending rate had to be decreased while the Medicaid budget required and received an additional $48 million.

Failure to improve American education over the past quarter century has resulted in an estimated $1.3 trillion to $2.3 trillion in lost (or never realized) GDP growth. Family budgets, too, have been hit hard by health care costs. The US Census Bureau has found that median income for a family of four is falling and was just over $50,000 in 2009 while the 2010 medical cost for a typical American family of four was just over $18,000.

Health care costs are high in the US because of two principle problems: poor quality and inefficiency. Thomson Reuters published a $700 billion per year list of savings possible through improving health care quality by reducing inappropriate care (including defensive medicine), preventing injury of hospitalized patients, and bringing American health care services in line with known clinical science. Inefficient administration of American health care financing costs up to $400 billion annually. US health systems are plagued by waste due to poor quality and inefficiency because of the penchant of Americans to expect market forces to introduce accountability into all transactions, including the purchase of health care.

Health care is not a commodity that can be efficiently distributed by a market. A market exists when a completely informed buyer can freely choose to enter into a transaction with a self-interested seller without any positive externality. Market efficiency is demonstrated when demand rises as price declines. None of these conditions exist within the health care sector.

a) buyers of health care lack clinical knowledge (no caveat emptor) and are not free to decide whether to purchase health services (especially in urgent settings);

b) sellers of health services are not supposed to act in their own self interest which is why society should not tolerate physicians and nurses whose greed pre-empts the best interests of their patients;

c) positive externality refers to a situation when someone other than the buyer or seller has a legitimate interest in the outcome of a transaction, such as is the case when the general public has an interest in assuring the best care for a patient with a communicable disease. We have massive infusions of tax dollars into health systems because of positive externalities. d) the inverse relationship between price and demand does not hold for health services. No one ever bought an appendectomy because it was on sale. Demand for health services is determined by epidemiology (the frequency of disease and injury), not by price.

Lack of accountability in our health system is not a market failure, since health care is not a commodity efficiently distributed by market forces. Rather, lack of accountability in health systems is a social failure. For instance, preventable hospital injuries can be discovered and eliminated not by individual buyers (patients) but by public health agencies. The pretense of markets, so characteristic of American health policy, has created perverse incentives to deliver mediocre care in an inefficient manner. Reducing poor quality and inefficiency waste will require inventing new social mechanisms to replace the failing business models which characterize the American health care delivery system.

Recently passed federal and state health ‘reform’ legislation (the Affordable Care Act and its predecessor in Massachusetts) are coverage initiatives and not the needed reform measures (for instance, read the Kaiser Family Foundation summary of the Affordable Care Act online at www.kff.org/healthreform/8061.cfm). Massachusetts officials testified before Congress one year before the passage of the Affordable Care Act that burgeoning costs made the Bay State’s health ‘reforms’ financially unsustainable. Recent projections by the Congressional Budget Office confirm that the Affordable Care Act will not prevent future “excess cost growth” in health care.

In summary, growth in US health care costs far exceeds any international comparison. Coverage initiatives, the standard American health policy approach over the past 50 years, ultimately fail to contain excessive growth in health care costs. The business model of private health insurance is administratively wasteful and invokes perverse incentives to deliver mediocre care. Sustainable health system reform must introduce social accountability into health care delivery while targeting improved quality and efficiency.

EXPLANATION OF THE PROPOSED SOLUTION

The graphic above allows the reader an easy view of the biggest problems in our health system (left side of the chart) and the Utah Healthcare Initiative (UHI) proposed solution (right side of the chart). This a state-based proposal for comprehensive, sustainable health system reform in Utah. UHI proposes to create one new government agency (the Utah Health Systems Commission) and re-name an existing publicly owned trust fund (the Public Employee Health Plan will be called the Utah Health Cooperative) while transforming it into the sole payment source for health services need by Utah residents. UHI also proposes to strengthen the current passive public health surveillance system for patient safety into a mandatory reporting system with trained staff for interventions to improve hospital performance.

The Utah Health System Commission will have two principle tasks: 1) define the clinically proven set of health benefits for every citizen in Utah; and 2) adjudicate claims against any part of the health system efficiently (i.e., in a fashion similar to workers compensation, with administrative law judges and without punitive damages or juries). The Commission will be given two years after passage of the enabling statute to determine what diagnostic and therapeutic interventions have been proven effective by clinical science while being the least expensive alternative. These interventions will constitute the initial Uniform Benefit for all Utah residents. The Commission will have the task of continuously reviewing clinical science as it evolves to keep the Uniform Benefit updated. The Commission will also organize an administrative law system, similar to the system which handles claims about workplace injuries and illnesses, for the purpose of adjudicating claims against any part of the health care system, such as malpractice by providers or failure to make payment by the Utah Health Cooperative. The principle features of this administrative law system will be that no punitive damages will be allowed and no jury trials will be conducted.
The Utah Health Cooperative (formerly the Public Employees Health Plan) would undergo a two year transformation from its current role of providing efficiently paid health benefits to Utah State government and other public employees. PEHP is the most efficient payer in Utah, reporting less than 4% overhead while the largest four private health insurers in the state average 15% administrative costs. Upon passage of the enabling legislation, PEHP would be re-named the Utah Health Cooperative and would immediately begin selling health benefits to all Utahns, whether employed in the public sector or not. Medicaid, CHIP, and other publicly paid programs would be transferred to the Utah Health Cooperative as soon as practicable. Private health insurers would have two years to phase out their Utah operations. The Utah Health Cooperative would negotiate with the US DHHS to become the fiscal agent for Medicare in Utah, anticipating the time when Medicare beneficiaries living in the Beehive State could be phased into full participation in the program. The most important function of the Utah Health Cooperative, aside from receiving and managing all funds intended to support health services in Utah, would be to use its monopsony clout to improve health system function, including better use of primary care, improved distribution of public health, optimizing behavioral health services, negotiating better prices for pharmaceuticals and medical devices, and supporting continuous quality improvement system wide.
Patient injury would be reduced through standard public health surveillance and intervention.

START UP COSTS

This proposal is fashioned as a response to federal legislation offered by Rep. John Tierney (D-MA) and Sen. Bernie Sanders (I-VT) known as The States’ Right to Innovate in Health Care Act of 2009 (find a draft of this legislation on the Utah Healthcare Initiative website, URL below). This proposed legislation would offer states technical assistance and funding, as well as regulatory flexibility, to assist with the costs of planning and implementing innovative state-based programs through a competitive selection process. The legislation proposes grants up to $10 million for each state selected, which is an adequate sum for the anticipated planning and implementation of the proposed Commission and Cooperative in Utah.

PROGRAM FUNDING

Using a variety of sources a rough estimate of Utah’s total health expenditures for 2009 would be $15 billion. Approximately 60% of US health expenditures arise from public taxation, or roughly $9 billion of Utah’s total 2009 health spending, leaving $6 billion from private sources (out of pocket from individuals or payments from private employers not offset by tax credits). Assuming that the relative proportions of waste due to poor quality and inefficiency cited above are applicable in Utah, approximately $6 billion of health spending in Utah during 2009 was lost to the cost of inappropriate care, patient injury, failure to deliver best practice care, and administrative overhead. Therefore, improved quality and efficiency anticipated through the proposed health system reform would substantially reduce (essentially eliminate?) the need for health care funds from private sources not offset by tax credits or mandated by law. The proposal accordingly anticipates that program funding will be principally derived through maintaining current public revenue streams paying for health care. There are currently three major public revenue streams: 1) publicly funded health care programs, including Medicaid, Medicare, CHIP, IHS, and a multitude of smaller health service programs ($4 billion); 2) assorted tax credits for employer/employee purchase of health benefits/care ($4 billion); and 3) funding for federal, state, and local government employee/retiree/dependent healthcare plus government mandated health service payments for workers compensation, vehicle insurance, etc. ($2 billion). During the initial two years after passage of enabling legislation, while the Utah Health Systems Commission is organizing the Uniform Benefit, the State of Utah will be required to assure the preservation of these public revenue streams for health care by: 1) negotiating with the national government for full carry over of all federal health care funding into a block grant to the state of Utah to be deposited with the Utah Health Cooperative; 2) identifying all state and local tax funding for health care and redirecting those funds in perpetuity to the Utah Health Cooperative; and 3) organizing an equitable levy of private employers and individuals, partially offset by federal and state tax credits, equal to the current level of tax supported health benefits purchased voluntarily in the private sector or mandated by law.

PROJECTED OUTCOMES

A few years ago a small hospital in rural central Utah undertook a quality improvement effort directed at reducing the morbidity, mortality, and cost related to pneumonia. The authors of the project successfully reduced the length of time to appropriate antibiotic therapy for patients presenting with pneumonia and therefore dropped the proportion of patients requiring hospitalization, cut average length of stay for hospitalized patients by 1/3, and halved average cost per case. Unfortunately, because of the perverse incentives currently characteristic of American health care delivery, reimbursement for pneumonia care fell even more than the drop in average cost per case, meaning that the hospital took a financial hit for improving the care of pneumonia patients. This hospital’s parent organization, Intermountain Health Care (IHC), is a non-profit organization with a community oriented mission, and is responsible for roughly half of all hospital beds in Utah. IHC has continued to organize quality improvement efforts despite these adverse financial consequences, in part accounting for Utah’s lowest in the nation per capita health care costs. After the passage and implementation of this proposed legislation, IHC’s mission to improve the quality of care in its hospitals and clinics will be in congruence with the community mission of the proposed statewide payer for health services, the Utah Health Cooperative, with the added advantage of an administratively simple and lean payment mechanism. Efforts to systematize urgent high level care needs (perinatal, trauma, cardiac, etc.) will be unimpeded by so-called market competition. The least expensive option for clinically proven care will be sustainably financed for all Utah residents. Primary care and behavioral health will be financially supported such that chronic care needs can be better managed in the outpatient setting. Stable funding for clinical health services will allow public health agencies to re-focus on their traditional primary and secondary prevention services.

REQUIRED LEGISLATION

Federal statutes, rules, regulations, and funding requirements currently effectively prevent any state from taking a comprehensive approach to sustainable health system reform. Unfortunately, this web of federal complexity in health policy eliminates the ‘laboratories of democracy’ from serious efforts to solve our nation’s most pressing domestic problem: rising health care costs. The Affordable Care Act is apparently the best that the sole remaining American legislative body (Congress) can do, and, as argued above, is completely inadequate. Congressional Republicans have been vocally arguing that the states should be granted more authority to pursue health system reform. President Obama has recently openly agreed with that position as long as any state plan provided for at least the same amount of coverage for no more cost than will be the case when the Affordable Care Act is fully implemented.

Given the apparent bi-partisan support for increasing the autonomy of state governments in fashioning health policy, the Utah Healthcare Initiative proposes that members of Congress from both parties consider and pass The States’ Right to Innovate in Health Care Act, offered by Rep. John Tierney D-MA. The purpose of this act (as stated in Sec. 2 of the draft) is to encourage States— (1) to develop plans for universal, comprehensive, cost-effective systems of health care with simplified administration to individuals residing in such States; and (2) to implement such plans by offering transitional grants and by removing Federal statutory and administrative barriers that may inhibit or discourage efforts by States to provide such health care while maintaining Federal payments for health care under Federal health care programs. Within the framework allowed by this act some states (such as Massachusetts) could follow the general outline of the Affordable Care Act and create mandates to buy health insurance, supplemental funding to assist families with the purchase, and health insurance exchanges. Other states, for instance Vermont, could choose to create a government-based single payer for all health services. In the event of passage of the States’ Right to Innovate in Health Care Act, the Utah Healthcare Initiative would vigorously encourage the passage of the here-in proposed Commission/Cooperative reforms.

The Utah Healthcare Initiative proposes to put these reforms into effect through a ballot initiative for the simple reason that lobbyists working for the status quo in our health care system are entrenched in Congress and in every state legislature. The business models for health insurers, pharmaceuticals, malpractice lawyers, medical device manufacturers, hospitals, and doctors will be either eliminated or substantially changed by any meaningful, sustainable health system reform. Of course, these various interests will use their vast resources to oppose these needed changes. Only a ballot initiative, which takes the question of health system reform to the patients, has a chance to succeed in making the comprehensive changes in the way we do health care business in this nation. Ballot initiatives can only occur at the state level.

FUTURE GOALS

The Utah Healthcare Initiative is a political issue committee (PIC) officially registered with the State of Utah Elections Office. As such, the Utah Healthcare Initiative can receive donations and dispense funds. UHI is actively seeking donors, participants, and sympathizers through blogs, a website, and an active public speaking schedule. Currently a member of the Utah State Legislature is working with the legislative counsel bureau to craft the needed legislative language for the ballot initiative. Essentially this involves writing the proposed changes to Utah’s health system into appropriate statutory format. Once this ‘bill’ is finished, UHI will begin the ballot initiative process by submitting it to the Lieutenant Governor’s office for review. UHI anticipates an arduous pathway towards placing the initiative on the ballot and eventually winning the necessary votes from the electorate to secure passage. Meanwhile, UHI is encouraging the Utah Congressional delegation to join with Rep. Tierney to secure the passage of the States’ Right to Innovate in Health Care Act.

Join the campaign to reform our health system by improving patient safety, reducing wasted overhead, and providing quality service to all patients. Organize a neighborhood presentation about the Utah Healthcare Initiative. Invite a speaker from UHI to your community, professional, or service organization. Donate to the campaign fund using PayPal on this blog or the website. Become a fan of the Facebook page. Follow us on Twitter. Do something or get ready for massive governmental debt and/or much higher taxes.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

Let's Do What Is Best Policy

2011-04-07T09:22:00.000-07:00

The title for this blog entry is a direct quote lifted from a recent article by Kirsten Stewart (find it here) in the Salt Lake Tribune. The article is about SB294 which was recently vetoed by Gov. Herbert. Members of the Utah Legislature, led by Rep. Jim Dunnigan (R-Taylorsville), who is an insurance broker, are attempting to override the Governor's veto. Here are excerpts from the article:

SB294 would have granted health insurance companies greater flexibility in pricing their plans for small employers, allowing them to extend discounts to young workers and parents with one child while hiking premiums for older workers and possibly for larger families.

The bill never came before a committee but surfaced suddenly in the House and Senate on the final day of the session, where it met with zero debate and was passed nearly unanimously. Twenty days later it was vetoed by the governor.

Backers of the measure, including the Utah Association of Health Underwriters and sponsoring Taylorsville Republican Rep. Jim Dunnigan, an insurance broker, pitch it as a return to market-driven rules in force prior to 2010.

Legislation approved last year restricted premium rates for some older workers but had the effect of raising premiums for their twenty-something colleagues. It also stripped single parents – those who work for small businesses – of the option of paying less for coverage than families of three or more.

That’s unfair, said Dunnigan who believes insurance rates should be based on risk and that older people and larger families should pay more because they use more health care. "That’s what’s driving this, consumers, not insurers. I had a divorced mom call me and say her premium doubled last year."

But Herbert vetoed SB294 fearing it will hurt older small business employees.

If the bill is revived, families too could feel the sting of higher insurance costs, said Lincoln Nehring, senior health policy analyst at Voices for Utah Children. "It’s a big deal for families. But it’s an even bigger deal for seniors who already pay five times as much as younger consumers."

Under SB294, workers in the 60-plus age range could pay up to six times more.

Brokers downplay the cost to seniors. In a letter to lawmakers urging support for an override, they paint a scenario in which the bill would hike monthly premiums for a 65-year-old worker by $17 and reduce monthly premiums by the same amount for a 19-year-old employee.

Bringing younger, healthier people into the insurance pool will make coverage more affordable for everyone by more broadly spreading the risk, the March 31 letter states.

Effects on the market, though, may be short-lived. Assuming President Obama’s signature health overhaul survives legal challenges and efforts to repeal some of its provisions, it will require nearly all Americans to purchase health coverage by 2014 and insurers will only be able be able to charge seniors three times more than young adults.

Regardless, said Dunnigan, "For the next two or three years, let’s do what is best policy."

Before offering my own comments, allow me to offer several comments from the Salt Lake Tribune website:

From imjenrus:

I'm in my 50's and pay about 20% of my income to health insurance on both myself and wife. This is just another ploy by politicians and insurance companies to raise rates while discounting none. Case in point: Does Utahns honestly believe that insurance companies will drop their rates for the groups of people this Bill says it targets. NO, for if they are already paying what they are in premiums then they'll continue to pay for these premiums, hence, this is an end around to raise my insurance while lowering no-ones insurance rates. There goes my retirement.

From John Pace:

As soon as proponents tout the bill as a "market-based approach" to healthcare insurance, they've exposed why they're wrong:

The for-profit, market-based healthcare industry is a failed business model.

The failed business model has left some 50.7 million working poor and disabled Americans unable to purchase insurance, and therefore unable to access basic preventative and primary medical care.

This in turn directly leads to approx 45,000 deaths annually, according to a Harvard study -- and untold suffering among hundreds of thousands that are merely sick or injured but do not die.

This is not anyone's fault. It's what any rational for-profit would do. Unfortunately, the rest of us must bear the costs of the system having to make a profit, and its consequent unwillingness to cover those who most need insurance.

These very same sorts of externalities, i.e., for-profit companies not serving those who most need service and passing on the consequences to us, are why the government handles most jails and prisons, fixes most roads, runs most K-12 schools, provides most sewer and water, provides for public safety and fire fighting, etc., etc., etc. These are not services where exclusions based upon expanding profit margins can be tolerated.

The 2010 ACA fixed a little bit of the problem, but we still have a long long way to go.

From stobbekranz:

So funny, they use the self righteous excuse of "providing more insurance for more Utahns" when in REALITY all it is is "providing more money for insurance companies"...which is what this is REALLY all about.

From healthagent:

What is wrong with premiums rising for 'older' consumers??

That is how insurance works.

How come no one is complaining about the HIGH premiums teenagers must pay for driving a car??

How come no one is complaining about the HIGH premiums 'older' consumers must pay for their life insurance??

That is how it works.......life is NOT fair...........despite the libs constant desire to make it "always fair....to ALL people"

It can not be done.

"The worst form of inequality is to try to make unequal things equal."
--Aristotle

From quakelive:

Insurance is the WRONG vehicle to take care of the health of your body. If you can't/won't understand why, I'm not going to take the time to explain it.

Non profit cooperatives and ending taxes on doctors and nurses is the answer. Few people find the answer which is why healthcare is still a mess in this country.

My comment:

If I'm not mistaken, SB294 is an attempt to reverse last year's legislative attempt to fix the pricing problem on the Utah Health Exchange, the so-called online market for health insurance that is the cornerstone of health reform efforts by Utah's elected leaders. When the Exchange opened with its first limited trial prices for the health insurance policies were commonly more (often much more) than available traditionally or elsewhere, much to the embarrassment of then Utah House Speaker Dave Clark, who has led the charge for this 'reform'. He vowed to fix that pricing problem, and did, in legislation passed in 2010. Now, without hearings, current legislative leadership (which does not include Clark) arrange for passage of SB294, which removes the restrictions on health insurance pricing, or in industry parlance, allows insurers more flexibility. So, Gov. Herbert's veto can be seen as an attempt to give the Utah Health Exchange a better chance to survive, though, unless the federal Affordable Care Act is altered, the Utah Health Exchange will not comply in its present state with federal rules.

But actually, all of this sturm und drang about health insurance, exchanges, and consumer-oriented health plans is beside the point. I like how John Pace put it: "The for-profit, market-based healthcare industry is a failed business model." Ultimately, the only way out of our health care mess is to stop depending on a failed business model. No matter how you fashion the Utah Health Exchange, it is still a place to buy and sell a useless product. No matter how much federal regulation shapes similar exchanges in all 50 states or supplements the purchase of health plans through these exchanges, health insurance is the world's least efficient method to finance health care and induces poor quality health care delivery to boot.

healthagent said it all: What is wrong with rising health insurance premiums? That is how health insurance works. Exactly. Health insurance premiums spiral upward while actual benefits spiral ever downward. We don't need health insurance. We need health care.

Ironically, it was Rep. Jim Dunnigan, a health insurance broker, who said: "Let's Do What Is Best Policy." I agree, and that would be eliminating health insurance.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

House Republicans Propose Budget Changes

2011-04-06T12:16:00.000-07:00

The New York Times (find it here) notes that the proposal for reducing the future federal debt just offered by Rep. Ryan and colleagues in the House Republican Caucus will not become law as long as Pres. Obama can wield a veto pen. But the proposal, from which the figure above is taken, will shape a great deal of the political debate between now and the next presidential election. Of course, as noted on this blog many times, the budget problems and future deficits which require action are principally driven by health care costs. The growing red wedge in the figure is the projected cost of Medicare, which is clearly outsizing any other portion of the federal budget in the coming years. The Republican proposal for Medicare is simple: change the program from a defined benefit to a defined contribution and then limit the growth of that contribution. Of course, that will mean that Medicare beneficiaries will pay an increasing amount for their medical care. The Congressional Budget Office projects that under this proposal the average 65 year old will pay more than double for their health care in 2030 than is currently the case.

There is no question that health care costs in this nation must be addressed. The waste that causes enormous and rapidly rising costs for medicine and surgery in this country must be eliminated, or at least substantially downsized. The question that this Republican proposal poses is this: Can the average 65 year old take responsibility for eliminating health system waste due to poor quality and inefficiency?

Congress has clearly demonstrated that it can not handle the waste elimination problem. But, like the dog in the manger, Congress has also made it impossible for states to address this problem on their own. If Congress must stop allowing health care costs to threaten the federal budget, wouldn't it make more sense to block grant all health care funds to the states with the proviso that the grant amounts will not rise in the future and then turn the states loose to find a way to reduce health system waste? Wouldn't state governments have a better chance to actually reduce waste than the individual 65 year old patient?

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

More On Health Care Information

2011-04-05T09:16:00.000-07:00

The following was written by Dr. Lauren Florence, chair of the Health Information Initiative of Utah:

Approximately 30% of the cost of ever-increasing health insurance premiums is spent on the transfer of information such as in billing and insurance related administrative overhead.¹ Assuming the same in Utah, where the Dept. of Health estimates that Utah healthcare expenses in 2010 were $16 billion, $4.8 billion (30%) was spent statewide on personnel, services, and systems that generate, move and store financial, administrative and clinical health information. Since the population of Utah is about 2.8 million people, the cost of healthcare information flow was about $1,700 per person in 2010.

Much of that seemingly exorbitant cost is due to every healthcare provider, facility and insurance carrier having a unique information system. None of those systems communicate well with each other. This results in an inability to access health records in a timely and reasonable fashion when a patient presents for care.

Usually a patient can remember enough when they arrive at a new doctor’s office or facility to start filling in the paper forms. But to have available only what patients can remember, is at the very least annoying for them and can be life threatening when treatment is time critical or for the demented, comatose or witholding patient. Relevant procedures, or laboratory and radiologic tests may have been completed but the results may not be in the patient’s possession or memory. Finding the results of the tests may be so time consuming as to warrant repeating them with the attendant costs.

If the widely dispersed health information available in the electronic data systems of the 21^st century were readily accessible at the point of care, healthcare could be less expensive, higher in quality, and more timely. Yet, it isn’t. The data systems for healthcare records were mostly created by billing companies and then expanded to include patient health data and so aren’t clinically useful for the doctors. Even though the Affordable Care Act offers both carrots and sticks to encourage doctors and other healthcare providers to adopt electronic health records systems, the current choice is so poor that the doctors’ clinical care of patients is not improved with their use. No subsidy or fine will greatly increase the use of the current systems. Without doctor buy-in, current health record systems will languish in their expensive boxes.

An ideal healthcare information system would be able to deliver the patient’s entire health record at the time of service to any doctor’s office or facility as directed by the patient. Doctors could make healthcare decisions based on all relevant information when face to face with the patient. Modeled after the credit card system, the ideal health record system automatically coordinates and transfers uniform data by rules set up in the program. Unique identifiers are used for each patient, doctor, and point of care.

The data is entered in object oriented programming form at each point of care. Object oriented data entry allows smaller or more restricted portions of a patient’s record to be delivered to other chosen points of care i.e. pharmacies, physical therapists, ambulance services, etc.

With an ideal healthcare information system, patients could see their personal medical information at any time. Their records would be in their own control and shared only with those of their choosing. Corrections by the doctors who entered the data could be made at any time the patient desires.

The patient’s uniform health record would be kept in the office of every doctor the patient chooses to see. This record would be backed up offsite, according to HIPPA rules, at a national data center whose only job is to protect data, such as IBM or EDS. The national company would be contracted to establish the system’s secure communication network, store the records in the company’s data processing center, maintain the network’s computers and servers, and staff the system’s Service Centers.

The Service Center is an area of cost containment due to economy of scale. Health data management including merging data to create a uniform record, coordinating the automatic transfer of information, correcting any discrepancies, and updating changes that each and every office and facility must currently do individually can be done once for all in theService Center. Employees of the Service Centers would also customize the system software for each point of care. Since each of the office and facility computers in the system would contain all of the ICD, CPT, as well as hospital and pharmacy codes, the customized screens would show only the codes needed for that particular office or facility to be used in a point and click format. Customization could be modified at any time and is part of maintenance.

The system should run as a not-for-profit dedicated to decreasing the cost of healthcare for the patients while improving quality of care. The dealings of any entity, involved with the described health information system, will be made transparent by the system. Where the waste is will be obvious and would be another area of savings.

When the people who actually buy health care, (i.e. patients, employers, and taxpayers) in the form of the governing board of the information system, identify savings and demand that these savings be returned to them, (with the threat of not doing business with any entity that is keeping the realized savings) the savings will return to the people who pay for healthcare.

Skilled expertise to run the system, such as computer scientists and efficient managers would be hired. Doctors are crucial to organization of the system since they have dedicated their lives to the care of patients and understand health delivery. But the control must rest with the patients whose records are within the system.

Software which would create an ideal system such as has been described was written 15 years ago and is available for all to use. The feasibility of this system has been shown by use in two different demonstration projects in Michigan. Approximately 250,000 patient records from the offices of about 250 doctors were included in the demonstration projects. EDS was contracted in the demonstration projects for about $20 per patient per year to establish the system’s secure communication network, store the records in the company’s data processing center, maintain the network’s computers and servers, and staff the system’s Service Centers.

To set up another demonstration project using this tested system in Utah that would cover a large enough population of patients to make the system begin to show cost savings (about 250,000 patients) is expected to require about the same amount of money as the Michigan studies. Compare this $20 per patient per year to the $1,700 per patient per year that we are now spending to manage health information.

The data from this first Utah project would give more credibility to the concept of a uniform, coordinated medical record system. This data could then be used to raise funds to set up about a dozen coordinated regional Service Centers in communities of approximately 250,000 patients all over the state.

Utah has a population of about 2.8 million. At $20 per patient, it would cost about $56 million to manage all the health information in the state of Utah annually. Compare this to the $4.8 billion (about $1700 per patient per year) that we now spend. Compare this also to the $100 million estimated to update just the 28 year old state Medicaid software. We were told this number when we met with the Utah state Medicaid directors in 2010.

1. Kahn, James et al., “The Cost of Health Insurance Administration In California: Estimates For Insurers, Physicians, And Hospitals” Health Affairs, November, 2005

My comment:

If you were to go on vacation to Las Vegas and be foolish enough to want to bet all your assets in the casinos, they could access all of your financial information quickly. But if you were to have a heart attack in Las Vegas after losing all of your assets in the casino, the physicians in the emergency room would not have any access to the relevant health information in your medical records.

Our health system is not designed to provide the best possible care to patients. It is designed to make the most money possible from patient care. We have electronic records in our health system which are designed to bill/pay for health care, but not care for patients. Dr. Florence is proposing that Utahns spend less on electronic information systems but get better performance in support of patient care. Who, other than profit-taking organizations, would be opposed?

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

A Rapidly Developing Financial Crisis

2011-04-04T07:58:00.000-07:00

I recently heard a nationally known leader in health system improvement speak about the current problems of the US. His principle thesis was that the American health are system will draw our country into another financial crisis within just a few years. Here are some of the facts he alluded to:

1) In 2009 the US had $14.1 trillion in debt, up 42% over the previous four years.

2) But the present value of unfunded future obligations is actually $60 trillion, including $43 trillion for Medicare, federal employee, and veteran health benefits.

3) Our nation's total economic value for all of our assets combined is $45 trillion.

4) Health economist Alain Enthoven of Stanford University: "The United States does not have decades to wait for health system reform; in 2009 about $1.15 trillion of the federal budget was spent on health care. And health care expenditures are growing 2.7% per year faster than non-health care gross domestic product. [The current] reform bill does practically nothing to slow health expenditures."

5) The Medicare Board of Trustees, in their 2009 Annual Report: "The long-range financial imbalance could be addressed in several different ways. . .these changes would require an immediate 134% increase in the tax rate or an immediate 53% reduction in expenditures."

6) 50% of all resource expenditures in hospitals is wasted on: 1) recovering from preventable foul-ups; 2) building unusable products; 3) providing unnecessary treatments; and 4) simple inefficiency.

We either reform our health system to eliminate the massive amount of waste or we watch our economy slide into second class status.

This speaker also called the shifting of public resources away from education and into health care a 'hanging offense'. He's talking about the opportunity cost of paying more and more for health care and getting less and less.

Finally, it should be noted that most agree with Prof. Enthoven, quoted above, that we do not have very much time to deal with this oncoming fiscal crisis. There seems to be agreement that it could hit us within the next presidential term of office.

Who will help organize a campaign for sustainable health system reform?

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

96% of Americans Favor Mandatory Report of Hospital Error

2011-04-01T00:22:00.000-07:00

Lois Collins of the Deseret News published a report about a recent poll by Consumer Reports concerning patient safety in American hospitals (find the story here). Here's a sampling of what she reports:

More than three-fourths of those polled "expressed high or moderate concern" that they or a family member could be hurt by a hospital infection while being treated at a hospital. And 71 percent were equally concerned about harm from a medication error, while two-thirds were worried about surgical errors.

But the big number — 96 percent — came when asked if hospitals should be required to tell the health departments in their states when they make a medical error. And 82 percent believe the public should be able to find that out, as well.

Some states have passed laws that require hospitals to report certain types of medical harm to their health departments. Only 10, though, require that those reports be made public. In Utah, specific types of medical errors or patient harms must be reported to the Utah Department of Health, says department spokeswoman Charla Haley. But those reports are not made public.

The Consumer Reports survey follows on the heels of a November 2010 report by the Office of the Inspector General in the Department of Health and Human Services that found one in seven Medicare patients experienced serious or long-term medical harm or even death as they were being treated in a hospital. And a similar number experienced temporary harm. Researchers said that, just among those covered by Medicare, hospital infections and medical errors added an additional $4.4 billion to the bill for hospital care and it "contributed to" 180,000 deaths each year.

The problem has been getting attention for years, since a landmark study on medical errors and patient harm by theInstitutes of Medicine was released in the 1990s.

The Consumer Reports survey, conducted in late January, included interviews with 1,026 people nationwide and has an error margin of plus or minus 3.1 percent.

The survey found that 57 percent believe it is "common" for patients to be harmed by a medical error in the hospital and almost half said it is "very or somewhat common for patients to be seriously harmed by their care."

My comment:

It is all too common for patients to be harmed by errors and omissions happening during the process of receiving care. The best way to handle this problem is to treat it as the public health disaster that it is and institute mandatory reporting. Public health surveillance programs are effective responses to any number of epidemic problems, from flu to TB to cancer to trauma. Patient safety will improve when care systems know that errors and omissions will be reviewed and receive an appropriate response.

Are we serious about health system reform or not?

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

Can We Price Health Care High Enough to Reduce Cost?

2011-03-31T09:37:00.000-07:00

It is the general attitude of elected politicians from both parties that Americans pay high health care costs because the price of health care is made artificially too low through health insurance. People need to have 'skin in the game' (very ironic term) in order for them to make more cost-effective decisions in purchasing health care. Thus, we have seen a proliferation of 'cost-sharing' arrangements in health care financing, like co-payment, deductibles, co-insurance, consumer directed care, health savings accounts, high deductible health plans, and now even Medicaid cost sharing arrangements. But do these cost sharing arrangements actually reduce health care costs?

A recent report from the Robert Wood Johnson Foundation (find it here or the longer version here) actually takes a look at data to answer that question. Findings in brief:

* Patient cost-sharing is not necessarily an effective mechanism for significantly slowing health care spending. Most people are healthy and cost-sharing would only modestly affect their health care spending. People who are very sick or who have serious chronic health conditions are typically deferring to their physicians rather than making choices about medical care based on cost-sharing. Moreover, by itself, cost-sharing is highly unlikely to slow the growth in spending unless the expected increases in the costs of appropriate care for the very sick also slow.

* Cost-sharing is not well-targeted on low-value services. Patient cost-sharing generally has been organized in broad categories (e.g., outpatient care, inpatient care, emergency department care). These broad categorizations do not help people distinguish between essential and nonessential services. Comparative effectiveness research could help insurers and government programs better target cost-sharing to improve value.

* Caution should be used when increasing cost-sharing for low-income populations or the chronically ill. Not only are low-income populations disproportionately affected by increased cost-sharing, but they also are more price sensitive than other income groups. Unless the cost-sharing increases are concentrated on services that are ineffective or unnecessary, low-income groups may avoid necessary medical care as a result. Increased cost-sharing for people with chronic conditions may result in higher expenditures for hospitalizations and other adverse outcomes if necessary care is reduced.

My comment:

These findings confirm what a reasonable, thoughtful person could surmise from actually thinking about health care services. When people are sick they are not shopping, they are patients. They are not looking for a good price for health care, they are asking their doctor to help them and then following his/her advice. The fact that they are sick determines that they will seek health care, not the price of the health care. People don't want health care (like chemotherapy or surgery) but will undergo it if necessary. And the price is not relevant to the decision. Cost sharing arrangements, therefore, do not reduce health care costs in the acute care setting.

But cost sharing arrangements can increase health care costs in the chronic disease setting. That is because patients don't know what care is low-value and what care is high-value. When they are individually fiscally constrained by cost sharing arrangements, patients will as likely not purchase high value health care services and will then go on to become more sick, require more care, and therefore cost more to care for. I don't mean to imply that patients are stupid, they are simply untrained. Clinical training is an expensive and difficult endeavor, which requires many years of experience. Doctors have that training, the lay person who is ill with a chronic disease does not and therefore seeks professional advice.

In summary, we do not have high health care costs in the US because we have been too generous with our health care financing. We have high health care costs because we are too generous with the corporate welfare that we give away to insurers, pharmaceutical companies, and other for-profit interests. We allow them to waste our health care resources on high overhead and poor quality care.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

Tapping the Unmet Potential of Health Information Technology

2011-03-30T13:30:00.000-07:00

This was the title of a recently published article in the New England Journal of Medicine (find it here). Excerpt:

Although EHRs laudably provide immediate access to patient data and electronic messaging functions, clinicians have been frustrated by the difficulty of using them to support care delivery and coordination. Transforming EHRs into effective clinical tools rather than a means of capturing information primarily for documentation and billing purposes will require progress on multiple fronts.

Continued research on clinical care processes, the design and use of HIT, and payment reform, as well as ongoing support for clinicians, will be key to the effective and meaningful use of HIT. Today’s EHRs do not sufficiently support aspects of care delivery that are vital to improving care and controlling costs.

Comment:

It seems that the current state of development of electronic health records is incomplete. Quote from the article:"Today’s EHRs do not sufficiently support aspects of care delivery that are vital to improving care and controlling costs."

We have a way to go before the electronic medical records live up to their hype.

Comments?

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

ACOs: Accountable to whom and for what?

2011-03-29T09:42:00.000-07:00

Years ago I heard the CEO of a for-profit managed care organization in Nevada argue that for-profit health care corporations were better for society than non-profit health care organizations because of accountability. He found that non-profits were accountable to no one while he, as CEO, was accountable to a board of directors. Of course, his accountability was principally to assure that the investors in his corporation, who elected the board of directors, made as much money as possible through the corporation. Profits are in direct competition with quality patient care within the for-profit health care corporation.

So now, the Affordable Care Act requires accountability from the health system through a brand new kind of organization, redundantly named "Accountable Care Organization" or ACO. Apparently the problem of accountability has not been solved yet. This is directly the result of our national penchant for market-oriented health system policies. We keep expecting the invisible hand of Adam Smith to hold health care organizations accountable. So will the new kind of organization be different than the traditional market orientation? This from the Wall Street Journal (find it here):

The Wall Street Journal

March 28, 2011

The Model of the Future?

By Avery Johnson

The 2010 health-care law encourages the development of accountable-care organizations as a way to improve care and reduce costs.

So what exactly are accountable-care organizations, anyway?

In broad outline, these entities propose to unite doctors and clinics or hospitals in groups that pool their resources with the goal of trimming spending while boosting the quality of care. When the group can show that it is improving care and delivers it for less than the cost projected—arrived at by crunching historical patient data for that market—a share of the savings goes to the ACO's bottom line.

ACOs exist more on paper than in reality, for now.

"An ACO is like a unicorn; everyone thinks they know what one is, but no one has ever seen one," says Gene Lindsey, president and chief executive of Atrius Health.

Elliott Fisher, the Dartmouth Medical School professor who helped coin the term ACO, and who worked with members of Congress to draft the ACO concept into the health-care law, concedes that "there are some really important questions about whether this will work."

But, Dr. Fisher adds: "I think it's the best hope we have."

And this, from the American Medical Association (find it here):

American Medical News

March 28, 2011

Cost control the next step for Massachusetts health reform

By Tanya Albert Henry

In February, Massachusetts Gov. Deval Patrick unveiled his cost-containment plan to follow up on the landmark 2006 coverage expansions. If approved by legislators, it would define and encourage accountable care organizations within the state; give the state insurance commissioner the ability to scrutinize insurers' rates, including underlying physician pay, and disapprove rates that are excessive; and revamp the medical liability system to try to resolve disputes more quickly and curb defensive medicine.

Accountable care organizations

* Mandates that ACOs provide patient-centered primary care coordination and referral services.

* Requires ACOs to share financial risk, distribute savings and meet quality measures.

* Expects ACOs to be competent in population health management, financial and contract management, quality measurements, and communication.

* Charges ACOs with providing behavioral health services, either internally or by contract.

* Makes physician participation voluntary.

* Allows primary care physicians to belong to only one ACO but places no limits on specialists.

* Requires MassHealth, the Group Insurance Commission, the Commonwealth Connector and all other state-funded insurance programs to implement ACOs and alternative payments by January 2014.

Comment from Dr. Don McCanne:

Accountable care organizations (ACOs) began as an abstract concept of integrating health care providers into a not-yet-defined entity that would be rewarded for improving quality and reducing costs. Without knowing what they were, Congress included them in the Affordable Care Act (ACA). Dartmouth's Elliott Fisher, who was one of the first to promote the concept, now says that "there are some really important questions about whether this will work."

Nevertheless, Massachusetts, which is serving as a prototype for the now-enacted ACA, is intending to move forward with its version of ACOs. Their model not only measures quality and distributes savings, but it also shares financial risk. Also it includes exclusive primary care networks, limiting patient choices. The intent of Dr. Fisher and his colleagues is very noble, but it appears that we may be opening up the process to enable a return to the worst of the managed care era.

Quoting from a personal communication from Steffie Woolhandler and David Himmelstein, "Universal, geographically-based, non-profit ACOs are called a national health service, a reform we would heartily endorse. Unfortunately, the ACOs actually being pursued are profit-driven recreations of full-risk capitated HMOs."

Very soon HHS will be releasing their guidelines for ACOs. The question we need to ask then is will these organizations be designed specifically to provide patients higher quality care at more reasonable costs, as Dr. Fisher envisions, or will they be designed by businessmen to... well, you know.

My comment:

US health systems are plagued by waste due to poor quality and inefficiency because of the penchant of Americans to expect market forces to introduce accountability into all transactions, including the purchase of health care.

a) buyers of health care lack clinical knowledge (no caveat emptor) and are not free to decide whether to purchase health services (especially in urgent settings);

b) sellers of health services are not supposed to act in their own self interest which is why society does not tolerate physicians and nurses whose greed pre-empts the best interests of their patients;

d) the inverse relationship between price and demand does not hold for health services. No one ever bought an appendectomy because it was on sale. Demand for health services is determined by epidemiology (the frequency of disease and injury), not by price.

. Reducing poor quality and inefficiency waste will require inventing new social mechanisms to replace the failing business models which characterize the American health care delivery system.

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

A Man and his Peripheral Neuropathy

2011-03-28T09:04:00.000-07:00

I received the following comments from a friend who lives in Utah and is uninsured:

"I am a 54-year-old male, both my wife and I are self-employed and cannot afford medical insurance. I am not overweight, have a business that requires constant movement, and I don't eat too poorly. The medical coverage plans we've looked into require high monthly premiums and an equally high deductible. By the time we paid the monthly premium and met the deductible we would be out-of-pocket nearly $6000. So really what would we get for our money? Peace of mind? Not at all since we don't have the finances available to even meet the deductible let alone the monthly premium requirements for which we would actually get very little help.
I have known conditions, each of which could ultimately be life threatening but there is very little I can do about them because the procedures are too expensive that could "solve or cure" these situations. We do have credit cards, we do not have a credit line available; so simply put, if we don't have the cash then we are stuck. For example, back in a day when we did have insurance I was diagnosed with Barrett's esophagus, a pre-cancerous condition caused by gastroesophageal reflux disease (GERD). It is recommended I have a minimum of one an annual "scope" to verify those abnormal cells have not changed further to esophageal cancer. However it has been over four years since my last scope due to the expense and lack of insurance to cover at least some of the cost.
Additionally I have high blood pressure, high cholesterol, high triglycerides, and an annoying disease known as idiopathic neuropathy.
All of these conditions with the exception of one, could truly cause my untimely death. But the current expenses associated with medical treatment and drugs are out of reach for me. A single doctor visit including office fee, blood work, medications, and follow-up could easily run what it takes me two weeks of work (50 hours per week) to earn. How do I meet other expenses when this is so high? I don't begrudge anyone, medical personnel, the right to earn a living; but it is so difficult when it appears to me medical insurers have helped create this situation.
State run health insurance would be an incredible blessing to me and my family. Indeed, even a life-saving blessing. I hope I'm still around to see it come to fruition."--Name Withheld By Request

My comment:

My friend is a fit, hardworking grandfather. Like many others, he just can not afford health insurance. He pays his taxes and therefore pays a substantial amount for health care that others receive. The business model of for-profit health insurance excludes him, either overtly or by price, from American health care financing despite his heavy tax investment in our health care system. If we collectively were to eliminate the wasteful business practices and poor quality now prevalent in America's health care systems, the taxes that we all pay (including those of my friend) would cover all clinically effective care needed by all legal American residents without anyone needing to pay premiums, co-pays, deductibles, or co-insurance. To put it differently, my friend is actually paying his share for health care, but is being denied the life-saving, clinically proven health services he needs. The health insurance he will be offered if Obama-Care is ever fully implemented will not provide him with either financial security or high quality care. The health insurance plans anticipated in the new federal law will be very expensive and yet will have a poor actuarial value (will not cover very much).

The Utah Healthcare Initiative health system reform proposal offers my friend a chance to realize the health benefits that he already pays for through his taxes. I, too, hope he is around to see it come to fruition.

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

Health Care in Japan: Better and Cheaper

2011-03-25T07:53:00.000-07:00

Utahns have a chance to learn about the Japanese health system by attending a workshop to be held March 28-29 in Salt Lake City at the Heritage Center in Fort Douglas. The workshop is free, open to the public, and begins at 1:00 PM both days. Here is part of Kirsten Stewart's report about the workshop from the Salt Lake Tribune (find it here):

Earthquake-stricken Japan has been capturing attention.

But the industrialized nation faces another challenge, one revealing for America — guaranteeing an aging citizenry access to quality health care at a time of economic instability.

Health care in Japan is universal and mandatory and delivered at half the cost of U.S. health care, said Janet Theiss, director of the University of Utah’s Asia Center, which is sponsoring a workshop Monday and Tuesday on Japanese health policy.

To developed countries like the U.S., now in the throes of reforming its health care system, Japan serves as a model, said Theiss. “They spend a lot less money and they cover everybody and quality of care over there is very high. We will talk about what that means, how those savings are achieved and how our two systems compare.”

There is a lot of talk these days about how Americans will shoulder the medical costs of aging baby boomers and Japan has the world’s oldest population, said Theiss. “We’ll explore the consequences of that for long-term care, end of life care and the stresses on the social system and medical resources.”

My comment:

Americans don't have high health care costs because our population is aging. Japan's population is older and they spend half what we do on health care. And they have excellent care. In fact, they spend less because they more consistently have excellent care than we do. Higher quality health care costs less. It's way past time for Americans to give up the notion that we have the best health care in the world. We have the most expensive health care in the world. We have the most profitable health care system in the world. We have the least efficient health care financing in the world. And we have the health care system least likely to prevent death amenable to health care in the first world.

We spend more than any other country and have little to show for it.

Time to retrench.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

How the Health Insurance Business Model Doesn't Work

2011-03-24T10:43:00.000-07:00

This week we are featuring comments about the first anniversary of the passage of Obama-care. Germane to this topic is an op-ed piece published in the Ogden Standard Examiner entitled, sarcastically, "The Best Health Care in the World" (find it http://www.standard.net/topics/opinion/2011/03/23/best-health-care-world). Here is the entire piece:

In 1974, I left my teaching assignment in California to return to Utah where I would enter the ranks of small business. We left an excellent health care provider called Kaiser Permanente.

My wife was having a problem conceiving a child and was told by the Kaiser doctor after several tests that included an X-ray of her brain that he could not find the reason for her problem. He recommended that she have another X-ray every three or four years to rule out a tumor in her brain.
We moved to Ogden, and I began managing an equipment rental company here and another rental store in Orem. We located an insurance company to cover our family of four and our eight employees. We paid premiums for three years without a claim when my wife decided to have another X-ray on her brain as recommended by the Kaiser doctor.

Again, there was no evidence of a tumor, yet our insurance company cancelled our policy and claimed we had failed to list a pre-existing condition on our application. Our attorney said we had a good case against the insurance company, but suggested that the insurance company had attorneys on staff and could delay the results for a long time.

Our attorney recommended that we select a health care company that would not do that to a customer.

We applied to several insurance companies, each having a question on their application; "have you ever been turned down or had a policy cancelled." We marked yes, but without cause. We located one that would accept us and our employees and we signed up.

After about four years of paying premiums without a claim, my wife went in for a CAT-SCAN of her brain. This time they found a small benign tumor and she had surgery on the following week.

The surgery went well, but the insurance company took out chapter 7 bankruptcy.

This left us with the doctor and hospital bills. It was a major setback for a small business like ours. We received a letter from her doctor stating that she was in excellent health and had recovered fully from the surgery.

Our doctor could not find a reason she should not be covered with health insurance. We applied to 37 different health insurance providers; each turned us down.

I did not understand, so I asked her doctor to send me everything that he had sent to anyone about my wife's case. He sent me a packet about a half-inch thick, with the minute-to-minute coverage of the operation. I learned much later, there are only two sources that all insurance companies use to determine if they will cover people with insurance. When these companies receive a negative report -- even unsupported by a doctors position, we can apply to 100 or more different insurance companies and get the same results

Without the ability to obtain insurance, we decided to set up a medical savings account with a stock broker and make payments each month as though we had coverage with an insurance company. Five years after my wife's operation, I found a company that would insure us again.

I went to the insurance commissioner's office in Salt Lake City, and asked them if they had any reason why I should not apply with this company. They said they had no such information to give us.

We signed up with them and paid monthly for 14 months before they took out bankruptcy.

When I returned to the commissioner's office and asked them when they were first aware of the company's problems; they said they had been on their watch list for the last three years.

I asked them why they failed to give me that information when I came to them before. They said they could only give out information that had gone through a legal process; otherwise what they might say could help cause them to fail.

Thankfully my wife and I have reached the age of the socialist program of Medicare.

My wife has had no serious medical problems since the brain surgery and her great desire is to outlive anyone who turned us down for medical insurance. Now, if you think this is an isolated case, I have heard many stories that are similar to our experience in the small business community.

Doug Olson lives in Eden.

My comment:

Mr. Olson could not have articulated the problems with the health insurance business model better. Because Obama-care relies on this faulty business model, we have health 'reform' which props up this level of dysfunction and foists it off indefinitely on the nation. When we buy insurance, we expect to be buying some level of financial security. Health care costs are the leading cause of personal and family bankruptcy and the vast majority of people declaring bankruptcy because of illness or injury have health insurance at the time the health problem occurs. Therefore, it's time we admit that the private, for-profit health insurance business model belongs on the scrap heap of history. Let's collectively haul it out to the city dump and burn it.

Yours,

Dr. Joe Jarvis

Adding to an unsupportably expensive health system

2011-03-23T10:13:00.000-07:00

The Economist noted the birthday of the Affordable Care Act (PPACA or Obama-care) with an editorial statement (find it here). Excerpts:

The reality of politics has obstructed (the) grand dream (of the Affordable Care Act). Republican leaders in Congress are trying to repeal the law outright. Several federal judges have ruled that one of the central provisions of the new reforms, an “individual mandate” requiring everyone to purchase coverage, is unconstitutional. And a recent poll by the Kaiser Family Foundation (KFF), a non-partisan outfit, revealed that hostility to the laws among politically vital independents has shot up sharply. One year on, how fares Mr Obama’s proudest achievement?

The chief strategy used by the administration to win over sceptics and to undermine legal challenges is to present the new laws as an unstoppable juggernaut. For example, when Kathleen Sebelius, the secretary of health and human services, spoke about the reform to the Senate Finance Committee on March 16th, she pointed to evidence of an “enormous difference it has made in the lives of Americans”.

. . .but here’s the rub: many Americans do not believe Mrs Sebelius. Roughly half of those polled by KFF thought Obamacare had already been repealed or were unsure of its legal footing.

As for costs, Mr Obama’s reforms deserve praise for expanding coverage, but they do this by adding millions of people to an unsupportably expensive system. Analysts estimate that America’s health spending will continue to soar under the reforms (see chart). That is a point hotly contested by Mr Obama’s team, who usually point to theoretical future efficiency gains and innovations that will save pots of money.

So it came as a shock when Deval Patrick, the governor of Massachusetts and one of Mr Obama’s closest friends, took a different tack. Asked recently about the pioneering health reforms in his state, which served as a model for the national reforms, he first gave a backhanded compliment to Mitt Romney (the state’s former Republican governor, now distancing himself from those reforms as he repackages himself to run for president in 2012). Mr Patrick then revealed the dirty little secret of Obamacare: “What these folks did in Massachusetts is frankly the same thing that the Congress did, which is to take on access first, and come to cost-control next.” In other words, America will soon have no choice but to come to grips with costs. Whatever one thinks of Mr Obama’s reforms, there is no denying that they have brought that day of reckoning closer.

My comment:

Americans have known or suspected the dirty little secret of Obama-care ever since it passed: we can not afford the Affordable Care Act. Why? Because we can not afford to continue to shovel money at the private health insurance business model, which would long ago have been thrown on the scrap heap of history if government at all levels would only stop propping it up. We also can't afford to pay 60% more for pharmaceuticals than is the case for any other first world country. And we can't continue supporting hospitals that injure American patients so often that death due to preventable injury while hospitalized is the 5th leading cause of death in the United States. And we can not continue paying for inappropriate care--care which has no chance of improving the patient's health status. And we can't afford a health care system that does the right thing for patients in a timely fashion only about half the time.

Obama-care is not health system reform. But it has, as the Economist points out, brought us much nearer the day of reckoning on health care costs. We either get busy and do real health system reform, or watch our economy and our health system slide into second class status.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

PPACA One Year Later: Lasting Fruit?

2011-03-22T09:14:00.000-07:00

The Washington Post ran an article (find it here) on the anniversary of the Patient Protection and Affordable Care Act (PPACA or Obama-care) which questions whether the legislation will have any lasting value. Excerpts:

One year after President Barack Obama signed his historic health care overhaul, the law is taking root in the land. Whether it bears lasting fruit is still in question.

The legislation established health insurance as a right and a responsibility. Thousands of families, businesses and seniors have benefited from its early provisions.

But worries about affordability and complexity point to problems ahead. And that’s assuming it withstands a make-or-break challenge to its constitutionality that the Supreme Court is expected to decide.

Public divisions over the law are still so sharp that Americans can’t even agree what to call it. Supporters call it the Affordable Care Act, a shorter form of its unwieldy official title. It’s also known as “Obamacare,” the epithet used by Republicans seeking its demise.

While Obama returns from Latin America on the signing anniversary Wednesday, administration officials will fan out across the country. Community commemorations started Monday, underscoring that the health care battle has moved to the states. Even states suing to nullify the law’s requirement that most Americans carry health insurance are proceeding with at least some of the building blocks.

Affordability is the main worry for critics. A recent poll by the nonpartisan Kaiser Family Foundation found that one in five Americans said they had been negatively affected by the law, and about half of those cited costs. Some blamed the law for this year’s premium hikes, although many experts say the impact was marginal.

“If they have a bad experience in the marketplace, it’s very possible they’re going to attribute that to the law,” said Mollyann Brodie, Kaiser polling director. “It certainly presents a challenge for the proponents.”

A lead author of the bill, Democratic Sen. Max Baucus of Montana, remains a strong supporter but laments not devoting more attention up front to cost control. “It gave detractors an opening,” he said.

My comment:

Read the article to find examples of individual Americans who claim to have been either helped

or hurt by the effects of this legislation. But Sen. Baucus hits the nail on the head. PPACA

will fail because it does not deal up front with cost control. While he now laments that fact, he

is personally responsible for having brought the corporate health care interests into the drafting

of the bill. Those interests wrote their own corporate welfare into the bill, which is why there is

no cost control measures 'up front'. Sen. Baucus is the man who held a $10,000 a plate fund

raiser for his re-election to which he invited health care executives (find the press notice as we

blogged about it here). The Democrats in Congress and the White House tried to lace this loser

legislation with a sugar coating. There have been people who have received benefits from the

early provisions of the bill. But there is no doubt that this bill is a budget buster, as has been

documented on this blog many times (for example here, here, here, and here).

The observance of the first anniversary of the passage of PPACA is a sad day. We are no closer

to health system reform, but the day our health care costs will doom our economy is much

closer.

To each reader I issue a challenge: Do something or give up your right to complain when you

are victimized by our profit-oriented health system, or when our economy fails under the weight

of our wasteful health care business practices.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

Start From Scratch On Health Care-BU Prof

2011-03-21T08:41:00.000-07:00

A link to this article an Yahoo (find it here) was sent to me by my son, who is a financial analyst in California:

Congress passed another stopgap budget measure Thursday that will keep the government up and running through April 8th, but both sides of the aisle remain far from a long-term solution.
The problem, says Laurence Kotlikoff professor at Boston University, is both parties in Washington lack the political will to deal with the the crux of the issue: entitlement reform.
"We are bankrupt today," he tells Aaron in this accompanying clip. The cure for the country's ills starts with meaningful and cost effective health-care reform. Obamacare is not that solution, Kotlikoff argues. "He set that up in a way that can be tremendously expensive," he says referring to the President's plan, "and he also did nothing to stop the explosion of costs in Medicare and Medicaid."
Kotlikoff suggests we "start from scratch" a solution very similar to what Rep. Paul Ryan (R-WI) and Alice Rivlin have suggested for Medicare -- except he would extend it to all Americans, not just seniors.
Editor's note: What follows is drawn from Jimmy Stewart is Dead (John Wiley & Sons, 2010); published here with the author's permission.
The Medical Security System (MSS), which I proposed in The Healthcare Fix (MIT Press, 2007), to fix our healthcare mess is very simple. Each American would receive a voucher each year. The amount of the voucher will equal the person’s expected annual healthcare costs that are covered under the MSS Basic Plan. Each person’s voucher amount will be determined based on objective health indicators (e.g., blood tests, X-rays, MRI scans) reported via electronic medical records, using individual risk-adjustment software. Thus an 80-year-old, advanced diabetic male living in Miami might get a $70,000 voucher, whereas a perfectly healthy 14-year-old girl living in Kansas City might get a $3,500 voucher.
Each American would use his/her voucher to buy the Basic Plan from a health insurance company. Since health insurers would be compensated via the size of the voucher for taking on customers with pre-existing conditions, they would have no incentive to cherry pick. Nor would they be allowed to do so; no insurance company would be permitted to refuse coverage of anyone.
Those who can afford it would be free to buy supplemental insurance from the same insurance company from whom they purchase their basic plan. This eliminates cherry picking (adverse selection) in the supplemental insurance market. Insurance companies would, however, be free to offer their clients financial and other incentives to improve their health. Insurers would also be able to establish co-pays and deductibles. These incentives to properly use, but not overuse the health-care system would be subject to review by the independent panel of medical practitioners set up to oversee MSS.
This panel would also determine what the Basic Plan covers. It would do so subject to a strict budgetary ceiling, namely, total MSS voucher payments would not be permitted to exceed 10 per cent of GDP. Ten per cent of US GDP appears to suffice to finance basic healthcare, including nursing home care and prescription drug coverage, for the population. It is certainly a larger share of GDP than is being spent in every other developed country on basic healthcare.
Once the vouchers are handed out, Uncle Sam is off the hook. The insurance industry and doctors, hospitals, and other private providers will be responsible for providing the Basic Plan based on the vouchers provided. Since US GDP will grow, total MSS expenditures will grow as well. Hence, the MSS panel will be able to add new medications, surgical procedures, new diagnostic technologies, etc. to the Basic Plan’s coverage. But the panel will add these new coverages to the Basic Plan at a much slower pace than would occur under the current system. This will dramatically reduce the growth rate of federal health-care spending, ensuring that the 10 percent ceiling on federal MSS expenditures relative to GDP is never violated.
This plan, to fix our entire health-care system, is not just pie-in-the-sky. It's essentially identical to the Rivlin-Ryan plan proposed this Fall by former CBO Director and former OMB Director, Alice Rivlin, and House Budget Committee Chair, Paul Ryan, to fix Medicare. But Medicare is not the only federal health-care system whose spending is out of control or will be shortly. The others are Medicaid, the new health exchange (whose costs will likely explode due to its induced unraveling of employer-based healthcare), and the implicit tax expenditures (revenue losses) associated with the exclusion from taxation of employer-paid health insurance premiums. Hence, we need to fix the entire system and to do so from scratch.

My comment:

Prof. Kotlikoff is correct that we can not mess around with health care anymore. We need to reduce the amount we spend on health care substantially. The Affordable Care Act is baloney (as the professor says) when it comes to health system reform. I disagree with the voucher program, because it still depends on the wasteful business model of the health insurance industry. But he's right that the debate about 'socialism' in medicine is ridiculous, we already tax ourselves far more than any other country and most funds for health care come from government spending. He's also right that we need an overt mechanism in the public sector to define what we spend this massive health care budget on. Listen to the brief audiovideo tape of the professor discussing his proposal.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

Makena: Why Market Forces Fail In Medicine

2011-03-19T08:55:00.000-07:00

The Salt Lake Tribune ran an important story about the rapid rise in cost for a drug known as Makena (find the story here). First, here is the sidebar explanation about what Makena is:

What is Makena, and who uses it?

Makena is a synthetic form of the hormone progesterone that first came on the market more than 50 years ago to treat other problems.

It’s believed the treatment calms the muscles of the uterus, experts said. A 2003 study of women at risk for preterm birth found that only about 36 percent of those given the progesterone drug had preterm births, compared with 55 percent among those not on the drug.

By some estimates, about 130,000 women a year might benefit from the drug. Only a fraction of them get it, but the number has been growing steadily.

These very early births produce children who — if they survive — need months of intensive care and often suffer disabilities. The cause of sudden preterm delivery is not understood, but it occurs in black mothers at much higher rates than whites or Latinos.

Mike Stobbe, AP medical writer

To summarize, Makena is a man-made form of a female hormone which moderately decreases the number of pre-term births among women whose pregnancy is at risk (for various reasons) for having labor start too early. Makena has been around for a half century, long past the time when research and development costs could be driving the price of the drug. Mostly, the drug has been made available through local pharmacies which mix the drug on their own. The FDA has discovered that there is too much variability in the quality of the locally mixed Makena products and has decided to certify a mass production process. Here is the rest of the story in excerpts from the Tribune:

Until now, a form of progesterone given as a weekly shot has cost as little as $10 per injection. But starting this week the price shot up to $1,500 a dose, meaning the total cost during a pregnancy could be as much as $30,000.

The drug has been made cheaply for years, mixed in pharmacies that make custom-compound treatments that are not federally approved.

But recently, KV Pharmaceutical of St. Louis won exclusive government approval to sell the drug, known as Makena. The March of Dimes and many obstetricians supported that because it means quality will be more consistent and it will be easier to get.

None of them anticipated the dramatic price hike, though — especially since most of the cost for development and research was shouldered by others in the past.

Morley said Medicaid must cover Makena but will also continue to cover the less-expensive compounded version until further notice from the U.S. Food and Drug Administration, which approved Makena but was not involved in setting the price.

Last month, KV sent cease-and-desist letters to compounding pharmacies, telling them they could face FDA enforcement actions if they kept making the drug.

The FDA doesn’t recommend the use of compounded versions of drugs when an FDA-approved version is available.

Makena’s cost is justified to avoid the mental and physical disabilities that can come with very premature births, said KV Pharmaceutical chief executive Gregory J. Divis Jr. The cost of care for a preemie is estimated at $51,000 in the first year alone.

To get FDA approval, the company is spending hundreds of millions of dollars in additional research, including an international study involving 1,700 women, Divis said.

“Makena can help offset some of those costs,” Divis told The Associated Press. “These moms deserve the opportunity to have the benefits of an FDA-approved Makena.”

My comment:

This is another illustration about why market forces don't work in health care. The FDA had to step in to regulate the production of Makena because absent a public agency the public could be unknowingly buying an inferior product. Patients just do not know how to judge the efficacy of pharmaceutical products. But once the FDA approved a particular product, in this case the product made by KV Pharmaceutical, a monopoly was artificially created and the seller did what sellers in a "market" do: it acted in complete self-interest. All the justifications offered by KV Pharmaceutical are irrelevant to their real motivation which is to make as much profit as possible without regard to the health and welfare of human beings. Unlike buyers in a real market, the users of Makena are coerced by the circumstances of a pregnancy, which are completely out of their control, to buy this drug. Price does not determine the demand for a product in health care. The occurrence of disease and injury determines the demand for health care products. People don't seek an appendectomy because it is on sale this week. And they don't choose to buy Makena because it happens to be cheap. Nor do they choose to not purchase Makena because its price has just been jacked up from $10 to $1500 a dose.

Market forces function when buyers have complete knowledge about the various market offerings (caveat emptor) and are free to choose to buy or not. In health care delivery, market forces can not hold sellers accountable because patients are not shoppers (or buyers): they are coerced by illness and injury to seek care and can not possible know what care they need nor whether the care that is offered is best quality.

It matters to all of society if as many babies as possible are delivered at term. We need the next generation to be as healthy as possible. Let's not be so stupid as to look the other way and pretend that the so-called health care 'market' will achieve optimal health for our newborns.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

Perverse Incentives: More Diagnoses = Higher Payment

2011-03-18T08:55:00.000-07:00

An interesting article just appeared in the Journal of the American Medical Association (JAMA) which can be found here. The research was done at Dartmouth, where a group has been elucidating the major US health care quality problem of inappropriate care for many years. Excerpts:

JAMA

March 16, 2011

Geographic Variation in Diagnosis Frequency and Risk of Death Among Medicare Beneficiaries

By H. Gilbert Welch, MD, MPH, Sandra M. Sharp, SM, Dan J. Gottlieb, MS, Jonathan S. Skinner, PhD, John E. Wennberg, MD, MPH

Context: Because diagnosis is typically thought of as purely a patient attribute, it is considered a critical factor in risk-adjustment policies designed to reward efficient and high-quality care.

Objective: To determine the association between frequency of diagnoses for chronic conditions in geographic areas and case-fatality rate among Medicare beneficiaries.

Design, Setting, and Participants: Cross-sectional analysis of the mean number of 9 serious chronic conditions (cancer, chronic obstructive pulmonary disease, coronary artery disease, congestive heart failure, peripheral artery disease, severe liver disease, diabetes with end-organ disease, chronic renal failure, and dementia) diagnosed in 306 hospital referral regions (HRRs) in the United States; HRRs were divided into quintiles of diagnosis frequency. Participants were 5 153 877 fee-for-service Medicare beneficiaries in 2007.

Main Outcome Measures: Age/sex/race–adjusted case-fatality rates.

Results: Diagnosis frequency ranged across HRRs from 0.58 chronic conditions in Grand Junction, Colorado, to 1.23 in Miami, Florida (mean, 0.90 [95% confidence interval {CI}, 0.89-0.91]; median, 0.87 [interquartile range, 0.80-0.96]). The number of conditions diagnosed was related to risk of death: among patients diagnosed with 0, 1, 2, and 3 conditions the case-fatality rate was 16, 45, 93, and 154 per 1000, respectively. As regional diagnosis frequency increased, however, the case fatality associated with a chronic condition became progressively less. Among patients diagnosed with 1 condition, the case-fatality rate decreased in a stepwise fashion across quintiles of diagnosis frequency, from 51 per 1000 in the lowest quintile to 38 per 1000 in the highest quintile (relative rate, 0.74 [95% CI, 0.72-0.76]). For patients diagnosed with 3 conditions, the corresponding case-fatality rates were 168 and 137 per 1000 (relative rate, 0.81 [95% CI, 0.79-0.84]).

Conclusion: Among fee-for-service Medicare beneficiaries, there is an inverse relationship between the regional frequency of diagnoses and the case-fatality rate for chronic conditions.

Dr. Don McCanne's comment:

This study from the Dartmouth Institute confirms the intuitive observation that the number of diagnoses of serious chronic conditions in Medicare beneficiaries has a positive correlation with case-fatality rates. The greater number of serious problems a person has, the greater the risk of death. But observation of the regional distribution of these serious diagnoses provides troubling results.

In this study, hospital referral regions varied in the average number of diagnoses per patient of these serious chronic conditions. There is an inverse relationship between the regional frequency of diagnoses and the case-fatality rate. As an example, if you had multiple serious diagnoses, your chances of dying are less if your diagnoses were made in a region where more people have a greater number of diagnoses than if the same diagnoses were made in a region where not as many people received multiple diagnoses.

The authors discuss possible explanations, but I'll go out on a limb, and a very solid one at that, and give my opinion. Assigning a greater number of serious diagnoses to a patient permits greater remuneration from upcoding, and it provides rewards for favorable quality and outcomes results since the patient is not as ill as the list of diagnoses would otherwise imply.

It is very difficult to differentiate a list of well documented diagnoses from an embellished list that may include some poorly substantiated notations in the record allegedly supporting the diagnoses. It would be very difficult to ferret out the claims that do not warrant additional consideration based on complexity or quality outcomes.

Reform was supposed to bring us higher quality at a lower cost, but it appears that continued gaming of the system will bring us higher costs with spurious results on quality and outcome assessments.

My comment:

Health system reform, when it really happens, will bring us higher quality health care at a lower cost because high quality health care simply costs less. One reason for this surprising (for most Americans) inverse relationship is that a big problem with quality in US health care is that we deliver (and pay for) inappropriate care, including inappropriate diagnoses. Dr. Brent James put this problem simply--he said that in America we pay doctors to harm patients. It is clearly harmful to operate on a patient when the available clinical science does not support surgical intervention. And it is harmful to over-diagnose a patient, leading to overtreatment.

Real health system reform will require an overt method to address the problem of inappropriate care. We must stop paying for interventions that do not have any real chance of improving outcome (for instance, back fusion surgery in the clinical setting of uncomplicated degenerative spine disease). And we must use our common health care dollars (taxes and premiums) to pay for the least expensive of two or more interventions with similar results. Of course, nothing should stop anyone from buying whatever they want to purchase with their own money. But when it comes to our commonly held health care delivery, we need to establish payments which support care which improves the outcomes of prevention, cure, stabilization, or palliation.

The fact that there are perverse incentives to overtreat is evidence that health care delivery is a market failure. In what real market is poor quality rewarded? The all-knowing buyer (caveat emptor) does not exist in health care, because the consumers of health care are not shoppers, they are patients. Patients do not have the clinical judgment necessary to choose wisely. Nor do they often have the time and opportunity to seek a 'good deal'. Even if they did, they would not know what diagnostic or therapeutic intervention would best suit their clinical problem. It takes years of training to develop clinical judgment. Web-searching can not replace experience in patient care.

The Utah Healthcare Initiative is proposing a mechanism for reducing inappropriate care in Utah. Take the time to read the brief outline of our proposal (find it here), then tell us what you think.

Yours,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

Sen. Orrin Hatch Reviews the Affordable Care Act

2011-03-17T08:56:00.000-07:00

Here is the entire text of a statement Sen. Orrin Hatch read just before testimony from HHS Sec. Sebelius at the US Senate Finance Committee:

Thank you Mr. Chairman for helping to schedule this important hearing. It comes on the anniversary of the Patient Protection and Affordable Care Act becoming law. Whether this is a welcome anniversary depends on one’s perspective.

When I listen to the Utahns, and Americans from coast to coast, who were left footing the bill for this misguided health law, I get a very different assessment.
For struggling families, any marginal benefits from this law are far outweighed by the heavy-handed intervention in their healthcare by Washington bureaucrats.
For seniors, the cuts to a Medicare program that is already nearing bankruptcy, in order to fund another new entitlement and expand an existing one, are beyond irresponsible.

And for taxpayers, the decision to pay for this law with over $813 billion in tax increases was the last thing our struggling economy needed.
The more that Americans get to know this law, the less they like it.

In the end, it might have been over 2,000 pages long, but Americans understood it both simply and soundly.
In short, at the President’s urging, Democrats passed a $2.6 trillion health care law, with massive new subsidies for coverage, and without addressing the long-term costs of care.

All of this was paid for with billions in new taxes and by taking from an already struggling entitlement.
This simple understanding is closer to the mark than that of the supposedly sophisticated who sold this massive spending bill as somehow saving money.

Citizens understood that the historic expansion of federal power and the creation of new bureaucracy would never increase efficiencies and make care more accessible.

So one year later, what do we know about this law?

What has it given us?

As it turns out, the American people were closer to the mark than all of the liberal editorialists that pushed for this law.
$2,100 in higher premiums.
800,000 fewer jobs.
$118 billion in new unfunded state mandates.
$311 billion in higher health care costs.
$529 billion in Medicare cuts to fund new entitlement spending.
$813 billion in new taxes.
And $2.6 trillion in new federal spending.

It would be hard to devise a more economically destructive piece of legislation. Just last week, the Congressional Budget Office concluded that “growth in health care costs will almost certainly push up federal spending significantly relative to GDP under current law.” So much for bending the cost curve.
And let’s keep in mind that all of this damage comes before the Medicaid expansions and the new premium subsidies for the health law’s insurance exchanges.

It is reasonable to assume, given the history of federal spending programs, that the original cost estimates for these coverage expansions are substantially understated. Yet Americans’ opposition to this law is not only owing to it being bad policy. In the eyes of citizens, its original sin was a lack of transparency. Americans understood that the true cost of health law was being hidden from them.

According to the President’s budget, a permanent fix to Medicare’s physician payment formula will cost taxpayers nearly $370 billion over the next ten years.
But instead of fixing this problem, the health law cut $529 billion from Medicare and directed it toward new entitlement spending. This was simply irresponsible. But it was also misleading, as it double counted the savings from Medicare.

The Chief Medicare Actuary — the Administration’s chief actuary — was crystal clear on this point. He said, “[i]n practice, the improved Part A financing cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions under PPACA) and to extend the trust fund . . .”
This double counting and lack of transparency on costs that stained the health law in its origins continued as the Administration sought to implement the new law.

According to the Congressional Research Service, roughly 83 percent of the final rules implementing the health law circumvented public comment, which is generally required by federal law.

I guess this Administration’s pledge on transparency simply became another slogan that was discarded when it became an inconvenience in implementing their agenda. Just yesterday, my colleague, Senator Enzi, and I reminded the Administration of its troubling failures when it comes to briefing Congress on the health law’s implementation. This includes a failure to respond to nearly 67 percent of Republican requests.

One year later, with its flaws only more evident, I suspect it is starting to dawn on more members of this body as well.
I thank the Chairman again, as well as our witnesses, for appearing here today. I look forward to today’s testimony and what should be a lively question and answer session.

Thank you.

Comment:

Give it to us straight, Senator, do you like the Patient Protection and Affordable Care Act or not?

What is missing from this statement is a proposal for a way forward. At the very least, Sen. Hatch should be proposing how it could be made possible for states to take a lead role in reforming health care delivery. He and his Republican congressional colleagues should be responding to the offer from Pres. Obama to move forward the date when states can apply for waivers from the requirements of PPACA.

Best wishes,

Dr. Joe Jarvis

www.utahhealthcareinitiative.com

CBO Smoke and Mirrors

2011-03-16T09:42:00.000-07:00

The Congressional Budget Office is asked to project federal budget outlays in the future, given certain assumptions which Congress wishes were (or will be) true. For example, the current CBO report about reducing the deficit (featured in yesterday's blog posting, find it here) includes the following paragraphs:

CBO’s baseline also incorporates the assumption that Medicare spending will be constrained beginning next year by the sustainable growth rate mechanism, which

controls the fees paid for physicians’ services. Under current law, those fees will be reduced by about 28 percent in January 2012 and by additional amounts in subsequent

years, CBO projects. If, however, future legislation overrides the scheduled reductions—as has happened every year since 2003—spending for Medicare may be greater than the amounts projected in the baseline. For example, if payment rates for physicians stayed at their 2011 dollar levels through 2021, Medicare outlays over the next decade (net of premiums paid by enrollees) would exceed the current baseline projections by about $250 billion (or 3 percent). If payment rates were raised over time, the impact on Medicare outlays would be even greater.

Some of the options for Medicare presented in this chapter might be implemented under current law and could be the means by which the growth of Medicare spending is limited to the amounts projected in the baseline. The reason is that the Patient Protection and Affordable Care Act (Public Law 111-148) created the Independent Payment Advisory Board (IPAB) and made it responsible for restraining the growth rate of Medicare spending per enrollee. If the growth of such spending is projected to exceed specified targets, the IPAB will be required to submit proposals to reduce it, and the Secretary of Health and Human Services must implement those proposals unless the Congress acts to change them or otherwise alter the IPAB process. The board is not allowed to make recommendations that would ration care, raise premiums, increase cost sharing, restrict benefits, or modify eligibility, leaving reductions in payments to health care providers as its major potential source of savings. CBO’s

baseline projections incorporate an estimate that the IPAB process will reduce outlays for Medicare by a total of $14 billion between 2017 and 2021.

My comment:

CBO estimates are flawed. Congress has never actually allowed the reduction in physician fees which leadership in Congress required CBO to assume would happen. That creates an underestimation in federal health care costs amounting to $250 billion over this coming decade. And yet, leadership in Congress expected the American people to take them seriously when they stated that the Affordable Care Act would not add to the federal deficit. Further, Congress created a Board which is to make recommendations for Medicare spending reductions but only through reducing payments to providers, even though Congress has never actually reduced payments to providers.

The Affordable Care Act is simply not affordable.

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

CBO: Growth in Health Care Spending per Person

2011-03-15T09:59:00.000-07:00

From the Congressional Budget Office publication entitled "Reducing the Deficit:

Spending and Revenue Options" published March 2011 (find it here).

In the case of health care programs, although demographics are a significant element of CBO’s projections, expected growth in health spending per person is also important. Enrollment in Medicare is projected to increase by about one-third between 2010 and 2021, and spending per Medicare beneficiary is expected to rise by about one-half over that period. Some of the latter rise stems from overall inflation, and some results from growth in spending per beneficiary over and above inflation. Altogether, CBO projects that spending for the Medicare program will roughly double between 2011 and 2021 in dollar terms and will increase from 3.6 percent of GDP to 4.3 percent of GDP. Growth in health care spending per person will also boost spending on Medicaid and other mandatory federal health programs in the coming decade.

Over the longer run, rising health care spending per person will continue to drive up federal health spending under current law. For the past several decades, the rate of growth of health care spending per person (adjusted for the effect of changes in the age composition of the population) has exceeded the growth of per capita GDP—a phenomenon referred to as “excess cost growth.” Between 1985 and 2008, for example, excess cost growth averaged 1.5 percentage points a year for Medicare, 1.2 percentage points for Medicaid, and 1.9 percentage points for other national health spending. CBO expects rates of excess cost growth to slow somewhat over time. Even so, it projects that spending for Medicare and Medicaid combined will climb from 5.5 percent of GDP today to 11 percent of GDP by 2035, with slightly more than half of that increase resulting from excess cost growth and slightly less than half from the aging of the population.

My comment:

We can not continue to allow "excess cost growth" for health care services, whether they are paid for by government or the private sector. By the end of the current decade, actual dollar spending for Medicare will double (according to the CBO), absent any effort to change the trajectory our nation currently has in health care policy. This is simply not sustainable.

Who lobbies for all that spending? The American taxpayer is shelling out more for health care (on a per capita basis) than are the taxpayers in any other country. CBO data has already been used on this blog to document that our nation's federal debt problem is due to health care costs (find it here).

Either we must change the way we do health care business or we will face massive taxation or massive deficits (or both).

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

Health Care Reform as Political Baggage

2011-03-14T09:00:00.000-07:00

Steve Kornacki at Salon.com (find it here) is reporting that Mitt Romney can become the 2012 Republican presidential nominee despite having signed the legislation in Massachusetts which became the precursor to Obama-Care. Excerpts:

It is tempting -- very, very tempting -- to write off Willard "Mitt" Romney as a serious contender for next year's Republican presidential nomination.
Romney, in case you haven't heard, embraced a healthcare reform law in Massachusetts five years ago that ended up being the model for the national program that President Obama pushed through Congress without a single Republican vote last year.
Thus, even though the rest of the GOP field isn't (at this point) particularly strong or deep, Romney -- despite being crowned the front-runner as soon as the 2008 campaign ended -- is lucky if he breaks 20 percent in polls of national Republicans.
When you look back at other competitive nominating contests in the modern era, the reality is that the GOP tends to nominate candidates who began the campaign with potentially severe problems with the base.
If Romney is the default alternative, then I doubt his healthcare baggage -- especially if he's saying all the right things about learning from the Massachusetts example, letting states decide for themselves, and wanting to repeal "ObamaCare" -- will prevent him from securing the nomination.

Both the Salt Lake Tribune (here) and Deseret News (here) ran the AP story by Steve LeBlanc about how Democrats are trying to weaken Romney's possible campaign by damning him with faint praise about health care reform in Massachusetts. Excerpts (from the Tribune):

President Barack Obama and other top Democrats have been quick to lavish praise on former Massachusetts Republican Gov. Mitt Romney for signing the sweeping health care law in 2006 that laid the groundwork for Obama’s national health care overhaul.
Repeal of the national law, derided as “Obamacare,” was a rallying cry for Republicans in last year’s midterm election and hasn’t been lost on Democratic loyalists who hope to taint Romney by tying him too closely to what is a highly unpopular law among GOP voters.
Some analysts are wondering if that strategy could end up backfiring if Romney wins the Republican nomination for president and has to reach out to independents and moderate Democrats — especially if those voters start warming up to the national law and its Massachusetts precedent.
Romney has walked a fine line on the 2006 health law, which he once considered a crowning achievement of his single term as Massachusetts governor.
As he weighs another run for the White House, Romney has cautiously defended his decision to sign the health care initiative even as he criticizes the national health law, essentially arguing that the decision to expand insurance coverage should be left up to the states, not the federal government.
A top Romney aide has recently gone a step further, saying Romney is “proud” of what the state law has accomplished. Massachusetts has the highest number of insured residents of any state in the country, with more than 98 percent coverage.
The Democratic plaudits haven’t escaped Romney’s notice.
During a speech at a recent Republican dinner in New Hampshire, Romney joked about Obama and Democrats spending “more time talking about me and Massachusetts health care than ‘Entertainment Tonight’ spends talking about Charlie Sheen.”

Comment:

Health care remains principally a political hot potato, not a problem that needs serious and sustained attention. American patients are at risk for preventable injury whenever admitted to a US hospital, and yet no elected leader is talking about how to reduce the more than 100,000 deaths which occur each year due to unsafe health care practices. We waste $1 trillion each year on health system inefficiency and poor quality, and yet no leading American politician has the courage to identify how and where we are wasting those funds. Every American family has its own health insurance nightmare story to tell, and yet very few American politicians are prepared to jettison the useless and wasteful private, for-profit health insurance business model.

As long as health care is principally a means to scaring voters into voting for their party, both Republicans and Democrats are going to fail to actually solve the health care crisis. Neither party has had the courage to look squarely at our national health care costs and propose sustainable reforms.

Until patients are more important than political points, Americans will continue to suffer in a health care system built primarily for profit not for patients.

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

Where Does All the Money Go?

2011-03-12T12:05:00.000-08:00

This morning I moderated a panel discussion at the Huntsman Cancer Institute (HCI). The title for the panel discussion was: The Art of Quality Care as Health System Reform. I subtitled the program: The Challenge of Cancer Care in a Hostile Health System. We had a variety of panel members: The COO of HCI, a patient who has survived leukemia, an advocate for patients without insurance, and the patient resource coordinator at HCI. I began the panel discussion by referring to the 60 Minutes segment broadcast 2 years ago about the closure of outpatient chemotherapy in Las Vegas (highlighted on this blog, find it here). Then I pointed out that the US spends about $9000/person/year on health care, which is about twice as much as other first world nations. And, 2/3 of that money is derived from taxes. We Americans tax ourselves at a higher rate than any other nation for health care. And then we add another 1/3 out of private sources. Then I noted that the US health care system is least able in the developed world to prevent death amenable to health care. We spend more and get less. Finally, I noted that 56% of cancer patients felt themselves unprepared to handle the financial burden of their disease. As a consequence, 3% of cancer patients had to suffer through foreclosure on their house while struggling with their disease. Only 7% of American cancer patients felt sure that they were financially prepared for the devastating consequences of their disease.

Someone in the audience asked a simple question: If we spend more on health care and get less, where does all the money go?

The COO of HCI answered that it goes to activities unrelated to the actual care of patients, like advertising, CEO salaries, profits, and settling lawsuits.

I explained the concepts of inefficiency and quality waste. We lose $400 billion each year because our health care financing business model (private, for-profit health insurance) is massively inefficient). We lose another $700 billion because we have a poor quality health care system (inappropriate care, patient injury, and failing to consistently provide clinically proven care in a timely fashion).

Unfortunately, our Congress did nothing to improve American health system function for either of these massive waste problems.

I urge all Utahns to recognize that health system waste attacks all patients (those with cancer included) at their most vulnerable moments. People being driven into bankruptcy by health care costs generally had insurance at the time they became sick or injured. Health system waste, because it draws funds away from care providers, weakens the bottom line of institutions like the Huntsman Cancer Institute. We must change the way health care business is done in Utah or our care, whatever we can pay for, will erode away.

Join us.

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

Ever More Inferior Health Plans

2011-03-11T08:41:00.000-08:00

This week, in Boston, the Group Insurance Commission (GIC), which provides health insurance benefits to about 185,000 public employees and their dependents, announced that all of its beneficiaries must re-designate their plan during the month of April. Those failing to do so will be re-assigned to the cheapest, most limited plan on the GIC menu. (Find the Boston Globe article here). Excerpts:

At a time when most health insurance companies are raising premiums by 10 percent or more, the Group Insurance Commission, which insures about 185,000 state employees and their families, last week showed them all up by limiting 2011 increases to just an average 2.4 percent.

But to achieve that goal, the GIC is counting on thousands of subscribers to give up their present plans for much cheaper ones that limit their choices of doctors and medical facilities.

The GIC has offered limited-network plans for years, but fewer than 10,000 of GIC’s 350,000 members have joined so far. Last year, the GIC added new limited-network plans offered by Harvard Pilgrim Community Health and Tufts Health Plan, but those plans, too, attracted limited interest.

To help jump-start migration to the less costly plans, the GIC, beginning April 9, will require every subscriber to pick from among the GIC’s 19 plans, which include preferred-provider organizations (PPO) that allow wide choice and health maintenance organizations that allow moderate choice but charge higher premiums than the more restrictive limited-network plans.

Any subscriber who fails to designate a plan in the one-month period ending May 9 will be dropped from their present plan and automatically enrolled in the cheapest — and most limited — plan on the GIC menu.

Dr. Don McCanne's comment:

We keep looking at Massachusetts since it serves as a prototype for national reform under the Affordable Care Act. Under this latest development in Massachusetts, state employees are being shoved into limited-network plans - significantly limiting their choices of health care professionals and institutions.

One of the primary defects with the insurance exchange model of reform is that emphasizing affordability of health plans rather than health care itself results in a transformation to ever more inferior insurance products.

The goal of reform should not be to take away choices in actual health care, nor to shift more of the costs to those who need health care. Yet those are precisely the trends that we are seeing and will continue to see under a model of competition between private health plans.

My comment:

The problem with our current health policy trend is that a lower premium for health insurance is considered the equivalent of making health care more affordable. Not so. American health care is expensive because it is wasteful. It is wasteful because it is financed inefficiently and because it harms patients (inappropriate care, patient injury, failing to do what clinical science would have it do). Reducing premium by shifting more costs to the patient does not reduce waste. Therefore, the care is not made more affordable.

American health care is in a death spiral caused by faux affordability.

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

Republicans on healthcare: Put Up or Shut Up

2011-03-10T09:00:00.000-08:00

Ezra Klein in the Washington Post offers the opinion that Republicans can not afford to continue to offer no health system reform solution (find his op-ed piece here). Excerpts:

It's put-up-or-shut-up time for Republicans. They managed to make it through the health-care debate without offering serious solutions of their own, and - perhaps more impressive - through the election by promising to tell us their solutions after they'd won. But the jig is up. They need a health-care plan - and quickly.

The GOP knew this day would come. In May 2009, Republican message-maestro Frank Luntz released a polling memo warning that "if the dynamic becomes 'President Obama is on the side of reform and Republicans are against it,' then the battle is lost." Repeal, Luntz argued, wouldn't be good enough. It would have to be "repeal and replace." And so it was.
That, however, is easier said than done.
Enter Wyden-Brown, an Affordable Care Act amendment that the White House has made a big show of endorsing: It says that any state that can produce a credible plan to cover as many people, with as comprehensive insurance, at as low a cost as the Affordable Care Act can wriggle out of all the law's mandates but still receive all the law's money. Vermont's governor, for one, is stoked: He wants to try a single-payer proposal.

Most conservatives have been actively hostile. They make some fair technical points. The law envisions the secretary of Health and Human Services handing out the waivers, while the Heritage Foundation's Stuart Butler would prefer to see a bipartisan commission in charge. But most take aim at the proposal's basic goals: that care has to be as universal, as good and as cheap.

But as the New Republic's Jonathan Cohn points out, under the Affordable Care Act, a family of four could shell out $12,500 out of pocket for medical costs. How much stingier should the insurance be?

Conservatives once offered solutions competitive with what the Democrats were proposing, but over the past 30 years, they've abandoned each and every one of them to stymie Democratic presidents. Confronted with a challenge to provide broader access to better health care at a lower cost, they're reduced to complaining that those aren't the right goals for health-care reform. But we've yet to see how "less comprehensive insurance for fewer people" would play in Peoria. My hunch is it wouldn't play very well.

My comment:

Conservatives have made a forceful case that the states and not the federal government should be leading the way on health system reform. I agree. And now, ostensibly, there could be agreement from the Obama administration to allow states to come up with better solutions to our nation's health system problems. So why is Vermont, a liberal state, the only state to appear to be getting ready to knock on the door to ask for permission to improve health system performance? Where are the conservatives? Still stuck on repealing Obama-Care while offering nothing about replacing it. Mr. Klein insists that Republicans are not really interested in anything other than gaining political traction using the unpopularity of the individual mandate featured in Obama-Care. If that is true, then the GOP is throwing the American patient under the bus in order to succeed at the ballot box.

I accept Mr. Klein's challenge. I am a Republican. I have twice been a Republican nominee for the Utah legislature. I am a member of the Utah Republican Party Central Committee, now serving my second term. I have worked on and advocated for sustainable, comprehensive health system reform for 20 years. I am a physician.

The proposal I have crafted with the help of others is 1) state-based; 2) fiscally conservative; and 3) reduces the size of state government. This proposal features the needs of patients by improving patient safety, increasing the quality of care inherent in health care delivery, and guaranteeing the financial security of families seeking care for their ill or injured relatives. It also attacks the tradition business model of America's health care corporations, including insurance, pharmaceuticals, and health care institutions. A summary of this proposal can be found here.

It is way past time for Republicans to offer constructive policy proposals for health system reform. We can not get by with political posturing anymore. If we do not change the way we do health care business, our tax base will be destroyed, our families will be financially devastated, and our economy will again be threatened.

Stop criticizing and start offering credible solutions.

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

More Fatal Flaws in Obama-Care

2011-03-09T08:52:00.000-08:00

The Wall Street Journal published a story about one set of unintended consequences caused by Obama-Care (find it here):

Patients are demanding doctors' orders for over-the-counter products because of a provision in the health-care overhaul that slipped past nearly everyone's radar. It says people who want a tax break to buy such items with what's known as flexible-spending accounts need to get a prescription first.
The result is that Americans are visiting their doctors before making a trip to the drugstore, hoping their physician will help them out by writing the prescription. The new requirements create not only an added burden for doctors, but also new complications for retailers and pharmacies.
"It drives up the cost of health care as opposed to reducing it," says Dr. Chung, who rejected much of a 10-item request from a mother of four that included pain relievers and children's cold medicine.
Though the new rules on over-the-counter drugs amount to a small part of the massive overhaul of the health-care system, the unintended side effects show how difficult it can be to predict how such game-changing legislation will play out in the real world.
To the handful of congressional aides who came up with the idea to limit tax breaks on over-the-counter drugs, it was supposed to be a minor tweak to raise revenue and to discourage wasteful spending on health products.
Some 33 million Americans are in families that have flexible-spending accounts, which are funded through payroll deductions and allow consumers to pay for health expenses with tax-free dollars.
The change also applies to health savings accounts designed for consumers in insurance plans with high deductibles. If fewer people use these accounts to buy drugs, the government gets more tax revenue. Retail sales of over-the-counter medicines amounted to about $17 billion in 2010, not counting sales at Wal-Mart Stores Inc., according to Nielsen Co.
What the law's writers didn't anticipate was the determination of some people to squeeze every last drop of tax savings from their accounts.
Tax breaks for over-the-counter drugs date to 2003, as popular drugs like the allergy medicine Claritin began switching to over-the-counter status. The Internal Revenue Service loosened the rules on flexible-spending accounts so consumers could use them to buy thousands of nonprescription medications. The tax-free dollars can also go for insurance co-payments, eyeglasses and other out-of-pocket health costs.
Critics say the accounts encourage overconsumption of medical services. Since consumers typically must forfeit unused funds by year's end, they often ended up scrambling in December to drain their funds by loading up on aspirin, antacid and the like.
"The entire flexible-spending account thing is a waste of our taxpayer dollars," says Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology and a former paid consultant on the health law to the Department of Health and Human Services. "If you're going to scale it back, this is a natural place to start." (Another part of the law limits the amount consumers can save in flexible-spending accounts to $2,500 a year, starting in 2013.)
Congress's number-crunchers estimated the change would generate $5 billion over a decade. Hardly anyone noticed it, even as it stayed in the bill through passage in March 2010.
Only after the president's signature was dry did the American Medical Association realize what had happened and send a letter to the government warning of unintended consequences, including more office visits and extra paperwork.
Sure enough, when the change took effect Jan. 1, patients began bringing lists of over-the-counter drugs to office visits and also requesting over-the-counter prescriptions by phone, doctors says.
While it may not be worth the trouble for some patients, the savings can add up for those with chronic conditions, especially if the doctor writes multiple refills. A survey late last year by Nielsen found that nearly half of consumers with flexible-spending accounts would request the prescriptions as a result of the changes.

Those unintended consequences are small compared to the apparently intentional double counting of Medicare dollars during the run up to passage of Obama-Care, as published by the New York Post (find it here):

Critics of the new health-care law are ridiculing Health and Human Services Secretary Kathleen Sebelius for essentially admitting a key GOP contention: that the administration has been "double counting" Medicare savings by saying the same $500 billion would be used both for extending the life of the current program and for funding its new mandates.
"Not that it's any comfort to the American people, but the administration seems to finally be acknowledging a basic fact: Over a half-trillion dollars can't be simultaneously used to both fund Medicare -- a program on the verge of insolvency -- and another unsustainable entitlement that is ObamaCare," fumed Sen. Orrin Hatch (R-Utah) yesterday.Rep. Joe Barton (R-Texas) said, "The more we dig into the new health-care law, the more we see how devious the Obama administration was in deceiving Congress and the public about the expense of it."
Rep. John Shimkus (R-Ill.) angrily confronted Sebelius on the accounting gimmick during congressional testimony Thursday.
"There is an issue here on the budget because your own actuary has said you can't double count," he said. "You can't count . . . "
"What's the $500 billion in cuts for? . . . Are you using it to save Medicare or are you using it for health reform?"
She responded, "Both."
An HHS spokesman told the Web site Daily Caller that the way the health-law costs are estimated is "entirely consistent" with the way the cost of legislation has been estimated for 30 years.
When the bill was moving through Congress in 2008 and 2009, then-Sen. Judd Gregg, a New Hampshire Republican, compared it to "Bernie Madoff accounting."
Meanwhile, the number of organizations given HHS waivers exempting them from some of the more expensive provisions of the law reached 1,000, according to the latest department statistics.
Republicans have slammed the waivers as an admission of problems with the law, and claim an inordinate number have gone to the Democrats' union allies, including the United Federation of Teachers and SEIU 1199, the health-care workers union.

And finally, there is now evidence that in Massachusetts health reforms, after which Obama-Care was patterned, have not changed the rate of personal bankruptcy due to health care costs (find the article from the American Journal of Medicine here):

The American Journal of Medicine
March 2011
Medical Bankruptcy in Massachusetts: Has Health Reform Made a Difference?
By David U. Himmelstein, MD, Deborah Thorne, PhD, Steffie Woolhandler, MD, MPH

Despite a marked declined in the uninsurance rate in Massachusetts since the implementation of health reform, the proportion of bankruptcies that occurred in the wake of medical problems has not decreased significantly, and the absolute number of medical bankruptcies has actually increased by one third.

What accounts for the seemingly paradoxical trends of increasing coverage yet stable, or even increasing (on a per capita basis), medical bankruptcy rates? Health costs in the state have increased sharply since reform was enacted. Even before the changes in health care laws, most medical bankruptcies in Massachusetts, as in other states, affected middle-class families with health insurance. High premium costs and gaps in coverage — copayments, deductibles, and uncovered services — often left insured families liable for substantial out-of-pocket costs. None of that changed.

Conclusions

The recently enacted national health reform law closely mirrors Massachusetts’ reform. That reform expanded the number of people with insurance but did little to upgrade existing coverage or reduce costs, leaving many of the insured with inadequate financial protection. Our data do not suggest that health care reform cannot sharply reduce the number of medical bankruptcies. Indeed, medical bankruptcy rates appear lower in Canada, where national health insurance provides universal, first dollar coverage. Instead, these data suggest that reducing medical bankruptcy rates in the United States will require substantially improved — not just expanded — insurance, as well as better disability insurance programs to provide income support to ill individuals and family caregivers.

Dr. Don McCanne's comment:

"Unaffordable underinsurance" is rapidly becoming the new standard in the United States. Even with subsidies, insurance premiums are ever less affordable, and for those who need health care, out-of-pocket spending creates significant financial hardships. Since reform under the Affordable Care Act closely mirrors that of Massachusetts, their current experience with medical bankruptcy portends the future of medical bankruptcy throughout the United States.

The Massachusetts experience shows that merely providing insurance coverage to the majority of the population is not enough. The quality of the insurance coverage is crucial. In 2009, 89% of Massachusetts debtors and all their dependents had health insurance at the time of filing, yet the insurance was not effective in reducing the rate of medical bankruptcy below levels that already existed before the full implementation of the Massachusetts health reform program.

Other nations with first dollar coverage do not see medical bankruptcies, even though they cover everyone at a much lower cost.

My comment:

In so many ways, large and small, Obama-Care is a failure. From the mother who simply wants to get an over-the-counter medication for her baby's cold, to the pediatrician who must now write a prescription for that medication, to the pharmacist who must now carefully label that medication, to the family which, despite following all the rules, and paying all of its taxes and premiums, still can not afford to take care of its own ill and injured members without filing bankruptcy, Obama-Care is a failure. That President Obama's promise that the Affordable Care Act would not add one dime to the federal deficit was all smoke and mirrors talk is now clearly documented, and only in part by the recent admission from Sec. Sebelius that the Obama administration counted $500 billion twice.

Warren Buffet once said that it was not good to be the village blacksmith when the automobile came into common usage. No one attempted to prop up the business model of the village blacksmith with public spending and regulation. Obama-Care's fatal flaw is that it attempts to prop up the business model of private, for-profit health insurance even though that business model is clearly no longer viable.

Utahns can propose a better method of health care financing and should aggressively seek the earliest opportunity to opt out of Obama-Care.

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

Can Utah Really Offer an Alternative to Obama-Care?

2011-03-08T10:10:00.001-08:00

Can Utah Really Offer an Alternative to Obama-Care?

Kirsten Stewart, continuing her excellence in reporting about health system reform, has two articles in the Salt Lake Tribune (here and here) that deal with the situation in Utah. The first article questions whether the Utah Health Exchange, the Beehive State's signature health reform achievement thus far, really qualifies as a possible alternative to Obama-Care. Excerpts:

Advocates of a state-by-state approach, including Republican Utah Gov. Gary Herbert, say imposing a one-size-fits-all fix ignores local variations in health care markets, demographics and politics.
He and others are agitating to turn the joint federal-state Medicaid program into a system of block grants, money that states could spend as they see fit. “Real health care reform will rise from the states, the laboratories of democracy,” Herbert said at a congressional hearing last week.
But supporters of a national approach contend cash-strapped states are in no position to fast-track innovations. Without some federal coordination, controlling costs will prove difficult.
And homegrown alternatives are few in number.
To get out from under national reform, states must insure virtually all their citizens. The coverage must be affordable and as comprehensive as the federally-mandated basic plan. They can’t spend more than the feds and they have to get it done by 2017 — or by 2014 if legislation to move up the date clears Congress.
“The reality is Utah’s health reform has, of yet, done nothing to reduce the number of uninsured in the state. Until Utah is willing to invest in that side of the equation, the waiver will remain out of reach,” said Lincoln Nehring, senior health policy analyst at Voices for Utah Children.
So far, the only state to significantly reduce its uninsured rate is Massachusetts, which like Utah, rests its reforms on a health exchange.
They are the first states to experiment with an idea first floated by the conservative Heritage Foundation: state-controlled insurance marketplaces that work by pooling the purchasing power of individuals and small businesses, allowing them to enjoy the same economies of scale and lower-priced premiums as large companies. Massachusetts’ success is due, in large part, to the state’s embracing the individual mandate, the requirement that people purchase coverage or face a penalty, and its subsidization of coverage — the very aspects of federal health reform that Utah is fighting.
The Bay State also is able to keep premiums in check through stiffer insurance regulations than Utah has been willing to undertake.
Loathe to impose mandates on private insurers, Gov. Herbert rejects the idea of dictating how to design the required bare minimum policy. He also wants freedom to change the way health providers are paid under Medicaid and balks at expanding the program.
But, plagued by high premiums, Utah’s exchange has been slow to catch on. As of March 1, 68 of the state’s 67,000 small businesses were enrolled spanning 811 employees and their dependents for a total of 2,181 customers. By comparison, the five-year-old Connector boasts 220,000 customers.
Looked at on a per customer basis the Connector actually runs leaner, costing $145 per person to Utah’s $275.
Of course, that’s excluding hundreds of millions of dollars that Massachusetts spends subsidizing coverage for 160,000 of the 220,000 Bay State residents enrolled its Connector.

In the other article, Stewart notes that the Legislature, evidently in a move to make the Utah Health Exchange artificially appear to be a great success, has begun to look at a couple of bills. Here is the entire article:

A bill that some say is a ruse to make Utah’s Health Insurance Exchange look successful is wending its way through the Legislature.
A centerpiece of Utah’s health care overhaul, the exchange is a government-operated marketplace where small-business owners and employees can comparison shop for health coverage and leverage their combined buying power to obtain more affordable premiums.
Federal health reform will bring exchanges to all states in 2014, though they’ll look much different from Utah’s, which has been plagued by high premiums and low enrollment.
HB404 would direct lawmakers to scour the Public Employee Health Plan for places to cut costs and consider dumping its 25,000 beneficiaries, mostly state workers, into the exchange.
Insurance companies, brokers and the union representing public employees oppose the bill, sponsored by Rep. Don Ipson, R-St. George.
“There are forces at play to say that the way to make the exchange look successful in Utah is to drive public employees into it. Instantly you’ll have 25,000 to 30,000 belly buttons in it,” said Kelly Atkinson, a lobbyist for the Utah Health Insurance Association. “If the exchange is to be successful, it should stand on its own.”
The bill passed the House late Monday night 45-28.

My comment:

First, let me ask members of the Utah Legislature why they would want to artificially inflate the public perception of the Utah Health Exchange? By any measure, it is simply a failure. Why pretend otherwise? Given the comments of the lobbyist from the Utah Health Insurance Association, it appears that insurers are wanting the Utah Health Exchange to fail. If the legislature can not even please Utah's powerful corporate insurers with its minimalist approach to a web-based method to sell their product, why go on with the effort? Why prop up a failed business model?

Second, if the Public Employees Health Plan is a success (and it is), why not simply try to emulate what is good about PEHP for every Utahn? Aren't all Utah taxpayers actually paying for the health benefits that public employees get through PEHP? Since that is the case, why can't the legislature make it possible for all Utahns to enjoy the advantages of the PEHP business model--non-profit, public trust fund, low overhead?

Third, in the sidebar for the first Tribune article, the efforts of various states to offer an alternative to Obama-Care were featured. Put simply, the only real achievements so far have been by Massachusetts (which is the prototype for Obama-Care), Vermont (which is seriously considering a Canadian-style or state government based single payer, California (which twice passed the same single payer format and which Schwarzenegger twice vetoed), and Utah's Health Exchange (which would not qualify as an improvement over Obama-Care). Why not consider an alternative for Utah which would not grow state government (like the Vermont proposal) but would improve on Obama-Care by capitalizing on the strengths of Utah's own PEHP?

The Utah Healthcare Initiative is proposing health system reform which would be superior to Obama-Care in every way but is not a state government based single payer. Better quality and more efficient care would reduce the cost of care and make care affordable for all Utahns. Of course the Utah Health Insurance Association would oppose the Utah Healthcare Initiative proposal, but they are already opposing the Utah Health Exchange. And insurers oppose any reasonable health system reform because anything with promise to reduce costs will inevitably limit the ability of health insurers to make as much money as possible.

Let's stop pretending that we can tweak the system we have. Remember what Clayton Christensen recommends: we must creatively disrupt the old way of doing health care business.

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

LaVarr Webb: Utah Healthcare Initiative Proposes Cuts

2011-03-07T08:25:00.000-08:00

In a brief editorial comment/question found on the website Utah Policy (find it here), LaVarr Webb challenges Utah's Congressional delegation to have the courage to actually propose cuts to entitlement programs, like Medicaid and Medicare. Here is Mr. Webb's entire comment:

President Obama and members of Congress on both sides of the aisle say they support budget cuts. That’s good. The federal budget certainly needs cutting, and the Republicans are suggesting large cuts, while the Democrats want small cuts.

The problem is, the cuts are focused only on discretionary spending, a very small part of the budget. When entitlement programs, interest payments on debt, and military spending are excluded, only about one-seventh of the budget remains. So even big cuts don’t make much of a dent on deficit spending.

And, unfortunately, no one, not Republicans, not Democrats, are making bold proposals to rein in entitlements, the biggest part of the budget. So while members of Utah’s congressional delegation all, even Democrat Jim Matheson, talk like budget hawks, they are really budget sparrows, not proposing specific action to make a real impact.

Sure, they all say that entitlement programs need to be addressed. But they aren’t making meaningful proposals. They’re all waiting for someone else to act.

I would love to see Sen. Mike Lee tell us how he would specifically cut entitlements. Ditto for Sen. Orrin Hatch, and Reps. Rob Bishop, Jim Matheson and Jason Chaffetz.

If they’re really serious about getting the budget under control, how do they propose to reform Social Security, Medicare and Medicaid? I’d like to see specific proposals, with numbers.

Ironically, former Sen. Bob Bennett, who was defeated because many delegates thought he was too liberal, did propose a realistic plan to reduce Social Security obligations. He put his plan out there for everyone to see. How about Utah’s current congressional delegation? Can they show as much courage and resolve to really cut the budget as Bennett did?

Comment:

The Utah Healthcare Initiative is no budget sparrow. We have proposed a comprehensive set of proposals for reducing Utah's health care spending by as much as 1/3. We estimate that Utah's annual health care spending is currently about $15 billion. (Admittedly, this is a very rough estimate.) We believe a higher quality, more efficient health care system could actually finance necessary health care services for every state resident for much less, perhaps as little as $10 billion per year.

How? Eliminate inappropriate care (including defensive medicine). Improve patient safety. Do the right thing for patients at every opportunity. And limit overhead to less than 4% of the revenue stream.

What needs to happen in order to make this kind of health system reform possible in Utah? Utah's Congressional delegation needs to lead the charge in Congress to amend Obama-care so that any state can undertake comprehensive health system reform through being exempted from the onerous requirements of the Affordable Care Act. Then, Utah's electorate needs to have the chance to vote in comprehensive reforms which will be opposed by the corporate health care lobby, which will always control legislative outcomes such that their bottom line is protected. In health care, corporate welfare is what drains the tax base.

Join us. Make a donation to the Utah Healthcare Initiative. Use the PayPal option on our website!

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

Romney Embraces Massachusetts Health Reform

2011-03-05T10:24:00.000-08:00

Mitt Romney, who is apparently preparing for another run for US President, has re-affirmed his support for the health reforms he signed as Governor of Massachusetts, according to Politico (find it here). Excerpts:

Mitt Romney rejected Mike Huckabee's call for him to admit that the "RomneyCare" health care program failed, instead saying he's "proud" of "getting everyone covered" when he was governor of Massachusetts.
"Mitt Romney is proud of what he accomplished for Massachusetts in getting everyone covered,” Romney’s spokesman, Eric Fehrnstrom, told the Boston Globe, in the first direct response Team Mitt made to Huckabee's criticism of the health plan in his new book.
Fehrnstrom also put daylight between the Romney health care bill and President Obama's reform package, which is unpopular among voters and is the subject of several lawsuits by different states.
“What's important now is to return to the states the power to determine their own healthcare solutions by repealing Obamacare," Fehrnstrom added. "A one-size-fits-all plan for the entire nation just doesn't work.”
The comments came after POLITICO reported that a chapter in Huckabee's new book, "A Simple Government," devotes two full pages to trashing RomneyCare and tethering it tightly to ObamaCare.
"Ever since the debate over (the national) program began, it’s been compared to RomneyCare, the failed statewide health-care program implemented by none other than my fellow GOP member Mitt Romney when he was governor of Massachusetts,” Huckabee says in the book.
“Any critical assessment of this program will show that it failed … and yet the Obama administration decided to emulate it in its pursuit of a national health-care program.”

My comment:

Apparently there continues to be no love lost between the former governors of Arkansas and Massachusetts, who appear to be on a collision course in the Republican presidential primaries next year. Obviously, one of the points of conflict will be health system reform, with former Gov. Huckabee attempting to pin Obama-Care on Romney. There are, of course, striking similarities between the two: both are coverage initiatives and achieve higher coverage through increased public funding of care and individual mandates to purchase health insurance. Romney, while believing that what he signed into law in the Bay State was a net good thing for the state, decries its application across the board to all states via Congressional action. He believes, apparently, that each state should be allowed its own health policy choice.

This begs the question whether what Romney signed into law in Massachusetts has actually succeeded. More people are now 'covered' in Massachusetts than before the legislation was passed. Does that mean that we should agree with Mr. Romney that the law is a 'net good'?

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

The Price of Failing to Reform US Health System

2011-03-04T08:49:00.000-08:00

The Salt Lake Tribune published an article earlier this week with a headline indicating that Obama-Care will be a significant financial boon to underinsured patients (find the article here). More about the so-called 'boon' later, but a sidebar to the online article contained interesting facts:

Between 2000 and 2008, Utah’s per-capita median income rose 30 percent, while health insurance premium costs grew by 93 percent. As premiums rise, many employers pass on a greater share of the costs to their workers.
As a result, the number of Americans with job-based coverage slipped to 56 percent in 2009, down from 64 percent in 2000.
Small businesses are hurt the most and pay up to 18 percent more than large companies for comparable coverage.
Individually purchased plans on the open market are also four times as likely as employer-based plans to have deductibles of more than $1,000.

First comment:

The rapid rate of growth of health care costs, here represented by the growth in health insurance premiums, is simply unsustainable. Real health system reform will re-align the growth in health care costs with growth in the overall economy.

Now to the so-called 'boon' of Obama-Care using the following excerpts from the Trib article:

A lot is being said about the costs of federal health care reform. But here’s another number to consider: $197.4 million.
That’s how much an estimated 147,300 sick and injured Utahns would benefit if the law’s caps on out-of-pocket spending were in place today, according to a report released Tuesday by Families USA.
President Barack Obama’s signature health overhaul places a ceiling on how much people with health coverage pay out-of-pocket for medical care, not including their insurance premiums. The spending caps are scheduled to go into effect in 2014, but The Lewin Group, a health-analysis firm hired by Families USA, an advocacy group, crunched numbers as if the caps were in place today.
The findings highlight a little-known but key way that the new law will help working Americans, who have seen a steady erosion in the value of their health insurance plans, said Ron Pollack, executive director of the pro-health reform group.
“Two decades of rising health care costs have squeezed families into coverage with higher premiums, higher co-payments and higher deductibles, and sometimes, these costs have forced families out of health coverage altogether,” Pollack said.
An unexpected illness or injury can lead to credit card debt, bankruptcy and people forgoing care, he said.
But the Affordable Care Act guarantees that consumers won’t have to pay more than an annual set amount for health care services that are covered in the new law’s essential-benefits package.
The spending caps are set on a sliding scale based on family income.

The Families USA report can be found here. Elsewhere in the report, the following excerpt explains the 'cap' on costs included in Obama-Care:

Under the Affordable Care Act, all health insurance plans sold through the exchanges
and all new individual and small group plans will be required to cover a package of
essential benefits that is outlined in the law. New health insurance plans will also be
required to have caps on how much an individual or family must pay out-of-pocket for
covered services. These caps will limit the amount that an individual or family must pay in
deductibles, copayments, and co-insurance for essential benefits.

Second Comment:

Notice that the caps will limit deductibles, co-payments, and co-insurance, but nothing is said about limiting premiums, or more importantly, the actual cost of our health care system. Of course, all of this largesse for health care will come from the US taxpayer. Note, for instance, that Obama-Care requires states to expand eligibility for Medicaid, as detailed in a report published in the National Journal (find it here). Excerpts:

The expansion of Medicaid underPresident Obama's health care law will cost state taxpayers at least $118.04 billion through 2023, about twice the Congressional Budget Office estimate of $60 billion through 2021, Republican members of Congress said today.

"Governors of both political parties were clear when Congress was debating the $2.6 trillion health law that they could not afford a massive expansion in Medicaid. Washington didn't listen and plowed forward instead by putting 16 million Americans onto the Medicaid rolls to keep the federal price tag down," said Hatch. "With this report, we see the true cost to states, who are already facing a collective $175 billion budget shortfall, of this unsustainable expansion.
"Any sustainable attempt by governors to balance their budgets is undermined by the $118 billion cost of the massive growth of this federal program. It's time for Congress to peel this program back by putting states, not the federal government, back in charge."
"Rather than ensuring the Medicaid program remains fiscally sustainable, the Patient Protection and Affordable Care Act (PPACA) enacted the largest expansion of the entitlement program since its inception in 1965. In fact, half of the individuals gaining health care coverage under the new health law will obtain it through the government’s Medicaid program," the report reads.

Third Comment:

It is only fair to note that the National Journal article is about a Republican report (sponsored jointly by Orrin Hatch (R UT) and Fred Upton (R MI) which is hotly contested by both the Obama White House and democrats in Congress. But equally fair is the observation that the debate is not about how much the expansion of Medicaid will cost (both sides agree, apparently, that it will cost a lot) but about how much of that cost increase will be born by the states. I think it should be obvious that taxpayers are not particularly concerned about whether they are paying more taxes to state governments or the federal government, they want to reduce their overall tax burden and they want tax money used efficiently and not squandered on corporate welfare (which is where most of the waste in our health system ends up.)

To illustrate how much we are already spending in federal taxes for health care, before these massive increases in Medicaid and before the massive increases in federal revenues which will be needed to pay for the individual mandate for health insurance even begins, I refer to an opinion piece recently published in the Salt Lake Tribune entitled "Those Numbing Numbers Mean Something" (find it here). Excerpts:

One of the reasons federal spending has spiraled out of control in recent decades is that neither the public, nor the Congress, has any idea what the huge budget numbers really mean.
Per capita income in the United States now stands at approximately $33, 070. It’s higher in most urban areas. In the Salt Lake City metro area, for example, the most recent figure from the Census Bureau, for 2009, was $36,986.
A couple earning twice or even three times that amount, approximately $74,000 per year, or even $111,000 a year, knows what they can afford to buy. They also know what they can’t afford to buy. And most people budget accordingly.
But this same couple has no idea what a trillion dollars will buy, let alone $3.5 trillion, the amount the federal government will spend in the 2011 fiscal year. There is no way for anybody — from the typical wage-earner in Salt Lake City to the chairmen of the House and Senate budget committees — to really comprehend such numbers.
So how much do those multi-billion-dollar government programs cost us personally?
I set out to answer this question recently with a team of academic colleagues affiliated with the Independent Institute in Oakland, Calif. Our purpose was not just to calculate a number, but to make the process personal and accessible, so any taxpayer can calculate his or her approximate costs for virtually any major government program.
For example, consider a hypothetical 31-year-old Salt Lake City suburbanite, a college graduate who earns $36,986 per year, the average per capita for the area. We chose that age because in 2009, the most recent year for which government data are available, that was the median age for the metro area.
According to our calculations, that individual, based on current tax rates and a projected lifespan of 80 years, will pay more than $445,000 in future federal taxes to finance government spending.
About $65,208 in taxes will go to pay interest on the federal debt. If this individual didn’t have to pay that $65,208 in taxes to help finance the government’s debt, the money could be invested in a private account, and over time would grow to an estimated $314,507. Think of what cutting the deficit now could mean to our children.
Government administrative costs and personnel benefits will cost this same individual some $23,748. Trimming these costs could earn the average person up to $150,000. He or she will pay an estimated $54,664 in taxes to help finance our national defense. Medicaid will cost $55,540; welfare $33,503; Medicare $92,199; Social Security $89,135.
But those huge numbers mean something. As we’re now able to demonstrate, they mean families must struggle not only to pay their own bills, but to pay government’s as well.

Final Comment:

So, given the present day rate of health care spending, Medicare and Medicaid account for about 1/3 of the median income household's future federal tax burden. If you add the state tax burden for health care, and the federal tax burden for other health care programs (VA, Indian Health Service, public employee health benefits, etc. etc.) you begin to see that health care costs are the principle driver of our tax burden. Now add to all that the rapid rise in health care costs as reflected in the initial quote found above. And then add the additional costs to the taxpayer anticipated by the 'Affordable' Care Act. Most of the money in the health care system (now approaching 2/3) comes from taxpayers. It stands to reason that getting control of health care costs must be considered a principle method for controlling the future tax burden of US citizens. Virtually all of the projected federal deficit is due to health care costs.

The price of failing to reform the US health system is financial ruin. We can not tax ourselves enough to pay for continuing to do business as usual in health care. We must change the way we do that health care business, not just shift more of the cost to the taxpayer. Take a look at the Utah Healthcare Initiative proposal for health system reform. Either offer something better or make a donation to our cause. Or wait for the inevitable financial collapse which will be caused by health care costs.

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

NY Times: Let States Innovate Health System Reform

2011-03-03T08:15:00.001-08:00

The idea of states being allowed to improve on Obama-Care has now received the stamp of approval from the NY Times editorial page (find it here as published in the SL Tribune). Excerpts:

President Barack Obama had a splendid idea this week. He challenged governors who oppose his health care reforms, most of whom are Republicans, to come up with a better alternative. He has agreed to move up the date at which states can offer their own solutions and thus opt out of requirements that they oppose, like the mandate that everyone buy health insurance and that most employers provide it.

Let as many states as possible test innovative approaches to determine which works best.

The president told the nation’s governors Monday that he supported a bipartisan bill — sponsored by Sens. Ron Wyden, D-Ore., Scott Brown, R-Mass., and Mary Landrieu, D-La. — that would allow states to fashion solutions right from the start of full-scale reform in 2014, rather than waiting until 2017, as the law requires.

The catch is that a state’s plan must cover as many people as the federal law does, provide insurance that is as comprehensive and affordable, and not increase the deficit.

It would be wasteful to require states to set up exchanges and other elements of the reform only to abandon them for an alternative system three years later.

The pending bill would wisely allow states to submit proposals in the near future and, if approved, put them into effect in 2014.

Alternative approaches might include replacing the mandate to buy insurance with a system to automatically enroll people in health plans, reformulating tax credits for small businesses and low-income individuals to encourage near-universal coverage, adopting such liberal approaches as a single-payer plan or a public option, and even moving all or part of the enrollees in Medicaid into new health insurance exchanges.

These would all have to be done without driving up the federal deficit or reducing benefits, affordability and coverage.

The president’s new olive branch is not apt to change the legal arguments over whether the mandate in the reform law is constitutional. But it can’t hurt to bring forcefully to everyone’s attention that there are alternatives to the mandate if states want to pursue them. Republicans ought to rise to the challenge.

My comment:

Who will join the Utah Healthcare Initiative in rising to this challenge here in the Beehive State?

Yours,

Dr. Joe Jarvis

www.utahpatientspac.com

Gov. Herbert: Health Reform Through the States!

2011-03-02T08:39:00.000-08:00

Gov. Gary Herbert appeared before the US House of Representatives Energy and Commerce Committee on March 1, 2011 and made a statement about health reform (find a copy of his prepared remarks here). Here are some excerpts:

Justice Louis Brandeis famously described states as laboratories which can engage in "…novel social and economic experiments without risk to the rest of the country."

The federal government has taken the opposite approach. The federal government decreed the one-size-fits-all law of the land, and has left to the states the details of how to shoehorn the Affordable Care Act's voluminous dictates and mandates into their agencies and budgets.
The Governors who are responsible for so much of the implementation of the Affordable Care Act were never invited to the table when it was being proposed by the Obama Administration or debated in Congress. I find that unconscionable.
With the creation of the Utah Health Exchange, Utah employees also benefit from expanded access, choice, and control over their health care options. Rather than the traditional one-size-fits-all approach inherent in the defined benefit model, employees can now use the defined contribution from their employers to shop for health insurance tailored to their individual needs and circumstances. The Utah Health Exchange currently gives Utah small business employees more than 100 plan choices, all of which retain the pre-tax and guaranteed-issue advantages of traditional small group insurance.
After the planned pilot phase, the Utah Health Exchange is now fully operational. In just the first month, we have already helped more than 1,000 employees get health insurance they have chosen. Each month, enrollment continues to climb. Our figures show that 20% of businesses participating in our defined contribution market through the Utah Health Exchange are offering health benefits for the first time.
We have used market principles to create a Utah solution to Utah's problems.
The federal government simply should not be in the business of telling Utah, Massachusetts, Mississippi, or any other state how to run their current or future exchanges, or even force them to have an exchange.
The Affordable Care Act not only mandates exchanges for every state, but it gives the states little leeway in constructing exchanges that work for diverse needs and populations. Worse, the Affordable Care Act feigns a posture of giving flexibility to the states, while it's requirement are, in reality, quite rigid.
Just as Henry Ford offered his customers a choice of any color car they wanted as long as that color was black, the Affordable Care Act allows states flexibility in constructing their exchanges as long as they do it the way Washington tells them. Minimum Essential Benefit mandates, obligatory quality improvement activities for carriers, compulsory federal subsidy determination mechanisms; these are just some of the examples of the lack of flexibility of the new national health care program.
The next major problem in need of market forces is the state's Medicaid program. Medicaid is poised to wreak havoc on the state's budget for years to come, threatening our ability to fund critical services, such as transportation and education.
Even before the Affordable Care Act, Medicaid was already a large and growing part of the Utah state budget. Medicaid's share of the overall general fund has been growing and is projected to grow even larger, creating real problems for the state. In the 1990s, it was as low as 9%. In Fiscal Year 2010 it was 18%. By FY 2020, it is estimated to exceed 30%, without federally mandated expansion.
In this recession, Medicaid enrollment has skyrocketed. In December 2007, enrollment stood at 158,267 individuals. In December 2010, enrollment stood at 230,812 individuals, a 46% increase in 3 years.
The Affordable Care Act accelerates growth in Medicaid and compounds the budget pressure. The Act prohibits the normal state tools to control costs. It requires Maintenance of Effort, meaning the state must participate at federally-dictated levels. The Act limits cost-sharing. The Act confiscates state pharmacy savings.
Perhaps worst of all, the Affordable Care Act dramatically expands Medicaid eligibility in 2014. Enrollment is projected to grow approximately 50% under the mandated expansion. The Act only pays for part of new costs, meaning states must cover the rest. In Utah, these new costs are estimated to be as high as $1.2 billion over 10 years.

In an addendum to his prepared remarks, the following additional information was made available:

The basics of the (Medicaid reform) proposal are:
• Replace existing managed care contracts with Accountable Care Organization (ACO) contracts - Providers would be paid on a capitated basis in a way that brings the doctor and the patient into the mix (as opposed to the old HMO model where we pitted doctors against insurers.)
• Require contracted ACOs to meet performance standards, including using Medical Homes.
• Increase Patient Responsibility - Create a sliding scale copayment schedule for patients based on their income.
• Budget management strategy - Peg the growth in Medicaid payments to the growth in state revenues. Use a Medicaid Rainy Day fund in good years to save up for the bad years.
• Expanding the Premium Subsidy Option - Allow Medicaid clients the option of taking a subsidy to purchase insurance through work or the Utah Health Exchange instead of being on Medicaid.
My comment:

There have already been lengthy blog entries here about the inadequacies of the Utah Health Exchange. According to Gov. Herbert, the exchange is now fully operational. Therefore, in the coming months, we can all see whether the exchange lives up to its hype or not. Further comment can be reserved until actual performance can be evaluated.

On the other hand, Gov. Herbert's proposals for Medicaid may be truly game changing. Perverse incentives (the mark of the absence of market forces) pervade our health care system. (As health care quality guru Dr. Brent James has said, in the US we pay doctors to harm patients.) Medicaid is a large payer. If Medicaid can change its payment strategy, perhaps it can alter incentives in health care delivery to align with what patients need.

The Utah Healthcare Initiative applauds Gov. Herbert's intentions to assert Utah's authority to develop and implement health system reform without interference from Washington DC.

Yours,

Dr. Joe Jarvis
www.utahpatientspac.com

How States Can Lead Health System Reform

2011-03-01T09:12:00.000-08:00

Two articles have appeared recently in the national news which point to possibilities for state innovation in health system reform.

First, from the Washington Times (find it here):

With efforts to repeal the health care law stalling on Capitol Hill, Republican lawmakers in states across the country are turning to another tool in the Constitution to try to limit the law’s reach — interstate compacts.
To backers, it’s almost like discovering a secret weapon hidden within the Constitution. Compacts, which are roughly like treaties between states, have the force of federal law, and a coalition of lawmakers and conservative activists and academics say they could just as easily be used to pry back from the federal government some areas of responsibility, including health care.
Skeptics say the chances for passage are questionable at best, and legal scholars say compacts are probably too blunt a tool to take on the complicated health care system. But to backers, the powers derived from Article 1 of the Constitution represent an out-of-the-box approach with legal and political possibilities.
“That very same article in the Constitution has been used for the federal government to grow its powers for many decades, and so now we’re taking a completely different look at that same section of Article 1 and realizing that perhaps the states can in a very polite way ask the federal government to give our authority back,” said Missouri state REp. Eric Burlison, who introduced legislation this month authorizing a compact in his state legislature. “This is not health care reform; this is governance reform.”
His legislation would return authority to regulate health care to the states that sign up, and would specifically declare that the compact would trump federal law. States that join would pledge that they intend to tackle health care and would share information through a new Interstate Advisory Health Care Commission.
More than 100 compacts have been passed, but they generally are used to solve cross-border problems such as transportation. In the Washington metropolitan region, the subway system is one example.

Still, he said, the effort alone signals a growing movement to think about how government power is divided in the U.S., and he said that is a welcome development.
All sides generally agree that the compact represents another sign of frustration among voters over the scope of federal powers as well as a belief that states are closer to their constituents and are better able to craft policies that fit.

And from the New York Times (find it here):

President Obama, who has stood by his landmark health care law through court attacks and legislative efforts to repeal it, told the nation’s governors on Monday that he was willing to amend the measure to give states the ability to opt out of its most controversial requirements right from the start, including the mandate that most people buy insurance.

In remarks to the National Governors Association, Mr. Obama said he supported legislation that would allow states to obtain waivers from the mandate as soon as it took effect in 2014, as long as they could find another way to expand coverage without driving up health care costs. Under the current law, states must wait until 2017 to obtain waivers.
The announcement is the first time Mr. Obama has called for altering a central component of his signature health care law, although he has backed removing a specific tax provision that both parties regard as onerous on business.
But the prospects for the proposal appear dim. Congress would have to approve the change through legislation, and House Republican leaders said Monday that they were committed to repealing the law, not amending it. Even if the change were approved, it could be difficult for states to meet the federal requirements for the waivers.
The White House described the proposal, based on a bipartisan bill recently introduced in the Senate, as a common-sense date change that would give states the freedom to innovate and act as laboratories. Mr. Obama called it “a reasonable proposal,” telling the governors, “It will give you flexibility more quickly while still guaranteeing the American people reform.”
The legislation would allow states to opt out earlier from a range of requirements, including the mandate, if they could demonstrate that other methods would allow them to cover as many people, with insurance that is as comprehensive and affordable, as provided by the new law. The changes must also not increase the federal deficit.
If states can meet those standards, they can ask to circumvent minimum benefit levels, structural requirements for insurance exchanges and the mandates that most individuals obtain coverage and that employers provide it. Washington would then help finance a state’s individualized health care system with federal money that would otherwise be spent there on insurance subsidies and tax credits.
Representative Peter Welch, Democrat of Vermont, has proposed similar legislation in the House, but he said in an interview Monday that his bill had no Republican co-sponsors, making its prospects for passage uncertain at best. Still, Mr. Welch called Mr. Obama’s announcement “extremely significant,” adding that the waivers were “an act of empowerment for the states.”
In Vermont, Gov. Peter Shumlin, a Democrat, is exploring the idea of using a waiver to create a so-called single-payer system, a government-run health care plan.
Such a plan, dubbed the public option in last year’s health care debate, would never have passed Congress. But Mr. Welch said he saw no reason Vermont should not get a waiver to establish one.
“My Republican friends argue that you should drive power and responsibility for implementation to the local level, and they’re right,” Mr. Welch said.

My comment:

The moderate, bi-partisan position is to let states take the lead on health system reform. Posturing by Republicans in the US House is simply partisan bickering as usual. A democrat from Massachusetts, Rep. Tierney, wrote legislation a decade ago which would have given states the freedom to innovate with health system reform. A former governor of Massachusetts, Mitt Romney, now likely running for president again, has recently said that each state should have the freedom to take on health system reform. The newly elected governor of Vermont, a democrat, wants to have as much freedom as possible for his state to do better than Obama-care. Sen. Mike Lee (R UT) made a statement during his recent campaign that he would support a states' rights in health care reform bill even if it meant that Vermont would enact a single payer bill.

Whether the freedom to innovate comes as a compact among states or as legislated change to the Affordable Care Act, let's concentrate on insisting that Congress make state-based progress on health system reform not just possible, but likely to happen.

Yours,

Dr. Joe Jarvis