I did have a chance to read his book before coming to the conference and look forward to see what he has to say about health care reform. For Shultz the story of reforming health care and social security begins with the stability and growth of the US economy. In order to respond effectively to the coming cost catastrophe the economic pie has to growth. Any reforms have to be designed to pass Shultz’s “pie test.” Simply put, proposals that weaken the the GDP fail the test. So making use of the competitive market to discipline costs, raising labor force participation, recognizing labor mobility, growing personal savings, forcing government to confront the cost of over-promised entitlements, increasing taxes only as a last resort — these are some of the dynamics that should be examined when looking at the impact of healthcare reform measures.
Thus the “Shultz-Shoven health care initiative” includes, but is not limited to, the following:
Encouraging national rather than state health insurance markets
Making health insurance benefits portable
Enhancing consumer access to healthcare price and quality information
Risk-adjusted vouchers for Medicare and Medicaid
Offer Medicare and Medicaid beneficiaries choice of private health plans
Fund government programs dedicated taxes rather than general fund to promote cost effectiveness
Replace Medicaid’s eligibility “notch” with phased reduction in the value of vouchers as income increases
Shultz’s ideas are not new but they do enjoy an economic logic that cannot be denied or ignored.
He sums up his proposals in the following way:
. . . we seek to modernize and significantly reform Medicare and Medicaid, improve employer-sponsored health plans, and ensure that those who do not have access to such plans will still be able to obtain affordable major health insurance. We advocate that all Americans have access to strengthened Health Savings Accounts and a more competitive health insurance environment.
The question will be whether in today’s healthcare debate these conservative, market-oriented ideas will seem somewhat tepid in the face of corporate conspiracies and single payer fantasies.
Just returned from a presentation by Dr. Elliott Fisher, Professor of Medicine at Dartmouth Medical School, on “Spending, Quality and the Paradox of Plenty”, where he addresses the problem of rising health care costs, poor quality and declining access to healthcare. His research and association with the Dartmouth Atlas of Health Care Project focuses on examining the differences in spending and medical practice patterns across regions in the U.S..
Not surprising, but always interesting are findings that are counterintuitive to those outside of the healthcare industry. For example, that higher spending regions in the country generally suffer from worse technical quality of care, slightly higher mortality, lower patient satisfaction with hospital care, and patient perceptions of worse access to primary care. Physicians in these regions also perceive greater difficulty in ensuring both the quality and continuity of healthcare.
Fisher argues that “higher spending across regions and physician groups is largely do to overuse of supply-sensitive services — hospital and ICU stays, MD visits, specialists consults; and — at the margin — more is worse.” He also thinks that “overuse is largely a consequence of reasonable differences in clinical judgment that emerges in response to local organizational attributes (capacity, clinical culture) and a national policy and culture that promotes growth and more care.”
Underlying causes include, according to Fisher:
A lack of accountability for key local determinants of quality, costs and health outcomes
An assumption that more is better, thus equating less care with rationing
A payment system that rewards more care, increased capacity, high margin treatments and entrepreneurial behavior
The challenge of “improving health and reducing suffering” requires organizational accountability for quality, costs and capacity, comprehensive performance measures and new approaches to payment, says Fisher.
Let’s look at what Wired editor-in-chief Chris Anderson is saying in his soon-to-be-out new book, FREE! — as discussed in this issue of Wired– and reflect for a moment on the implications for healthcare. Anderson argues that there’s a number of models or trends as to why things on the Internet are going to be, well, free.
• Freemium: A basic web service or software is supported by payers of the premium version of that service. One percent of the subscribers pay for the other 99 percent;
• Advertising: Free content, services, or software that’s accompanied by advertising geared to interested audiences;
• Cross-Subsidies: You get something with the intent that it gets you to pay for something else. Get the music free, now you want to go to the concert;
• Zero Marginal Cost: Somethings are so cheap to produce — again music is an example — that people offer it up for all kinds of reasons that have nothing to do with money;
• Labor Exchange: Using a web service, in and of itself, creates value for somebody else. The user is providing information that is worth more than the band width to get it.
• Gift Economy: It’s just altruism and it’s free — Wikipedia, Craigslist for example.
Can we see healthcare in here anywhere? Absolutely. It is everywhere flowing through all these models. There are many examples. But let’s not just list all the sites that you could point to. Let’s just say they are legion.
The real and most interesting question has to do with the impact of free healthcare on those aspects of healthcare for which we pay dearly. Healthcare on the internet is in some ways like the music industry — get the song free, then go to the concert and pay through the nose for the scarce experience of seeing the real thing (or band).
Sure, you can see the many forms of health information, advice, education and peer support, as recruitment strategies for the more expensive real deal — the physician visit, or the drug de jour, for example. In this view the internet creates even more demand for high cost care, and thus higher cost for the rest of us. Nothing in healthcare can really be free. Far from it. It is just a sophisticated bait and switch marketing strategy where the healthcare information, in itself, is a teaser of little value for some other product or service. So back to square one.
But there are some scenarios that move more in Anderson’s direction. Anything that is not tied down can be distributed through the internet under the above models. By this I mean, that anything which does not involve the laying on of hands can go on the net. With all of the interactivity possible now, especially with video capabilities, that inherent limitation — while still quite substantial — is getting smaller and smaller. And if it can go on the net, it will, and thus it will be on there for free.
In addition, an overwhelming percentage of energy consumers invest in “healthcare” is wrapped up in navigating the complexity of the system, determining their clinical options and planning for the repercussions of what ails you — all of which, the services available on the net excel at.
More important than probably anything else I’ve said so far, is the wedding of the emerging transparency in healthcare — price and quality of care ratings for example — to the internet. Value-based, healthcare 2.0 is on America’s doorstep and clamoring to be let in. It will attach itself and be amplified in a new internet-consumer-driven EMR, PHR, and “comparative-effectiveness” heaven that cannot help but have a disruptive impact on healthcare’s current anachronistic economic base.
But how, and how fast, are the only really important questions now, not if or when. What economic pressures will the net put on traditionally conservative healthcare institutions? How will they respond? Which of their highly valued, on the ground services, will be commodified and then free or nearly so?
Healthcare is a late bloomer when it comes to the information technology revolution, but it will, as they say, suffer from 100 percent of the effects of that technology. Are we prepared and being mindful of the changes all around us? That remains to be seen.
I’m attending the AHIP health policy conference in Washington, DC this week and getting an earful about the elections and healthcare reform. Some impressions:
First up on the podium was Chris Matthews, TV commentator of Hardball fame. Matthews is a good speaker and captures the audience right away. He believes anyone of the three presidential candidates could take the election. Yes, there is still a path for Hillary to get the nomination but a lot depends on what happens today at the polls in Texas, Ohio, Rhode Island and Vermont.
To Matthews, America is in a “rut”. The people want change, they want deliverance. And doing nothing is definitely “out”. Obama is different, not your typical politician and he believes that this election is really going to be “transformative”, the likes of which we have not seen for quite a while. While he did not address health care reform in a specific way, Matthews argues that real political change only comes from brilliant, dramatic, unpredictable and grand moves. So I don’t think health care incrementalism is in Matthews’ play book.
Donna Brazile, TV political commentator and Chair of the Democratic National Committee’s Voting Rights Institute, and super-delegate, also believes that voters are in a foul mood. There “will be blood in this election”, she says. The next president will inherit a divided country and healthcare will be right in the middle of it. In addition, the deterioration of the economy will make health care reform doubly difficult. Even so, Democrats will want to get something in healthcare reform on the table quickly after the election.
Michael Murphy, Republican Political Consultant, and TV Commentator, on this point, says a McCain presidency may, contrary to popular thinking, do more for healthcare reform since if it is proposed by Democrats, the Republicans will block it. Like Nixon going to China, you need a conservative to front this kind of liberal change.
Dan Crippen, former Director of the Congressional Budget Office, observes that many people think rising health care premiums are capricious acts; they go up by themselves and are unrelated to cost structure. He asks “How do we change the 30 year old question in healthcare from ‘who should pay’ to ‘what are we buying’.”
Ezekiel Emanuel, Chair of the Department of Clinical Bioethics, Warren G. Magnuson Clinical Center, National Institutes of Health, asks the question of how do we make sure that the process of healthcare reform is legitimate if we need to make sacrifices? What voices need to be heard? He also agrees with many of the other speakers that we need to better assess what we’re spending our money on in healthcare. We need a better strategy. In responding to those who say that cost should not be a consideration in delivering healthcare, he advocates, that cost is an essential ethical consideration in healthcare because cost has an impact on our ability to pay for other critical services and needs. And that fact alone makes it an ethical dimension worth weighing.
In a similar vein, Paul B. Ginsburg, President, Center for Studying Health System Change, provokes the audience on questions about the importance of equity in healthcare, and the public tolerance for administrative control of the distribution of health care services. Containing health care costs will be painful, he reminds us. There is no painless solution. Ginsburg warns that health care financing systems can fail, but that they fail slowly. This health care crisis has been with us for over a decade. However, the affordability problem is now invading the middle class, crowding out other important needs.
The final speaker of the day one was the notable Theodore R. Marmor, Professor Emeritus of Public Policy and Management, and Political Science, School of Management, Yale University. Marmor observes that the lack of consensus should not be surprising since with healthcare we have five Americas: The British model embodied in the Veterans Administration system; the German social insurance program model in Medicare; the 19th century poor laws model in Medicaid; the private health insurance system; and pure charity medicine.
His own criteria for judging health reform proposals are fairly simple: Does is include everyone as payers and recipients for care? Does it cover what ordinary people think is medical care? Does it contain fiscal restraints to prevent the raiding of either the public or personal funds? It is accountable for results? And is the protection portable?
Marmor would like to see a real national conversation about healthcare since right now he feels what Washington is saying up to this point is pure gibberish. How, he asks, can we avoid another mistake like that which was made by the Clintons without a real national dialogue and consensus? We cannot wait another decade for an answer.
US Senator Ron Wyden took the stage first thing the morning of day two of the conference. He’s a frequent speaker at this conference usually focusing on his ‘Healthy Americans Act’ as a step towards real healthcare reform. He says the first 100 days for the new president will be critical for healthcare. Democrats — if they win — will need to put something on the table quickly. Congress is getting ready to act and Wyden does not want a repeat of the now infamous Clinton failure of 1994. This time there is an opportunity to do healthcare reform right. He wants a system where everyone has a basic private portable health insurance plan.
Recent history shows states cannot fix healthcare by themselves because the big drivers are federal, such as Medicaid and Medicare. And if we don’t fix the private market, the country will go single payer. Wyden wants a new private health insurance market that breaks the dependence on employer-sponsored coverage. His plan would still offer a choice of an employer plan. But his ‘Healthy Americans Act’ now before Congress would provide for an alternative to both single payer, and an over-dependence on employer-sponsored healthcare.
But how will health insurers respond to these proposed new changes? Cajoling his audience of health plan representatives, he argues that his approach would be one way to stop playing the healthcare blame game, replete with its usual designated healthcare villain of the day being held responsible for all that is wrong in healthcare. Health plans have all too often shared this distinction.
Andy Stern, President of Service Employees International Union, started his talk with an all-too-familiar tragic story of a healthcare disaster that end bankrupting an American family. He then switched gears to share the changes his own union has had to undergo to confront the new global economy. Healthcare, he believes, has also not reacted well to this new global economy. What we have now is a healthcare sector; what we need to build is a healthcare system. “Change is inevitable but progress is optional,” he lamented.
If there is one truth about healthcare reform, Stern believes, it is that the longer you wait, the worse it gets. And the US employer-based healthcare system is not sustainable for the economy of the future. It is dead and it’s time for hard choices. We need to move on to a more competitive approach. But he doesn’t think the country is ready, willing or able to go for a single payer system. We have to build a broader coalition on healthcare and negotiate a new blend in order to move on.
Stern warned that there is a big target painted on health insurers and the bullets are getting closer. Health insurers will have to walk in a new direction. People are ready for change. But where is the solution? “Be the agents of change”, he charged, “not the assassins of change”.
Gail Wilensky, Senior Fellow, Project Hope and a former Medicare chief, observed that even when we have expanded access to healthcare — such as the recent addition of drug benefits to Medicare, we still have problems with cost and quality. Medicare’s cost is unsustainable and its population is becoming more politically forceful. The program’s provider financial incentives are perverse and its spending constraints are ineffective when it comes to value and quality. It will be an immense challenge to moderate the Medicare’s cost growth.
Bruce Vladeck, Senior Health Policy Advisor, Ernst & Young, and also a former Medicare chief noted that the healthcare reform proposals put forth by the presidential candidates rarely mention Medicare or Medicaid. Problems with Medicare are the problems with the healthcare system generally speaking. He argues that Medicare costs — even with new efficiencies — cannot be sustained without new money. Politicians need to be more open and explicit about this hard fact. And he adds, that we must stop confounding the problems having to do with improving the quality of healthcare, with the problems of moderating the cost of care. It is a fantasy, he says, that improved quality will save serious money in healthcare.
I don’t know if you’ve noticed but as we move into 2008 there’s a glut of papers, reports and predictions about what is going to happen in health care. Some have such a definitive tone, it makes you wonder if any have read Nassim Nicholas Taleb’s, The Black Swan, which engenders in the reader a humble appreciation and respect for role of high impact, improbable events in social affairs.
Anyway, I’ve taken the time to look through some of these pronouncements. Many are rehashes of the what I would call “more of the same” prognostications, others find us at various tipping points — unsustainability being a key concept here — in health care and forecast some, often vague, deep changes to come. Below are some of the bits and pieces of these various offerings of the future that caught my eye.
Expect large institutions to make significant IT investments; RHIOs will still struggle with architecture and governance models; EMRs creep closer to reality, and health plans will continue to implement consumer-directed vendor partnerships. (Forrester)
Doctors are using the Internet far more than their national averages, using email, obtaining professional information from online journals, attending courses and conferences, receiving professional updates and performing professional, administrative functions. . . In essence, in the short space of time that the Internet has been easily accessible through the Web, doctors have harnessed its power in both their personal and professional lives. All indications are that they will continue to do so. ( Masters)
Two areas that are going to get a lot of play in the next year or two. There are a number of products in the telemedicine space that use IT not as a database or workflow tool, but as a telecommunication and management system, teleradiology is one prime example. The other is interoperable home-monitoring devices. There’s good value with keeping people out of nursing homes, and it’s getting a lot of attention right now from doctors, hospitals and health plans. (Brailer)
Don’t see much of a business case for health 2.0 technologies, although personal health records as a concept has some validity, particularly as a service provided by health plans and employers. Still in a wait-and-see mode on PHRs. (Brailer)
Medicare’s Hospital Insurance (HI) Trust Fund is already expected to pay out more in hospital benefits this year than it receives in taxes and other dedicated revenues. The growing annual deficit is projected to exhaust HI reserves in 2019. (Friedman)
For the first time, a safe, effective and reversible hormonal male contraceptive appears to be within reach. Several formulations are expected to become commercially available within the near future. Men may soon have the options of a daily pill to be taken orally, a patch or gel to be applied to the skin, an injection given every three months or an implant placed under the skin every 12 months. (Schieszer)
U.S. health care costs are growing at 8 percent per year, an unsustainable rate that will be forcing every employer to make a crossroads decision in the next 12 to 36 months: either continue to provide health care benefits to employees and become very aggressive about controlling expenses or exit the insurance market completely and let employees fend for themselves. (Deloite)
Physician-hospital tensions will increase. Employer-health plan tensions will increase. The non-conventional provider movement (complementary and alternative medicine) will be pitted against the conventional. Off-shore resources will compete against high-cost domestics. The under-insureds will compete with employers for funding and services. Biologics developers will attempt to fend off traditional pharma to capture the high ground in diagnostics and therapeutics. Tension, anxiety, and turf battles for success will heat up, but so, too, will opportunities. (Deloite)
In an environment where employers and consumers are demanding more for less, medical tourism, telemedicine, and other innovative disruptions offer attractive options for people who require expensive surgery and procedures but do not want to be limited by their health care insurance policies. (Deloite)
Significant change is unlikely prior to 2010 and is apt to be gradual thereafter. Although urgency is still the operative word, the players involved have a healthy respect for the complexity of the problem and the runaway costs that will result if they get it wrong. Even if some changes emerge in the first year of the new administration, implementation would take at least a year. Bigger changes would probably follow, being phased in starting in 2011. (Booz Allen)
A surge in the number of retail clinics will force states, payers, and policy makers to think about the right model for the delivery of primary care. (PWC)
The market for individual health insurance could take off. (PWC)
We envision the proliferation of “health infomediaries” (HIs) who help consumers navigate the insurance, channel and service options in care delivery. HIs will become a fixture in the landscape for both the well and the chronically ill, and for a much broader socioeconomic segment of the population. (IBM)
The combination of the push for universal coverage, the erosion of employer-based insurance and the aging population is expected to drive this continued shift to individual and government-based coverage. (IBM)
As I recall, it was sometime in the 1970s when Dr. Walter McClure’s idea of “Buying Right” emerged from the Interstudy think tank in Minnesota. This was after I left said tank, but when I still had occasional contact with its thinkers, including McClure. I expressed my doubt at the time that it would catch on, and though it was adopted by many employers at the time, it was ahead of its time.
Back then, the idea was for employers to “buy right” in terms of the best health insurance plans and provider networks, while simultaneously empowering their employees to “buy right” in terms of the most appropriate and cost-effective care and providers for their sicknesses, along with those of their dependents. This would either drive the “wrong” treatments, plans, and providers out of business, or force them to become more “right”. Clearly, the idea has had a renewed life in the form of consumer-directed, high-deductible health plans and health spending accounts, with more of the buying right the responsibility of consumers.
But another form of buying right is also emerging, with the label of “Value-Based” purchasing of insurance plans, design of employee out-of-pocket expenses, and integration of employee benefit programs. And what makes this new approach so different from its thirty-odd-year-old predecessor is that what is being bought is no longer merely sickness care, but an entire armamentarium of benefits, pay-for-performance systems, learning systems, recruitment and retention strategies that are aimed at getting the absolute best employees and getting the most out of them.
Fortunately, the value that forms the major focus for this new approach includes the increased value that employers can gain from the strategy, and the increased value that employees can gain. Its emphasis in the case of health care is not so much on sickness care as on preventing sickness from arising, or once arisen from needing any more care than is unavoidable. In effect, what employers and consumers should both be “buying right” is health.
While it has taken thirty or more years to happen, this new buy-right approach seems to have far more support than the original version. It has employer champions, such as Pitney-Bowes and Dow Chemical, which were major focuses of discussion during the World Healthcare Congress just completed. It also has provider champions such as Mayo Clinic with its Health Solutions and Embody Health program, and the Centers for Preventive Medicine and The Prevention Plan programs offered by U.S Preventive Medicine®, which recently added USF Health in Tampa to its provider partners.
The poll taken of Congress attendees indicated that employers in the audience strongly supported the idea of employers continuing to play a strong role in the health of their employees, despite proposals for eliminating their “skin in the game”. And employers see the real potential for partnerships among providers, insurers, employees and themselves, rather than merely careful purchasing, an idea echoed by Wal-Mart CEO Lee Scott at the end of the Congress, as well as by GE Healthcare CEO Joseph Logan.
Frankly, I think the idea was equally good thirty years ago, just not in sync with the market at the time, of either consumers or employers. But it may be that its time has finally arrived, and that those who were able to hear about it during presentations at the Congress, as well as in private discussions with their peers and vendors who manned the booths, will take away both the motivation and the capability to make buy-right work at last, with the rightness of buying reflected in both health and prosperity for employers and consumers alike.
Matthew Holt interviews Jonathan Cohn, a senior editor with The New Republic whose book - "Sick: The Untold Story of America’s Health Care Crisis — and the People Who Pay the Price” - was recently published.
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