Category Archives: Uncategorized

“Skin in the game” doesn’t work

Posted on by • Posted in Uncategorized • Tagged , , , , , , , • Leave a comment

https://www.healthaffairs.org/doi/abs/10.1377/hlthaff.2018.05018?stream=top&utm_campaign=newsletter_axiosvitals&utm_medium=email&utm_source=newsletter&journalCode=hlthaff

Image result for skin in the game

Making people pay more of their health care bill out of pocket does not make them smarter shoppers, according to a new study published in Health Affairs, which corroborates earlier research.

The big picture: Part of the idea behind those ever-increasing insurance deductibles is that patients who have to put more of their own money on the line will become better consumers, comparison-shopping for the highest-quality, lowest-cost services.

  • But it doesn’t seem to work that way in the real world.

What they’re saying: In the Health Affairs survey of people with high-deductible plans …

  • Just 25% had talked to their provider about how much something would cost.
  • 14% had compared prices at multiple facilities.
  • 14% had compared quality metrics for multiple facilities.
  • 7% had tried to negotiate a price.

Between the lines: People don’t do these things because they don’t even think of it, or assume it won’t work. Or, to borrow some truly glorious academic-speak: “Perceptions of futility were common impediments to engagement.”

  • A separate study, also published in Health Affairs, did find one effect of high deductibles: They seem to make women more likely to delay treatment for breast cancer.

Yes, but: There’s some evidence that if patients try to avail themselves of comparison-shopping tools, they can achieve real savings, at least for MRIs and other imaging procedures.

 

Stand-alone ERs are crazy expensive

Posted on by • Posted in Uncategorized • Tagged , , , , , • Leave a comment

https://www.unitedhealthgroup.com/content/dam/UHG/PDF/2017/Freestanding-ER-Cost-Analysis.pdf?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Image result for freestanding emergency room

Freestanding emergency departments, which provide emergency medical care but are physically separate from hospitals, charge many times more than other providers for the same care, according to a new analysis by UnitedHealth Group.

  • (Standard disclaimers apply: Yes, the nation’s biggest insurer has some skin in the game here on ER costs. But there’s also plenty of other evidence that ER costs are indeed very high.)

How it works: Freestanding ERs often don’t provide treatment for common emergencies like trauma, strokes and heart attacks, per my colleague Caitlin Owens.

  • Only 2.3% of visits to freestanding emergency departments are for actual emergency care.
  • The number of these facilities increased from 222 in 2008 to 566 in 2016.
  • In Texas, the average cost of treating common conditions at a freestanding emergency department is 22 times greater than treatment at a doctor’s office, and 19 times more than at an urgent care center.
  • If the location of care was changed to one of these cheaper alternatives, it’d save more than $3,000 per visit.
  • Freestanding emergency departments are disproportionately located in affluent areas that have access to other providers, and in Texas, less than one in four receive ambulances.

The bottom line: It is much, much cheaper to go see your family doctor if you have a fever — the most common diagnosis at Texas freestanding emergency departments.

 

 

Healthcare Triage: Hospital Competition Can Impact Your Health

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , • Leave a comment

Healthcare Triage: Hospital Competition Can Impact Your Health

Image result for Healthcare Triage: Hospital Competition Can Impact Your Health

It turns out, hospital and health system consolidations can result in worse outcomes for patients. These mergers reduce competition, and it turns out that hospitals compete more often on quality than they do on prices. The result is that quality suffers in markets with less competition.

 

 

A review of health care costs: deck chairs and the Titanic, part 2

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , , , , • Leave a comment

https://stateofreform.com/news/federal/2019/02/breaking-down-health-cares-cost-dilemma-part-ii/

Related image

This article is Part II of a two-part series on the cost of health care and its component parts. Part I explores the recent growth of health care costs in the United States as well as the utilization inputs in the cost equation. Part II breaks down the pricing component of cost, determined by market leverage and the cost of delivering services. 

The Titanic

This brings us to the second category of costs: the Titanic. Or, to use our equation here of THC = U x P, the Titanic I’m talking about is the pricing component of cost.

In other words, health care leaders should do everything they can to make sure that utilization is the right care at the right time in the right setting. This makes a meaningful difference in the quality of our health care system.

But, if we focus on health care utilization alone, the health care system is still going to sink under the weight of costs. Our efforts will still be deck chairs on the Titanic.

To keep our ship afloat, we have to address the pricing input of our cost equation.

Like our cost equation above, pricing also has a simple equation of two inputs that determine price. According to a seminal study out of Massachusetts, which has been reaffirmed in additional studies (and by the experience of many network relations vice presidents across America’s health plans), this equation is straightforward.

Pricing is determined by a combination of market leverage (ML) and service delivery costs (SDC), where market leverage is 75 percent of the pricing structure and the cost of delivering the service is 25 percent.

This is true for either the plan or the provider, depending on where market leverage exists. This equation looks like this: P = ML(.75) + SDC(.25).

If we put this together, the math equation would look like this: THC = U x (ML(.75) + SDC(.25)).

Here’s how the study put it:

Price variations are correlated to market leverage as measured by the relative market position of the hospital or provider group compared with other hospitals or provider groups within a geographic region or within a group of academic medical centers. 

While addressing the utilization component of the cost-growth problem is essential, any successful reform initiative must take into account the significant role of unit price in driving costs. Bending the cost curve will require tackling the growth in price and the market dynamics that perpetuate price inflation and lead to irrational price disparities.

But here is what the numbers say: between 2004 and 2017, adjusting for age and sex factors, 68 percent of the growth in overall national health care expenditures came from increases in medical prices. Only 32 percent of growth came from utilization of services.

In other words, pricing is more than twice as important as utilization in the growth of health care costs – costs that are increasing more rapidly than ever.

 

 

Put graphically, while we have two inputs into total health care costs or expenditures, it’s incorrect to think of them as weighted equally, as demonstrated in image 1 above. It’s more accurate to think of these two pieces weighted as shown in image 2. And, if we are honest about the role of market leverage in health care pricing, market leverage alone is more than half of the overall problem in health care costs – more than all of the service delivery costs and utilization combined.

 

Keeping the Titanic afloat

Let’s restate the challenge we face here in our trans-Atlantic metaphor. Cost is the biggest problem in health care today. Those costs are made up by pricing and utilization, where pricing is more than twice as impactful in cost growth as utilization, and where market leverage is three times more impactful to pricing than are service delivery costs.

In order to keep our health care system afloat, we must address costs. And to address costs, we must address pricing.  And to address pricing, we must address market leverage.

If we move every deck chair around, but fail to address the cost consequences of market leverage, our ship will sink.

In our capitalist economy, we view consolidated market leverage as a market failure. It’s why we have antitrust statutes and an active regulatory regime to manage and push back against consolidation. Where the market failure is in the area of a public good, the American political system has often regulated those consolidated markets like public utilities or quasi-public entities.

Think of energy and Enron, of railroads and BNSF, of telephones and Ma Bell.

As health care nears 20 percent of the US economy, and where even urban states like California suffer from a “staggering” concentration of market leverage among health care providers, the lesson for health care policymakers and senior health care executives is this: If you want to get your hands around cost, you’re going to have to address market leverage to do that. Everything else is just deck chairs.

 

 

A review of health care costs: deck chairs and the Titanic, part 1

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , • Leave a comment

https://stateofreform.com/news/federal/2019/02/deck-chairs-and-the-titanic-part1/?utm_source=State+of+Reform&utm_campaign=ccf3275364-5+Things+CA+July+2_COPY_01&utm_medium=email&utm_term=0_37897a186e-ccf3275364-272256165

Related image

This article is Part I of a two-part series on the cost of health care and its component parts. Part I explores the recent growth of health care costs in the United States as well as the utilization inputs in the cost equation.

Part II will break down the pricing component of cost, determined by market leverage and the cost of delivering services. 

 

If you ask policymakers, industry leaders, and health care consumers, many will tell you that their number one concern with health care today is the cost.

For the most part, as a society we’ve moved past the days when access or quality were of primary concern to stakeholders. I would wager it’s not because those issues aren’t important.  Everyone knows we have wild challenges still with access and quality.

Rather, the acuity of the cost problem has risen so much, so quickly, that cost as an issue overshadows everything else.

This is a big topic, but it’s not really that hard to understand. Health care costs are actually a simple story.

There are only two categories of health care costs in America today. There are the deck chairs, and there is the Titanic.

Context matters, so let’s start there

Here’s one data point, but it’s largely the same point everywhere you look in health care.

These are average annual premiums for single and family coverage in the employer-based market. Those costs have doubled in the last 14 years, reflecting an average annual growth rate of roughly 5 percent since 2004.

 

 

Here’s another data point. According to CMS in an article in Health Affairs, “health care spending growth averaged 4.3 percent per year during 2008–17, compared to an average annual rate of 7.3 percent over the 1998–2007 period.” That might seem like costs are slowing, but it’s not the whole story.

Remember the “Great Recession?” It was the period of time when the economy almost fell apart. So, measuring health care spending growth should be done within some context of the overall economy.

For this, we can use a standard inflation calculator of the overall economy to compare its growth to the growth of health care costs. When viewed this way, health care inflation grew at a multiple of 2.7x the broader economy’s inflation rate between 1998-2007 and a multiple of 3.0x during 2008-2017.

So, not only are costs high in health care today, but they are growing faster than ever compared to overall inflation in the US economy.

 

Moving around the Titanic’s deck chairs

Let’s explore this metaphor a bit.

The Titanic is a big ship with a big deck. And so there are lots and lots of deck chairs to move around. And moving them around can cause authentic improvement to the quality of the experience.

A view out over the bow at a setting sun is a much better view than the one provided by a chair facing the steam funnel. Sometimes, chairs facing other chairs can foster comity and community through conversation. Sometimes, having alone time to ponder the stars in the night sky from the ship deck is nice.

How the chairs are deployed has a meaningful impact on the user’s experience of sailing on the Titanic.

I run with this analogy because there are a lot of things we do in health care today that meaningfully improve the experience, outcome and cost of health care.

You can probably name 10 such efforts without blinking an eye: improved care coordination, tele-health, community health workers, shared risk payment methods, integration of behavioral health, access to oral health, strong vaccination standards, online forums for shared patient experiences, good bedside manners, etc., etc.

All of these initiatives, as well as others, improve care and the user experience. They all can address cost in various ways, too. They can reduce hospital utilization, allow patients to access care remotely, reduce re-admissions or complications from drug interactions. There is a lot to like here that is meaningful and worth our time as a society to implement.

Put differently, in the cost equation where total health care cost equals utilization times prices (THC = U x P), I would categorize these initiatives as part of the utilization input of the cost equation. All of these initiatives address how we access and use health care in our system today.

But, at the end of the day, these are deck chairs.

 

 

The Public On Next Steps For The ACA And Proposals To Expand Coverage

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , • Leave a comment

https://www.kff.org/health-reform/poll-finding/kff-health-tracking-poll-january-2019/

Key Findings:

  • Half of the public disapproves of the recent decision in Texas v. United States, in which a federal judge ruled that the 2010 Affordable Care Act (ACA) is unconstitutional and should not be in effect. While the judge’s ruling is broader than eliminating the ACA’s protections for people with pre-existing conditions, this particular issue continues to resonate with the public. Continuing the ACA’s protections for people with pre-existing conditions ranks among the public’s top health care priorities for the new Congress, along with lowering prescription drug costs.
  • This month’s KFF Health Tracking Poll continues to find majority support (driven by Democrats and independents) for the federal government doing more to help provide health insurance for more Americans. One way for lawmakers to expand coverage is by broadening the role of public programs. Nearly six in ten (56 percent) favor a national Medicare-for-all plan, but overall net favorability towards such a plan ranges as high as +45 and as low as -44 after people hear common arguments about this proposal.
  • Larger majorities of the public favor more incremental changes to the health care system such as a Medicare buy-in plan for adults between the ages of 50 and 64 (77 percent), a Medicaid buy-in plan for individuals who don’t receive health coverage through their employer (75 percent), and an optional program similar to Medicare for those who want it (74 percent). Both the Medicare buy-in plan and Medicaid buy-in plan also garner majority support from Republicans (69 percent and 64 percent­).
  • Moving forward, half of Democrats would rather see the new Democratic majority in the U.S. House of Representatives focus their efforts on improving and protecting the ACA (51 percent), while about four in ten want them to focus on passing a national Medicare-for-all plan (38 percent).

 

Health care spending is more than just the parts you see

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , • Leave a comment

https://www.axios.com/understanding-health-care-spending-46e21c47-79ee-474b-80ff-778a705cdcae.html

Illustration of a red cross spinning to reveal money

People focus on the health costs that are most tangible and sometimes outrageous to them: their deductibles, and drug costs, and surprise medical bills, and the annual increase in the share of the premium they pay. But there’s more that gets less attention because it’s not as visible to them.

Why it matters: To really understand how Medicare for All or any other big change in health care financing would affect them, people need to understand how they would impact their overall family health budgets. Few people think about the other health costs they pay: their taxes to support health care, or what their employers are paying towards premiums (which is depressing their wages).

Between the lines: Consider this hypothetical example of a total family health “budget”:

  • The Browns, a family of four with at least one member in poor health and a $50,000 income, have standard employer coverage much like 156 million other Americans. They spend $9,250 per year (19% of their income) on health.
  • This includes $3,950 (8% of their income) in out-of-pocket health spending, $3,900 (8% of their income) in health insurance premiums, and, although they are almost certainly not aware of it, approximately $1,400 (3% of their income) in state and federal taxes that fund health programs.
  • The Browns are not taxed on the contributions their employer makes toward health insurance premiums, which economists generally say offset wages. Their employer is contributing an additional $13,050 to their health insurance premiums, as well as $750 in Medicare payroll taxes.
  • When combined, the Brown’s spending on health care and the money spent by their employer on their behalf totals a considerable $23,050. And remember, they make $50,000.

A few ideas that could help people learn more about their health total care spending and how reform proposals might affect their health spending:

  • The IRS and states could include a simple pie chart on everyone’s tax forms, showing taxpayers where their tax dollars go today.
  • Along with estimating the impact of health reform legislation on the federal budget, or the number of uninsured, the CBO could estimate its impact on typical family budgets, taking into account all of the forms of health spending families have today. Organizations like ours could do this as well.

What to watch: This could be particularly important when analyzing Medicare for All proposals, since they would so significantly alter the financing of health care by shifting it from premiums and out-of-pocket costs to taxes.

  • A Medicare for All plan would likely reduce what the nation spends on health care by lowering payment rates to providers and creating administrative efficiencies. The average family would likely pay less, but how much is hard to say without more details.
  • However, by changing the financing so significantly, there would likely be both winners and losers. Low-income people and sick people might pay less, and higher-income people and those who are healthy could pay more.

The bottom line: We can only get a clear picture of how family finances would be affected by Medicare for All, or any other significant overhaul of the health care system, by looking at the totality of what they pay now.

 

 

A Billion Dollars Won’t Make You Happy, but This Will

Posted on by • Posted in Uncategorized • Tagged , , , , , , • Leave a comment

https://www.inc.com/jessica-stillman/bill-gates-a-billion-dollars-wont-make-you-happy-but-this-will.html?cid=nl029week09day26_3&utm_source=newsletter&utm_medium=email&utm_campaign=Inc%20Must%20Reads&position=1&partner=newsletter&campaign_date=26022019

Gates just opened up about his happiness and what he believes holds many people back from peace of mind.

Yesterday, on his seventh Reddit AMA (that’s “Ask Me Anything,” for the uninitiated), Bill Gates took on a simple but profound question: “Are you happy?” You might think the answer is obvious. The man is a billionaire, after all. Why wouldn’t a phenomenally rich guy like Gates be happy?

And indeed, the Microsoft founder answered with a resounding, “Yes!”

But even as Gates celebrated his own contentment, he also made a point of explaining that it isn’t his billions that make him happy. Instead, it’s something much simpler that, unfortunately, is increasingly out of reach for many Americans.

Gates and science agree: Not worrying about money makes you happier

When another Reddit user asked Gates, “Do you think being a billionaire has made you a happier person than if you were just a middle class person?” he offered a forthright “Yes.”

But it isn’t the trampoline room in his house or the fact he frequently flies via private jet that makes the difference. Instead, it’s the freedom to not stress about money. “I don’t have to think about health costs or college costs. Being free from worry about financial things is a real blessing. Of course, you don’t need a billion to get to that point,” he explains.

Gates reads a lot of research so he’s no doubt aware that science is on his side on this point. Study after study shows that making more will increase your happiness about up to the point where you can stop worrying about covering essentials and absorb the shocks and setbacks life inevitably throws your way. After that, having strong relationships and more time are greater predictors of well being.

The trouble with Gates’s happiness advice

So far, Gates’s thoughts on money and happiness seem sensible and straightforward. But there’s one big complication when it comes to the relationship between finances and well being. As Gates acknowledges, getting to that magic point where you can stop worrying about money and cover basics like college and health care is becoming harder and harder for most Americans.

“We do need to reduce the cost growth in these areas so they are accessible to everyone,” he adds in his answer.

Later, he elaborates on the problem of health care costs in America. When a Redditor asks, “Is there something that is incredibly important in your opinion that hasn’t garnered as much interest generally as it should have?” he replies: “In the US I would say getting bipartisan consensus on how to reduce health care costs is a critical issue that doesn’t get enough focus.”

The numbers (as usual) bear him out. The average cost of health insurance, adjusted for inflation, has increased ninefold since the 1960s. Total spending on health care rose from $74.6 billion in 1970 to $3.5 trillion in 2017. Meanwhile, the cost of an undergraduate degree at a public school rose 213 percent just from the late ’80s.

These statistics put a grim spin on Gates’s answer. Sure, you don’t need a billion dollars to be happy. You don’t even need a million dollars. (And no, don’t write me enraged tweets–no one, including Gates, who also writes about his joy in his kids, is saying money is everything when it comes to happiness.) But it is super helpful not to worry that, if your child gets sick, you won’t be able to afford her medicine. And that sadly, is too high a bar for many Americans.

What’s to be done about this? Unfortunately, this isn’t one of those columns where I can offer you an easy takeaway, except maybe to call your congresspeople and express outrage about the situation. Because Gates and a ton of research are right: In America, it’s getting a lot harder to reach the point where money isn’t a drag on happiness.