Who would you put in charge of the investigation? Hercule Poirot and Jane Marple? Or the person most likely to have committed the heinous crime? Believe it or not, in health care we are about to do the latter.
Writing in Health Affairs, Ken Thorpe and his colleagues offer a description of the current phase of the problem:
Medicare beneficiaries’ medical needs, and where beneficiaries undergo treatment, have changed dramatically over the past two decades. Twenty years ago, most spending growth was linked to intensive inpatient (hospital) services, chiefly for heart disease. Recently, much of the growth has been attributable to chronic conditions such as diabetes, arthritis, hypertension, and kidney disease. These conditions are chiefly treated not in hospitals but in outpatient settings and by patients at home with prescription drugs.
So how are we dealing with this challenge? Poorly.
More than half of beneficiaries are treated for five or more chronic conditions each year, and a typical Medicare beneficiary sees two primary care physicians and five specialists working in four different practices. System fragmentation means that chronically ill patients receive episodic care from multiple providers who rarely coordinate the care they deliver. Because of this structural deficiency, patients with chronic illnesses receive only 56 percent of clinically recommended medical care. That gap in care may explain a nontrivial portion of morbidity and excess mortality.
Now before moving on, let’s note that Prof. Thorpe is a long-time adviser to Democrats on health care issues. The reason that’s interesting is that the solution preferred by the entire left wing of the Democratic Party is to force everybody into Medicare (single-payer solution) and the only solution Democratic moderates have proposed is demonstration projects run by Medicare (ObamaCare)!
I hate to be the bearer of bad tidings, but isn’t this like putting Bernie Madoff in charge of the SEC? Although these reformers often call themselves “progressives,” they are really reactionaries. Their model for the future is the failed system of the past.
“I Believe in Yesterday”
Is there any part of the health care system where there has been improvement? It turns out there is:
Over the past decade, chronic disease management programs have proliferated in the private sector and are common in the Medicaid and Medicare Advantage programs. But they are notably absent in traditional fee-for-service (FFS) Medicare.
Note that the success stories in Medicaid and Medicare Advantage are all private contractors who have an economic interest in lowering cost and improving quality — since they compete for patients and the competition often involves price and quality.
The private sector successes comprise a much broader and richer experience than these, however. They often involve privatization, entrepreneurship, competition, economic incentives and even patient power. There are also interesting examples within Medicare itself — but almost always in spite of — rather than because of — Medicare’s bureaucratic payment system. I’ve written about some of these before, but here’s a brief overview. (Full disclosure: We have received modest contributions from some of these entities.)
Cash and Counseling. Pilot programs in more than half the states allow the Medicaid homebound disabled to manage their own budgets. They can hire and fire the people who provide them with services — which increasingly includes medical care in addition to custodial services. Patients can use the money they save to purchase other health services and products. Satisfaction rates hover in the 96% to 98% range. (Nowhere else in the world are people this satisfied with a health care program.)
Critics often ask: Are people smart enough or competent enough to manage their own health care budget? Answer: If these patients can do it, patients anywhere can do it — unless they’re in a coma or under anesthesia. This undertaking, by the way, is a Robert Wood Johnson Foundation project — although there is little information about it at their Web site. You would think they are embarrassed about the whole affair. (I think once they realized they had created a Health Savings Account for poor people, their enthusiasm waned.)
Telephone and E-mail Services/Walk-in Clinics. A whole slew of services have been developed by entrepreneurs to cater to patients largely outside the third-party payment system. Since their goal is to meet patient needs by lowering the money cost and the time cost of care, they are especially important to people who need care frequently. Teladoc of Dallas has more than one million customers who pay for telephone consultations with physicians. As explained in a previous Alert, electronic medical records and electronic prescribing are an essential part of the business model. The nurses who deliver primary care at MinuteClinics follow computerized protocols, keep medical records electronically and can prescribe electronically. The quality of care they deliver appears to be as good or better than traditional care settings.
If Medicare would pay the market price for any service provided by approved walk-in clinics, it would cut a huge chunk out of its Part B costs and it would cut administrative costs as well. Ditto for Teladoc. That Medicare does not take these simple, obvious cost-cutting, quality-improving steps is Exhibit A for why we don’t want everyone in Medicare.
American Physician House Calls (APHC). As explained here, the goal of this company is to treat special needs patients in their homes — thus keeping them out of the more expensive hospital setting. In fact, the company estimates it bills Medicare about $33,000 a year for patients who otherwise would have cost twice that amount. These entrepreneurs are cutting Medicare expenses in half by coordinating care, using EMRs, prescribing electronically and apparently doing everything else Thorpe and company think ought to be done — and all on a fee-for-service basis!
The wonder is that APHC does what it does at all. They surely could make more money with traditional care and traditional billing.
Cancer Treatment Centers of America (CTCA). Put aside the issue of whether we are spending too much on end-of-life care for cancer patients. (Although if this issue is of interest to you, see the case for the other side made by Gary Becker and his colleagues at the University of Chicago.) CTCA seems to be doing what Thorpe and colleagues would surely approve of. Care is coordinated, records are electronic, and many services are provided despite the fact that Medicare doesn’t pay for them. Under Medicare’s byzantine payment rules, these entrepreneurial centers succeed by competing for patients based on quality rather than on price.
Now let’s compare all this entrepreneurial, need-meeting activity to the two approaches favored by the left.
Medicare for All (Single-Payer). One reason why Medicare is so defective is that it is the creation of politicians. In 1965, the federal government had no idea what a health insurance plan should look like, so in creating Medicare it copied a standard Blue Cross plan in use at the time. Political interests quickly coalesced around this plan and fought off any changes (the original plan did not cover drugs or many preventive services, for example). In time, the federal government was paying to amputate the legs of diabetics, while refusing to pay for the drugs that would have made the amputation unnecessary in the first place.
The structure of Medicare, then, reflects political equilibrium, not sound medicine or rational insurance economics. The reason why seniors pay three premiums to three plans (Medicare Part B, Medigap and Medicare Part D drug coverage) and still do not have the drug coverage the rest of the population takes for granted is that politics of medicine prevents a more sensible outcome.
Making the structure of health insurance political guarantees that it will not be able to adapt to the changing conditions Thorpe and his colleagues are describing.
Accountable Health Organizations (ObamaCare). The Obama administration is proposing to control costs with Medicare pilot programs, designed to try out new ideas. They are all demand-side ideas, however. None of them would encourage entrepreneurs (on the supply side) to solve problems on their own. And the demand-side ideas do not include empowering patients!
Chief among the ideas coming forth is the Accountable Health Organization (AHO), described by industry insiders as “an HMO on steroids.” The idea is to give providers responsibility for all health care to a group of providers, along with a set amount of money to manage. If they don’t spend it all, the ACO gets to keep some of the savings. The ACO would be judged against quality indicators set in advance by Medicare.
But how do we know that giving an entity responsibility for all health care is an efficient way to deliver care? We don’t. None of the entrepreneurial efforts described above assumes responsibility for a patient’s total care. And how do we know that the quality indicators chosen by Medicare will be the best parameters? We don’t know that either. Almost certainly they will not be.
A Supply-Side Alternative to Single-Payer Medicare and ObamaCare Medicare. What I have called a supply-side approach would let providers/entrepreneurs propose the innovations, rather than Medicare bureaucrats. Providers would not only propose changes in the way they are compensated, they would also propose changes in how we measure and determine quality of care. In other words, the improvements in care and advances in our measurement of the quality of care would come from those who are in the best position to know what is needed and how to do it.
In general, providers would be free to propose any change in a payment scheme, provided that (a) the participation of patients is voluntary, (b) the costs to the government do not rise, (c) the quality of care for the patient does not fall and (d) they propose a measurement system that ascertains whether conditions (b) and (c) have been met.
from: http://www.john-goodman-blog.com/the-mystery-of-health-care-policy/
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