Controlling Healthcare Cost Inflation (updated review)

(Update Oct 09: Note that when this post was written at the end of July, not all of these reform ideas were under serious consideration. Even though all of these ideas are now being addressed or considered, readers should still find interesting pieces in this post. Even this short summary post has some specific ideas, and the links have specific detail and how-to-make-it-work structures based on experience and considerable review and discussion.)
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The best health care reforms to reverse the unsustainable cost inflation trend (this is a updated version of my previous review post on countering healthcare inflation):

• Setting up new structure and strong incentives for preventative care and health improvement programs -- wellness, early detection, and maintenance -- with emphasis on the preventive strategies that have the greatest long-term cost-savings (some preventive care has significant net cost-savings over long time periods, some does not; we presume common sense (applying the results of cost-effectiveness analysis such as this) is used in setting up screening programs). Employees would be given mandated time off from work for routine checkups, and could earn insurance discounts or rebates. Preventative and maintenance care that is known to have high-payoff, such as one-time colonoscopy or detecting and then keeping high blood pressure under control (with diabetes screening, etc.), must have a $0 co-pay and not be subject to any deductible, so that follow-through has no cost for patients. <> Incentives should reward providers/organizations that accomplish good long-term outcomes in improving or maintaining patient health -- for instance, capitation (fixed monthly) payments for maintaining diabetic patients within defined levels of health over time, with annual bonus payments for successful maintenance. Health Support Organizations could be paid per client for health maintaining programs open to all individuals, and earn profits through successful long term results of keeping clients healthy or improving health, as measured periodically by weight and blood chemistry (they would receive a per-client annual bonus payment for each client that maintains their health level as measured by established criteria.) Early and effective treatments for certain conditions control overall national health care costs over long time periods better than many other cost-reduction strategies, especially for widespread problems such as undetected diabetes or hypertension.
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• Creating extensive public information and disclosure requirements on the effectiveness of particular treatments that are clear to patients -- aka "comparative" or "evidence-based" information given in real-time, during health care visits. This might include, for many treatments, a simplified disclosure sheet with a multiple-choice question or two at the end for the patient to correctly answer (or have re-explained) on the statistical findings about a given treatment before the treatment can be delivered. Along with a disclosure on patient out-of-pocket costs, this allows patients to participate in choosing what is a worthwhile effort.
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• If the insurance system lacks pay-for-outcome (see next point below), then experimental or unreliable treatments could include cost-sharing: Gradually creating graduated co-insurance requirements for certain treatments (co-insurance is a fixed percentage of total cost (e.g.--20%) the patient must pay out-of-pocket or via their own private supplemental insurance) -- for treatments found less effective as determined for instance by the statistical life-extension results over time by conditions (e.g.--what percentage survivors at 2 years, 4 years, etc.) This would be done on an ongoing basis. The data and information delivery could be computerized, relying on data-entry of study results by a dedicated division of the public health care plan or national health care data center, to create independence from financial incentives or kickbacks in the private sector. New Treatments with little data would be given an initial success rate based on preliminary study data, or be listed as entirely experimental with a larger co-insurance requirement. This pricing would also have disclosure requirements -- real-time provision of price information to patients in doctors' offices or provider facilities, requiring signature before treatment. As with the previous information, this helps the patient weigh the choice of whether to pursue unreliable or experimental treatments. (Note that Pay-for-Outcome, below, is superior to this style of cost-sharing.)
  
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• Creating pay-for-outcome incentives for providers to switch from quantity-of-care in fee-for-service models to more effective quality-of-care-based systems, such as cooperative models like the Mayo Clinic or provider networks, by adjusting reimbursements from a public or private insurance plan to reward effectiveness instead of quantity. A provider that is more effective and succeeds with less tests and treatments for a specific, narrowly-defined condition should receive the same pay as a provider that does more to reach the same outcome. (A complete, dynamic, evolving structure for this with many provisions for difficult situations and complex outcomes, including diagnoses and drug costs, is here.)
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• Finally, since Reform is likely to combine guaranteed issue (private insurers must cover applicants who can pay) and prohibit exclusion of preexisting conditions and pricing discrimination, and since these would tend to increase overall premium costs, it is necessary to mandate everyone must buy health insurance so that those currently receiving free care through emergency rooms at the expense of everyone begin to help pay at least part of the costs of their own care. <> Because a mandate delivers everyone into the hands of private insurers, overall costs become crucial. Therefore, private insurers must be regulated to require they pay out a minimum of 88%-92% (I'd suggest 92%) of their incoming premiums for actual health care, but with smaller pay out levels allowed if insurers can innovate to lower costs. (But, if health insurance exchanges are set up then see further below.) Insurers would then rebate overcharges above this level with interest to policy holders annually. This balances the gift to private insurers of new captive customers who are required to buy insurance by capping insurers ability to exploit captive policy holders. Alternatively, a strong public plan would exert pricing competition. Finally, if broadly open (open to more than 1/2 the population) exchanges are set up with well-defined benefit plans, like "bronze," "silver," etc., then innovation and competition would lead to better results even without regulation of pay out ratios, as insurers and providers can compete to innovate to lower costs if they can take part of the resulting savings as a reward. Therefore, under the scenario of a Senator Wyden type of open exchanges (with broadly open exchanges), a regulation of payout ratios needs to allow for insurers to innovate to lower costs (via pay-for-outcome for instance) -- the payout requirement needs to allow for cost-lowering without temporarily penalizing insurers for such savings by allowing insurers to keep that extra profit for 2-3 years, if they manage to lower costs while maintaining outcome quality. Further, we need rules that force clear, simple disclosures to policy-holders of precisely what policies do not cover, along with Federal Standards of some very basic minimum coverage insurers are required to offer. (more detail in the 6th bullet in this post)

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Recent good articles on Reform: (updated 10-3)

Mayo Clinic offers an Overview of Good Reform

Massachusetts to Replace Fee-For-Service (Global Payment example)

Health in All Policies (Op-Ed: theHealthCareBlog)

NYTimes Editorial: Curbing Runaway Health Inflation

Explaining Runaway Costs: The Lobster or the Salad?

Putting the Cost of the Democrats’ Plans for Reform in Context

NYTimes Editorial: Health Care and You

Hospital Savings: Salaries for Doctors, Not Fees (7-25)

David Leonhardt (NYTimes) on Health Care Reform (7-21)

Obama Today (7-17) on Reform (including long-term cost savings)

Mass. Panel Backs Radical Shift in Health Payment

Current bills (to 7-17) side by side comparison

Popular (and well-informed) public opinion

Medical Productivity via modern methods -- The Doctor is In, and Logged On

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What Should Be The Consequences For Rescissions?

Someone who carefully reads every health care post I've written on this site might conclude I consider private health insurance companies integral to a good health care system.

Perhaps it would even appear to a superficial, quick glance over some of my posts that I think "markets" are always the solution to most problems, or the starting place for any solution.

I do not take an ideological approach.

Markets are indeed useful within certain well-bounded areas of life.

What does "well-bounded" mean?

Another phrase for this is "intelligently-regulated." (see bullet point #5 here)

For instance it's fine to have a market in labor for carpenters. It is not fine to have a market in forced sex slaves.

My attitude towards private health insurers is also..."bounded."

That is, I don't think having private health insurers in our health care system is better, or worse, or anything so simple and categorical.

Rather, I pay attention to the details.

I view private health insurers according to how they act.

They are as they act.

...

The way many of them have been rescinding policies when policy-holders most need them has been especially harmful.

Creating insurance application forms that cannot reasonably be completed with perfect accuracy, even with good effort (can you find the exact details of *every* health care visit or medication of any kind you've have in the last 10 years?) -- and thus can be used as a pretext to cancel policies for "fraud" if and when major claims are made is...

...a form of business practice of lower integrity than most Americans accept.

Americans are more just (fair-minded) than this.

...

I don't think this is redeemable.

The fact is that these types of rescissions have been effected by many major private insurers.

I don't think there is any way to redeem that.

Insurance companies that have used trivial and inevitable incompletions in their impossible applications to justify rescissions multiple times to avoid paying claims in my opinion have forfeited -- past tense -- their right to practice insurance, and should have their licenses revoked.

...

Revoked as in out-of-business.

So when one or more major insurers in a state must wind down and cease business in that state, what happens?

Answer: Other, better companies can take their business.

It's called a "well-regulated market."

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An unpopular alternative is for there to be no regulation at all, so that consumers would know there is no "consumer protection" and thus pay close and nervous attention to the reputations of companies.

Purchasing safety in this way can be expensive. Premium brands often have significant price premiums.

This kind of caveat emptor (buyer beware) system requires journalists or consumer's unions to uncover and report enough factual information for people to be able to learn of the qualities of a company.

Without quick, effective uncovering of poor practices, we only have advertising and hearsay to go on as consumers.

Historical experience has been that laissez-faire (absence of regulation) can result in large numbers of deaths along the way, before people learn much about individual companies.

So the essential idea of regulation is to try to outlaw some of the worst abuses that can happen, so that the consumer learning curve has fewer victims.

The thing about regulation is you must either genuinely regulate, or not at all. It must be one or the other, and this understood by the public.

Either the appearance of safety a regulatory environment creates is real -- because the inspectors and regulators actually do their jobs effectively -- or the appearance of safety is an illusion.

The worst possible case is for consumers to believe there is regulation when little real regulation is actually carried out. This causes consumers to relax their vigilance and rely on an illusion.

The illusion of regulation when regulators don't act is profoundly dangerous to all of us.

Life and death dangerous.

So...we need either actual regulation and enforcement...or an explicitly unregulated laissez-faire market where consumers actually must work to learn about the quality of a company's practices.
We have a regulated market.

This means that regulators -- state insurance regulators -- must be adequately staffed and must do their jobs.

Fines are not enough.

Nice Example of Pay-for-Outcome in Practice

Searching the Newshour videos I found this jewel from March:




A guarantee on a treatment is one form of pay-for-outcome. Extra pay for better outcomes could be set up to motivate more rapid innovation to find better treatments to replace those that have low success rates. A broad system of pay-for-outcomes is much more easily set-up than most people would guess. Pay-for-outcome can be applied to all medical treatments, with mutiple levels of outcome criteria to cover fuzzy outcomes and incentives to treat difficult conditions, and pay-for-outcome will evolve health care practices towards better quality and cost-effectiveness over time.

Schumer and Orszag -- Arriving in the Vicinity of Real Reform

We are hearing prominent voices with great influence on writing health care reform getting close to the best answers, but not connecting the last dots.

They are close.

Consider this article from Friday's NewYorkTimes on another cooperative-care (aka "accountable care") system that delievers higher quality for less cost. This is a short article and should be read in its entirety. Once you do, consider this situation:

“Everyone knows that the Bassett model is the right model,” said Senator Charles E. Schumer, a New York Democrat involved in negotiations over health care legislation.

“The question is, How do you get from here to there?”
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Whether these trends will encourage the creation of more hospitals like Bassett is uncertain. Legislation pending in the House instructs the government to create pilot programs for “accountable care organizations” like Bassett.

But the history of Medicare is full of pilot programs.

Dr. Streck said there was growing recognition that hospitals like Bassett were models. “Does it appear that Congress is going there?” he said. “No.”

Senator Schumer said the Senate Finance Committee was determined to make major changes to the government’s fee-for-service payment system.

“We talk about it all the time,” he said, “but it’s uncharted waters.”

Listening to Peter Orszag I hear a similar approach. Competent in his own background, Orszag reasonably hedges his bets by categorically avoiding any complete system -- could any delivery system laid out all-at-once work as hoped? Would a complete system be flexible? Could it respond to results with rapid modifications or to take advantage of new information and ideas to change quickly?

I can understand this. Complexity does indeed merit caution. Repeatedly we hear the idea that we can't change the current system "root and branch", etc. This makes perfect sense.

We should not change the system root and branch.

What we really need instead, says Orszag, is "...a continual application of incoming information...."

That's not a bad idea.

We'll come back to this shortly, but first consider the proposed solution at the moment -- IMAC.

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Hoping for piecemeal evolution starting from where we are, we have the reasonable proposal from the administration of a panel of experts to develop reform for medicare (MedPAC, now IMAC):

Obama: "Well, over the last week, working with not only health care experts, but also members of Congress who are concerned about this, we actually have now gotten a commitment to incorporate an idea that has a panel of doctors and health care experts advising on how we can get a better value for our money in Medicare. And every expert out there says this can be a valuable tool to start reducing inflation over the long term....
"It's called the MedPAC program. By the way, it was originally a Republican idea. I want to give credit where credit is due. The Republican Congress passed a bill that created a panel of health care experts to make recommendations to Congress on how we could get better quality, lower cost. The problem is every year, it would just go on a shelf and nobody would act on it. So what we said is, let's give that body some power. Let's require Congress to vote on the proposals that they're making every year. Congress can still reject them, so it's not completely removing it from politics, but they have to reject or accept it as a package. And that, I think, would incentivize and empower important changes.

This is an idea that might produce good results (for instance a small group of experts could excel in certain ways, such as more dramatic reforms, if they have the right motivations.) It's also a way for Congress to move more significant reform decisions out to a panel if Congress itself cannot make effective reforms due to lobbying pressure. It's reasonable to think a panel of experts could bring forth good ideas.

...

But what would happen if we simply blended the leading ideas together right now?

What would happen if you took the consensus from Orszag and many others about changing fee-for-service and combined it with the Republican devotion to the "market?"

This is more than hand-waving. Consider.

What exactly is "a continual application of incoming information" that also changes fee-for-service into "paying for quality?"

It sounds familiar, yes?

If you involve all participants (medical providers) then....you have something that appears exactly like...

"paying for outcomes where outcomes are defined by criteria chosen in an ongoing process involving all participants (medical providers)."

These are essentially the same idea. Once you look closely.

Orszag has the right basic idea, and only needs to trust what we know already works very well -- a well-developed, regulated market where there is a strong connection between the quality of what is sold and the price it fetches.

Republicans have one good piece -- the idea of a well-developed market (i.e. -- where there is a strong connection between the quality of what is sold and its price) -- and need to only imagine actually applying it in detail to health care. What would they get?

They would get "a continual application of incoming information"...aka -- a "market" so to speak.

So...let me highlight exactly such a system -- a pay-for-outcome system that is structurally dynamic, responsive, and evolves by nature, due to built-in continual application of incoming information from all participants.

(Update) 2013 Could Be A Lifetime Away...Do Simple Reform Now

So, what if major Health Care Reform passed, and people were hopeful, but...many important reforms were scheduled for distant years like 2013 so that some important reforms just....didn't happen for years....

And meanwhile, people would feel the reality of one year into reform, say fall 2010, feels like the real result of Health Care Reform....

Congress would never be that foolish, or...would they?

Let's hope some ordinary common sense intervenes in the timetable.

What are reasonable time tables?

How about these:


60 days from passage:

• All private insurers required by law to pay out a minimum of 88%-92% of premiums to health care claims each year, with automatic rebates with 5% interest of the excess premiums to policy holders.
• Rules for rescissions -- none unless clear fraud found by independent inspector.
  
• $0 out-of-pocket rules for preventive checkups and diagnostics
  
• Employers required to provide time-off for preventive checkups
  
• $0 out-of-pocket rules for diabetic and high-blood pressure maintenance programs and for all such very-high-payoff care on a federal list based on existing research on which preventive procedures are most cost-effective
  
• All Insurers and Medical Providers required to work together towards complete pricing lists that cover all possible charges and also calculate patient out-of-pocket expenses for various policies -- an ongoing master Price List -- with the expectation that any charges not on the Price List will be outlawed starting 6 months after the law is enacted. The aim is price disclosure to patients during visits before treatments.
  
• All insurers required to issue simple, clear disclosures to policy-holders that meet a Federal standard for clarity and list precisely what is excluded from a policy's coverage in simple, clear language. Policy-holders must return to the insurer this signed disclosure sheet or else be automatically moved within 60 days to a Federal Minimum Standard that eliminates loopholes in coverage, raises benefit caps to $5 million, caps deductibles at Federally-set levels ($500), and sets co-insurance percentages (portion insurer pays) to 70% or higher.
  

6 months from passage:

• Medical providers required to disclose complete price and out-of-pocket cost information (from the ongoing Price List) to patient or guardian for each expected or likely treatment before the treatment, and obtain signature, in all non-emergency situations.
  
• Guaranteed health insurance issue (acceptance) and guaranteed preexisting condition coverage rules for all private health insurers; no more rescissions allowed for any reason.
  
  
  • Everyone not with insurance required to purchase at least a low-cost, basic policy that meets federal minimum standards, or more. The federally-defined minimum policy would cover every treatment on a federal list of common, cost-effective treatments that have generally been in widespread use for at least 5 years, including common-sense benefits like maternity, and have federally set deductible caps and out-of-pocket caps, which could be higher in the case of a Health Savings Account up to the account balance.
    

1 year from passage:

• Most remaining provisions of health care reform
  

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One thing everyone learns if they lead a project against a deadline, remodel a house, do an difficult auto-repair, or other such common experiences is...it can be done.

It's time for us to stop underestimating the ability of Americans that work in the health care system.

They can do it.

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8/28 -- Here's Steven Pearlstein's version of simplified compromise reform.

Orszag; Mayo's Cortese:"price controls...a catastrophe"

Charlie Rose offered quite a program last night.

Peter Orszag, Director of Office of Management and Budget:


Denis Cortese, President and CEO of Mayo Clinic


One highlight from Cortese (starting around 6 to 6.5 minutes):

"...depends on what we mean by the "Public Option." If we mean a Medicare-type option that has price-controls and is fee-for-service, that would be a catastrophe.

We've seen it already in Medicare...its had price-controls under its control since 1983. And with price-controls what have we seen? People just do more. The rate of growth of spending has just gone up."

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Obama Press Conference

I liked very much what I heard Obama say tonight.

I strongly recommend against seeing excerpted bits from news organizations, often heavily interpreted -- they are inferior to the real thing.

C-Span full video of Obama's News Conference on Health Care Reform.

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Transcript here.

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"Rationing" -- A Failure of Knowledge and Imagination

Once again we are treated to an ambitious attempt to pour new wine into an old wineskin -- an hoary old word is pushed toward a new meaning during a high stakes contest for our future. We must watch and perhaps gnash our teeth as the new meaning floats groundless in the air. We may watch hopefully, but experience suggests the outcome.... No matter how high the old is flung into the air, it simply floats up there for a while, flirting with the new meaning, then...gently settles back down right into its normal resting place.

A recent disastrous instance of this group self-flagellation was the ill-fated choice of the in-your-face word "nationalization" to refer to a public re-structuring of a failing major bank (similar to what the FDIC does, but on a larger scale). The word nationalization in no way aided a political move towards the needed process of restructuring certain major banks. It backfired, since it suggested something more than what was meant.

It was easy for bank lobbyists to paint "nationalization" as a form of "socialism." We are living with the consequences. Credit to businesses continues to contract in many instances where the business is sound and credit-worthy.

Today, we have "rationing."

The result is likely to be equally unfortunate for the public good.

Seemingly a rational necessity, we are asked to see the need for rationing medical care in a new light (for instance my own discussion of late-life choices a few weeks ago here in a brainstorming post).

But rationing of course has a popular meaning, just as nationalization had a popular meaning.

The popular meaning of rationing includes the expectation, which is firmly entrenched in about half of the population, that some reasonable types of care -- knee replacements for severely arthritic knees for example -- will simply be denied, or greatly delayed in long waiting lists, due to rationing.

In other words, to many people "rationing" means "you won't get any."

By using this word to refer to the generalization of making difficult choices -- contrary to its popular meaning of restriction of choice -- those seeking to open discussions of rationing are inadvertently helping to spread the "government will ration care" idea, just by helping the word become more commonplace in headlines.

But it is even worse than this. Unlike "nationalization" (restructuring) of large failing banks, rationing in the sense of making difficult choices about care in the Public Plan isn't even a good idea.

...

To presume rationing is an absolute inevitability is a failure of imagination. To impose it would be a failure of knowledge.

The problem with rationing is in certain presumptions.

The first obvious truth is that we do not have an unlimited ability as a nation to pay ever-higher health care costs as a portion of total national spending. A further truth worth communicating after pushing "rationing" into public debate is to point out that health care today is already "rationed" all the time, in one way or another -- either by explicit denial of benefits by insurers, denial of coverage, or by sky-high and escalating premiums.

But pointing out that health care is already "rationed" while talking of the need to "ration" is like attempting to clean up spilled milk as one continues to dump more onto the floor.

These two truths are not the only basic aspects of this issue. There is a consideration equally as fundamental and important.

Questioning any major idea is a necessary part of developing better solutions.

Rationing is a major idea. Therefore it should have been questioned more already.

But, better late than never, as they say...

First though, it may help at the outset to know that rationing isn't the only way to control costs of expensive treatments that have low success rates. A better solution is already presented here in the 3rd cost-inflation-control idea. As you can see from the link, this method I suggest is not "rationing" in the popular sense. The Public Plan need not rule for or against an expensive experimental gamble. Rather, it can simply allow individual choice, and offer a reasonable partial aid. Individuals receive information and partial help so that they can weight the costs and benefits according to their own unique calculus -- keeping their own integrity of choice and responsibility of choice.

...

Now...even leaving aside the misuse of language, rationing in the sense of making difficult choices on the public level is a flawed idea.

Why?

Because it violates a basic truth, or reality -- that we cannot successfully choose for others what they should value, and to what degree.

You cannot assign a value to a whether someone else should spend 3 hours a day playing a guitar for enjoyment, regardless of apparent costs.

You can't say they should, or that they should not. Nor can you choose what their priorities should be, nor what trade offs they should be allowed to make.

It is beyond our human mental ability to choose such large choices well for others.

It's simply a greater degree of complexity than we are able to cover.

We don't know whether someone might prefer an exotic and chancy therapy or treatment in a last-ditch attempt where they would have to pay $15,000-$40,000 out of pocket, or pay for an expensive supplemental insurance policy that covers such procedures. We cannot make such choices for individuals, one way or the other, even if we are committed to offer a defined, precise, partial support for less-reliable or less-cost-effective treatments that requires public plan payment of part of the cost.

No 2nd party has the knowledge to place a value on 3 months or 6 months worth of your life, regardless of your age.

But...you have that ability.

Individuals who choose more heroic end-of-life care have every right to choose such and pay a significant part of the cost or high insurance premiums. Individuals who choose exactly to have no heroic end-of-life care at all have a right to a lower premium, and thus some extra freedom of time and money for different goals and values in their lives.

So, the solution to the seeming problem of public Rationing is not to.

(Update 7-29) Reforms to Control Health Care Cost Inflation

See the updated version of this post here.

Obama is Correct -- Status Quo on Health Care "Unsustainable"

"Deferring reform is nothing more than defending the status quo -- and those who would oppose our efforts should take a hard look at just what it is they're defending," Obama said...

"The status quo on health care is not an option for the United States of America," Obama said. "It is threatening the financial stability of families, of businesses and of government. It's unsustainable."

"It's time for us to buck up Congress, this administration, the entire federal government to be clear that we've got to get this done." -- AP

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Update: Cost is now the issue.

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At the moment the blog must appear to have been taken over and become the Health Care Reform blog, but...for those coming back hoping to see more on the economy, don't worry, some stuff is cooking.

I do like to focus on something and continue on it, in proportion to its long-term significance.

Here's a look at how health care cost inflation could destroy the American economy -- scroll down and look at the 6th graph -- U.S. Health Care Expenditures as a % of GDP.

So, it's of sufficient importance for a focus of weeks.

Bob Woodward on Charlie Rose just mentioned Obama has something like 130 initiatives going now.

Ok, Mr. President, I think you know this one is in the top 3...or top 2. Let's see you follow through completely.

...

Here's a Fresh Air piece on the overall reform situation with Jonathan Cohn, which although imperfect in some ideas (for the best way a Public Insurer can set prices see the update "Setting Prices" here instead) -- the piece still has offers a good overview.


.

Write Your Congressperson and Senators (updates)

People, it's time to write our Congress about getting real reform in health care.

Now, next week, July, August, until a bill is sent to Obama. Because real reform will need the people to weigh in and let Congress know we are here, and are paying attention. If you've written your own representatives, consider key legislators next.

Under fee-for-service cost inflation, our current health care system will sap the American economy and future, and bankrupt more and more families.

The government is already profoundly involved in health care, and we need to change the rules of the game, so that the health care system acts more in response to its customers -- you and I, in terms of what we get for our money.

The most important issue is making real fundamental change to counter health care cost inflation, which otherwise will slowly bankrupt us.

Write your Senators about Health Care Reform -- addresses and webmail. And your Congressional Representative -- addresses and webmail.

I suggest fairly short letters. Always good are compelling personal stories. Physical mail is good, and webmail is ok I think. Both is even better.

Personal experiences are meaningful, and those include more than only the most dramatic stories on rescission and outrageous fake coverage. Also meaningful are the year after year increases in costs beginning to overwhelm family budgets. This is a telling point. It deserves the context also: "Senator, I know that our piecemeal fee-for-service system is the driver of these endless increases in costs."

See this post on Dr. Relman for example, and feel free to use any part of my own writings on health care on this blog if you wish, or as a source of points or links. The link to Relman's NPR interview is a good one also.

link text:

http://findingourdream.blogspot.com/2009/07/reforms-to-control-health-care-cost.html

http://www.npr.org/templates/story/story.php?storyId=106470889



For detailed ideas on how to implement a outcome-based compensation instead of fee-for-service:

http://findingourdream.blogspot.com/2009/06/new-way-to-hold-down-health-care-costs.html

-------Update 7/15 -----------------------------

"Deferring reform is nothing more than defending the status quo -- and those who would oppose our efforts should take a hard look at just what it is they're defending," Obama said...

"The status quo on health care is not an option for the United States of America," Obama said. "It is threatening the financial stability of families, of businesses and of government. It's unsustainable."

"It's time for us to buck up Congress, this administration, the entire federal government to be clear that we've got to get this done." -- AP

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Here's my own letter to our Texas Senator Kay Bailey Hutchison:

Senator Hutchison, many people are now becoming aware that health care cost *inflation* will bankrupt more and more businesses and families, every year.

Our future economy, and thus our security, depend on stopping the trend of ever-rising health care costs.

More and more GDP for health care means less for education, research, you name it.

I'm hoping that thousands will write to Congress to let you know that we care enough to support Congress in this reform struggle.

We have to somehow move away from fee-for-service and to some other system, perhaps like the Mayo-Clinic.

Real reform will change the rules, so that the ever-higher costs resulting from piecemeal fee-for-service is no longer dominate.

Please do *real* reform.

Here is one of our top, most knowledgeable Doctors on this:

http://findingourdream.blogspot.com/2009/07/relman-says-current-versions-of-health.html

Relman Says Current Versions of Health Care Reform Won't Work

Update 8/8 -- Dr. Relman offers more perspective and ideas.
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Former editor-in-chief of the New England Journal of Medicine and retired Professor Emeritus of Medicine at Harvard Medical School M.D. Arnold Relman says President Obama's health care plan won't work (NPR, Talk of the Nation).

Why won't the current (7/10/09), leading reform plans in Congress work?

Relman: "...if the bill gets passed that [Obama] wants, a lot more people will have health insurance. The basic problem with the health care system is not going to be resolved [under this plan]. In fact, it will probably get even worse. The basic problem is that we can't afford the rising cost of health care. It's breaking the bank. It's breaking in the private economy, and in the public sector. There's nothing in the bills that are winding their way through Congress now [7/10/09] that effectively controls health cost inflation."

Congress needs to pay attention to all the people saying this.

"What the President is asking for isn't enough. What we have to have is a reform not only of health insurance, but of the health care delivery system, because that is where the basic problem lies. The delivery system is inefficient, expensive, wasteful, and it has the wrong incentives. It's become a business, and as a business it wants to constantly increase its sales, and until we change that, we're not going to have real health care reform."

Exactly.

"[Medicare] is going broke.... A federal plan is not going to help unless and until we change the way we provide health care."

You just can't get more clear than that. Dr. Relman then lays out his good way to structure health care delivery. It's based on working systems here and overseas -- things proven by experience to work well. We could do very well for instance to use changes Dr. Relman recommends. Any real reform that controls cost inflation is better than any reform that doesn't. (For specific reforms, see my own summary of months of sifting the best ideas here.) Instead of transcribing the entire interview, of about 10 minutes, I suggest everyone listen for themselves.

But one more piece I just have to transcribe:

"...[we could] get excellent medical care at [as much as] 40% less than what we spend now. More than enough savings to cover everybody. Our problem is not that we can't afford good health care. We're spending plenty of money now. Our problem is that we have a terrible system."

This makes sense. The U.S. spends about twice as much per capita as France, which has the world's top rated system.

A New York Review of Books review piece by Dr. Relman is here.

Now, Congress and the Administration, read, listen, and live up to this moment.

If you can't go 100% of the way to Relman's pragmatic good ideas, at least do something real. Make Mayo Clinic-type organizations easier to spread. Incentivize. Do something real. Actual. Something that works. Use a good alternative, anything, just something that actually addresses cost, fundamentally. Something that will work.

"Moderate", "Conservative", "Liberal" -- Beam Me Up, Scotty

Are you tired of still hearing useless labels used even in the NYTimes that tell us absolutely nothing at all about a person or their beliefs or thoughts?

Worse is if you've left those labels behind, and were happy to be rid of them, and then you find even an good economist with an influential position insists on participating occasionally in that Limbaugh-style grouping of Americans into political camps.

Not "Dumb, and Dumber" -- "Liberal," "Conservative"...or the "M" word.

Sure, I understand this. I did this some in high school, having fun debating my friends about Reagan-Carter in 1980. But at University, I would have been embarrassed to even use such categories. Is this only the sensibility of a lover of novels?

I don't think so. But...

But I realize people are able to imbue old words with new meanings. There could be some new fun in using "Liberal" and "Conservative."

Trouble is...those old words still have their old meanings to most people.

The problem is a battle between camps is a recipe for general failure as a nation.

...

Be honest, really honest, and take the 4 people in the world you have known the most completely in your life.

Are they just "Liberal" or "Conservative" or ..."Moderate"?

Did their philosophies, outlooks, understandings, beliefs fall into such broad categories?

Would you want them to?

Enough already. America is not Fox News!

Paul, come and join us in the post-Fox-News America. There are more people here than you think!

Exceptional NPR Resource -- Multiple Looks at Other Nations' Health Care

For anyone who hasn't found this wonderful page at NPR, it's a great way to get quick overviews and some interesting pieces on the health care systems of several other nations.

For instance, this piece shows a good Dutch innovation and a style of primary doctor decision making that result in quality and lower cost.

Major News Media -- Health Care? Soon...? Update -- Perhaps So

If you've been wondering, like I have, why major news media like the New York Times, ABC News, etc. haven't been leading with multiple front page/leader pieces on Health Care Reform this last week, while we are in the midst, the center of the legislative process...well...

It's a very good question.

There was one national media lead on Health Care Reform though on Friday that stands out -- Bill Moyers Journal, highly recommended (all 3 sections). Further, NPR has done many good pieces, having something worthwhile on most days.

If you have limited time, and you normally like to read the New York Times ("All the News that's Fit to Print" still appears at the top left of the front page), well, lately, you'd need to use the search function to find much on Health Care. It's strikingly odd. An excellent piece by one of their top economic writers, David Leonhardt, appeared recently. Paul Krugman writes this and this. But stories at the Leonhardt caliber should be leading or on the front page every day lately.

Health Care Reform is so central and crucial for the economy over time (see 4th paragraph here) that the issue justifies multiple leaders, 7-12 front page stories per week now during the crux of the debate. We are not seeing anything close to that. It's as if there is some inhibition of coverage....

Could the reporters be so well-covered with insurance, and comfortably well-paid, that most simply don't connect the dots, don't really get it (with obvious exceptions like Leonhardt)? Might insurers take special care to always pay on reporters and legislators, so as to avoid more public attention?

This broader problem of reporters that are economically far removed from typical American household restraints has gotten worse in recent years, with some rare exceptions.

But what can explain the striking mismatch between this issue's implications for the broad economy and the paucity of coverage?

Could major news media be concerned about jeopardizing precious advertising dollars from such sources as big pharmaceutical ads? Are there other conflicts of interest?

--------------------------
Late update -- I see that the NYTimes.com now has 7 articles with the date for tomorrow -- July 12th, as of 10:40 pm this evening (on the 11th). So, should be interesting to see if this means the issue will get its deserved prominence.
--------------------------

...

On a slightly humorous note, there is an automatic google advertisement at the moment showing a skeleton begging Obama for a doctor's appointment -- but...is this because of coming "socialism" "rationing" health care, etc., or...is it representative of the current situation before reform!? heh heh...you decide!

...

If you only have an hour today, you could do a lot worse than the Bill Moyers program.

Here's one excerpt from Friday's Moyers interview with the former CIGNA (a major private health insurer) head of corporate communications:

WENDELL POTTER: Well, there's a measure of profitability that investors look to, and it's called a medical loss ratio. And it's unique to the health insurance industry. And by medical loss ratio, I mean that it's a measure that tells investors or anyone else how much of a premium dollar is used by the insurance company to actually pay medical claims. And that has been shrinking, over the years, since the industry's been dominated by, or become dominated by for-profit insurance companies. Back in the early '90s, or back during the time that the Clinton plan was being debated, 95 cents out of every dollar was sent, you know, on average was used by the insurance companies to pay claims. Last year, it was down to just slightly above 80 percent.

Solving the Problems of a Public Health Insurance Plan

Each objection to a Public Health Insurance Option, aka Public Plan, is important to consider, and with some thought, each objection can be completely addressed and solved in a good way.

It just takes application of knowledge and a certain kind of logical thinking. But good solutions for all problems arising around a Public Plan exist.

In my main post on Health Care, including updates, we've now addressed:

• Fixing the Cost-Spiral


• Drug Costs


• Freedom of Choice of Doctors/Treatments


• Non-interference between Patients and their Doctors


• Freedom for Innovation


• Complex Conditions


• Complex Diagnoses


• Complex Outcomes


• Setting Prices in a Public Plan

The last main part, which I've worked on today, is how a Public Plan can set treatment prices in a rational market-fashion, leaving complete freedom of choice for patients and providers, and without an unfair advantage over private insurers (who themselves could use a similar system or even use the public plan prices). See "Update 7-10" in the post.

In brief, the Public Plan should be, and can be:

• Universal


• Cost-efficient


• Affordable even for most lower-income households


• Encouraging of innovation


• Completely compatible with private insurance


• Allow 100% freedom of choice of doctors/providers


• Use market mechanisms to increase flexibility and evolution


• Gradually encompass new treatments as they become available

Is Congress Aware the Rules Have Changed?

Normally, Congress can make laws without teeth, which have little effect.

This allows Congress to manage the conflict of public expectations on the one hand and vested special interests that make huge campaign contributions on the other.

So the routine is to legislate new laws with weaknesses that satisfy lobbyists, at the expense of the constituents Congress (nominally) represents.

The recent credit card reform is a glaring example. Usurious interest rates are allowed, while a few tricks are disallowed. In this case, much of the public probably won't expect the extra interest burdens will sink the general economy (but in combination with other problems, the extra interest burden is more harmful to local economic fabric than widely understood.) Congress can seem to have done something meaningful, since they did in fact prohibit certain practices, and in this way they can rationalize they did something meaningful, avoid a public backlash, and preserve their stream of contributions from financial institutions. Likely many members of Congress did believe they were doing the right thing voting against limiting credit card interest rates through a psychological process of rationalization -- you always can justify that which lines your pockets.

Health Care Reform, today, is different than the usual situation in two ways.

First, there is vibrant and widespread internet discussion on health care that actually penetrates to the root causes of the spiraling cost crisis. Mainstream media is broadcasting the root causes -- such as too much quantity instead of quality. Mainstream media is discussing real problems because the real problems are very serious. More than a small minority of the electorate understand real root causes of the cost spiral.

Across the nation, a great majority of Americans not only want real reform, but actually care a great deal. They understand so well that a "public option" is popular (70%+). When fake reform ideas are put forward, a great number of active citizens will quickly learn and discuss the inadequate nature of such reforms.

The issue is big enough that a majority ends up understanding the broad implications.

The political contributions from lobbies are also facts, and can be used in elections as proof of being purchased by lobbyists.

Second, health care costs are a rapidly increasing crisis as the economy is retreating from the false ground of the credit bubble. If no fundamental reform is undertaken, the health care cost crisis will only grow relative to the economy, spreading distress more and more widely. If Congress passes a reform that fails to address costs at the roots (such as this way), the crisis will grow worse, and the current Congress will reap the political outcome in November, 2010 and 2012.

So, the rules are different here. Is Congress aware of that?

Drug Cost (and a coming post on Stimulus)

I realized this evening that the post on incentives as the best health care cost-control method needed one more basic piece -- drug costs.

The current incentives on drug costs are terrible. What happens when a doctor has no consistent or basic incentive to compare effectiveness and costs for prescriptions? A doctor might prescribe a drug of only equal effectiveness but significantly higher cost for instance if it is heavily advertised and the patient asks about it. Another possibility is to begin with a new drug, without trying an often-effective old standby that has much lower costs. In other words, the incentives are often in the wrong directions.

This turns out to be quite easy to correct in the Pay-for-Performance (Outcome) incentive structure. And the wrinkles also.

See my update here.

----------------------------------------

Coming Soon: I'll be posting within a few days or couple of weeks a better kind of Economic Stimulus we can implement quite easily and rapidly. It will be politically popular with both parties, and quite low-cost over a 7 year period. Best of all...it's organic (...couldn't resist stretching this word into the sentence.)

The Alabaster City

O beautiful for pilgrim feet
Whose stern impassion'd stress
A thoroughfare for freedom beat
Across the wilderness.
America! America!
God mend thine ev'ry flaw,
Confirm thy soul in self-control,
Thy liberty in law.

O beautiful for heroes prov'd
In liberating strife,
Who more than self their country loved,
And mercy more than life.
America! America!
May God thy gold refine
Till all success be nobleness,
And ev'ry gain divine.
[original lines:God shed his grace on thee Till selfish gain no longer stain The banner of the free!]

O beautiful for patriot dream
That sees beyond the years
Thine alabaster cities gleam
Undimmed by human tears.
America! America!
God shed his grace on thee,
And crown thy good with brotherhood
From sea to shining sea.

(America The Beautiful, 1893, Katherine Lee Bates)

--------------------------------------------------------------

When I saw the complete lyrics of the this old American song above, the 2nd-4th verses, it was actually a revelation.

So many of our political issues and cultural issues lately seem to pit two sides against one another, where

the side calling itself "patriotic" works directly against much of what makes us American -- The Bill of Rights.

or...

the side calling itself "Christian" works directly against and in contradiction to the teachings of Christ.

Perhaps those who find themselves in such political debates should stop sparring.

Instead, I suggest we simply quote the Bill of Rights in full sentences at times. For instance, in a debate on "gun control," it's helpful to quote the full text of the 2nd amendment.

You might say, "But what does 'well-regulated' mean in the 2nd Amendment where it says: 'A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed'?"

Even more radical, of course, would be to quote Christ himself when in a debate or discussion with people who speak of "Christian" values but are too often arguing against the teachings of Christ. We cannot afford as a nation to allow such noble and necessary ideals as those of Christ to be repainted into cover for a political philosophy which contradicts the teachings of Christ, even if this misdirection has been perpetrated for a decade or two.

I suggest that those who are peace advocates study some of the most powerful roots of their beliefs -- the teachings of Christ.

"But I -- I say to you, Love your enemies, bless those cursing you, do good to those hating you, and pray for those accusing you falsely, and persecuting you." (Matthew)

In a debate with the militarists who now dominate America, one might ask simple questions like:
"How would Jesus have us respond to the 9/11 attack?"

It isn't necessary to appear to win the argument at that moment. There are bigger issues at play. You don't need to "win" an argument instantly, nor even refute an obvious, convoluted rationale. Truth has a way of making it's own progress. When Reagan went to Berlin in 1987 and said, "Mr. Gorbachev, tear down this wall," the truth behind what Reagan was saying did *not* result in the wall coming down quickly. A year later, the wall still stood. But....the ground it stood on was changing. Reagan's words may have only added increased awareness. But of many pieces are such great movements composed.

It's surprising and uplifting to actually read the words that established America. Even more so for the words that established Christianity.

The best cure for many of the modern ills of America, is...America itself.

The Other Shoe Begins to Drop

One thing was clear at the outset of this Debt Bubble Collapse.

Nations with huge trade surpluses are in much more economic danger than nations with trade deficits like the U.S.

Like the U.S. in 1930, leading exporters today stand to lose the most jobs with a collapse in world demand.

The possibility is continued cataclysmic collapse in trade, leading to massive downturns in GDP and jobs in the export leaders.

That's right, it's the most successful exporting powerhouses like Germany, China, Korea and Japan which are in the greatest economic danger. Much more so than the U.S.

Their only hope is to create serious domestic demand increases, which would require drastic plans to accomplish. Such plans are not visible, although China has taken a partial step.

It's not that no response at all has occurred. Germany did try a clever auto trade-in scheme for instance. China promptly developed a lending/building&infrastructure-boom, which isn't exactly consumer demand, but is better than nothing. But these, while helpful, are far from the real economic strength that would come for instance from China supporting its own growth via increasing Chinese consumer demand.

While China pressed the Keynesian stimulus button at least partly, Japan tried a new tack, Korea aimed green, and Germany begrudged a small stimulus inadequate for a nation where exports were 47% of GDP, the truly enigmatic picture has been Germany.

It only took a moment to guess why Germany was reluctant to try sizable deficit Keynesian spending (in proportion to the large downturn) months ago if you remember your history -- the hyperinflation of the Weimar Republic is their greater economic memory, not the Great Depression, which Germany quickly escaped.

But in recent months, as we watched job loss and panic around the world, the Germans seemed comfortable, busy shopping, unaffected. While German trade figures dropped precipitously, the mood in Germany seemed...chipper.

But it turns out there's a reason Germany defied economic logic for a while...

Marketplace points out why:

STEPHEN BEARD:"...rather than lay off large numbers of staff, German companies have kept them on, working a shorter week, often with a Government subsidy, in the hope of an early upturn....

SIMON TILLFORD:"The assumption that there will be a relatively robust economic recovery now looks pretty far-fetched, hence German companies are going to start laying off workers in large numbers over the next six months....

ANDREW HILTON:" ...If the U.S...bounces back, the German economy will bounce as a result...but, if the recession is prolonged in the U.S....we will see rising unemployment in Germany...focused in the export sector."

Could these strong, hardworking nations do something about their impending employment waterfall?

Sure.

But will they?