Archives for posts with tag: market-based solutions

It’s no secret that the ACA is experiencing growing pains at best and is in crisis at worst. Plagued by website concerns and the fact that many states are not committed to the Medicaid expansion, actually manifesting the increased coverage that is so central to the bill is proving to be much more difficult. Robert Reich recently remarked on his Facebook page regarding the problems with ACA implementation, “…if the problems continue, it won’t be only Democrats in trouble but the entire idea that government can do something complex and well. Yet, ironically, it won’t be the government that determines whether or not the system works as promised; it will be an array of private for-profit contractors and insurers.”

Again we see private industry creating problems but our government taking the blame in the public’s eye.

SCOTUS’ decision to allow states to choose whether to expand Medicaid created a new “donut hole” that’s particularly worrisome – people who do not qualify for Medicaid as it currently stands, but who make less than 138% of the poverty line (and thus do not qualify for the federal subsidies to purchase insurance through the exchange) have absolutely no options for health insurance! Because they were supposed to be covered under the new expanded Medicaid, no other provisions for their coverage were made.

It is extremely important that Medicaid expansion happen in every state, but we need to keep a close eye on how it’s done.

In some previous posts I’ve talked about states’ ideas for implementing Medicaid expansion and how Virginia, like many other states, seems to be leaning in the direction of increasing managed care. This basically amounts to awarding contracts to private insurance companies to handle the administration of Medicaid, with the idea that private companies will know how to better decrease costs as well as increase efficiency. Generally (but not always) this means that private companies are paid a fixed rate per enrollee, which is usually a percentage (usually around 95%) of what patients are costing the state, on average, under the prior fee for service system. Good data exists regarding this tactic in Medicare. Contracting to private companies via Medicare Advantage increases costs because programs have consistently found ways to cherry-pick for the healthiest seniors, thus minimizing risks, and have higher administrative costs than traditional Medicare.  It is estimated that Medicare private plans have resulted in overpayments of over a quarter-trillion dollars from 1985 – 2012!

However, the impact of Medicaid Managed Care on cost, access, and quality of care is more difficult to assess on a national level because Medicaid is a state program and significant variability exists between states. The patient population of Medicaid is also significantly different than Medicare. Yet there is some emerging evidence that the impact is negative, especially when for-profit companies handle care:

1) A recent study by McCue and Bailit directly compared publicly-traded with non-publicly traded Medicaid Managed Care plans and found “publicly traded plans that focused primarily on Medicaid enrollees paid out the lowest percentage of their Medicaid premium revenues in medical expenses and reported the highest percentage in administrative expenses across different types of health plans. The publicly traded plans also received lower scores for quality-of care measures related to preventive care, treatment of chronic conditions, members’ access to care, and customer service.”

2) The state of Connecticut recently ended their contracts with multiple managed care organizations (MCOs) after an independent investigation, citing concerns about insufficient transparency regarding allocation of funds and burgeoning administrative costs.

I spoke with a few physicians who provide care to a large population of patients with Medicaid about differences they’ve noticed with the Managed Care companies vs fee for service. These companies seem to increase administrative burden on physicians by ensuring “quality measures” are met. A few examples – reminders to place patients on ACE inhibitors (when many of the patients are already on these medications, but just not registered by the company), or “Members who turned 15 months old during measurement year and had at least 6 well child visits since birth.” While important aspects to consider, it’s easy to see how satisfying them may not necessarily lead to better outcomes (but give the appearance of such to policymakers). It’s even easier to see how these may balloon into huge administrative bloat for already busy doctors.

Still, many states are expected to increase their involvement with private insurance companies in expanding Medicaid.  Why? The myth persists that private companies, because they are subject to the invisible hand, will streamline administrative costs and improve quality or risk failure. All available evidence points to the contrary, because healthcare does not function like other markets. 

 

Medicaid Managed Care proponents say that coordinating care of people with chronic diseases/conditions is necessary to help them navigate the confusing system and keep them out of the hospital living longer, healthier lives. How could any multi-payer system possibly do that better, and with less administrative burden, than a single payer one? That would allow for the optimum, most efficient coordination of care, as well as quality evaluation.

Let’s work to keep an eye on further privatization of Medicaid. An example of an organization doing just this is Community Catalyst, a consumer advocacy group that conducts research and writes publications about healthcare reform, including Medicaid Managed Care. 

When these market-based experiments fail, we need advocates to step in swiftly with evidence-based explanations in order to prevent the needless suffering of patients and further waste of taxpayer money.

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The Surgery Center of Oklahoma has been in the spotlight recently because of its decision to post all of its prices for its procedures online. This has been heralded as increasing transparency in healthcare costs and implicitly demonizes other hospitals in the area that haven’t followed suit, like traditional academic centers.

Why haven’t hospitals done this a long time ago, so the uninsured can bargain shop for their knee replacement  instead of being stuck with a huge bill they’ll have to go into bankruptcy to afford? It’s an attractive idea, especially when presented as oversimplified as it has been to the public.

In isolation, price-posting is just another market-based artifice, more zeitgeist of our accelerating entrenchment in our broken, healthcare-as-commodity model than any real solution. Nothing illustrates it better than this quote in the NYT opinion piece from the co-founder of the Surgery Center himself, “Patients are holding plane tickets to Oklahoma City and printing out our prices, and leveraging better deals in their local markets.”

HOLD UP DOC. There are a few BIG assumptions here:

1) The medical procedure you need is known to you in advance – that is, it isn’t an emergency.

2) You have the ability to pay SOMETHING ,but either don’t have insurance or lack specific coverage for the procedure, etc.

3) You are physically and mentally able to bargain shop for the healthcare you need. There are many people who need healthcare services who aren’t able to do this – people with dementia requiring long-term care, a person in a coma from a car accident, a person with a debilitating psychiatric problem – it’s not hard to bring examples to mind.

We find that what this really represents is a very specific marketing tactic to a targeted audience – mostly healthy people who need an elective surgery to improve their quality of life. Clearly a very important demographic, but it by no means representative of everyone seeking healthcare.

This approach might works for certain places, like outpatient surgery centers, because they don’t have to deal with people who can’t pay. They can throw their hands up and say, “Don’t blame us! This is a fair deal. Our prices are listed with no small print – pay or don’t receive services.” These are not hospitals – they are centers that offer specific, non-comprehensive services.

Meanwhile, other hospitals in the area, like Oklahoma University Medical Center, take care of people who can’t pay.

The NYT opinion piece basically sums the problem of healthcare costs as a lack of knowledge on the part of the consumer.  That IS a problem, but the real problem is summed up simply in one word: profit.

When there is a market-based healthcare system like there is now, we get comical (but tragic!) comparisons like the NYT piece where finding cheap airline tickets through Kayak is used as analogy to “shopping” for health care.

Anyone without a stake in the current system, any American that needs life-saving services, anyone with the presence of mind to take a step back and examine things in context will see this is just. another. tired. gimmick.

The beginning of a real solution to the healthcare cost problem requires the following steps, in order:

1) Recognize every single person’s fundamental vulnerability to disease and death.

THEN

2) Affirm healthcare as a human right, NOT a commodity that is only available to those that can afford it.

THEN

3) Change the system into an “Ultimate Public Utility” model – because it’s something that we ALL benefit from, and are (mostly) unable to predict when we will require.

THEN

4) Realize that a publicly-funded, Single Payer model – improved Medicare for everyone – is the NECESSARY BUT NOT SUFFICIENT next step.

I’ve noticed some Single Payer advocates start to falter when they present Single Payer as the ipso facto solution for every healthcare-related problem. It will not be like that. Very little will change for the average person if we just decide tomorrow to extend Medicare to cover everyone. A Single Payer system’s REAL power is providing the  ONLY framework that will allow us to collate our bloated, fragmented system into one that can be examined and systematically changed in response to population needs. More fundamentally, it is the only one in which population needs can be accurately assessed in the absence of profiteering. It will be a quicker, more centralized, more responsive system because it is structured to be resistant to conflicts of interest. The goal of a Single Payer system is to provide necessary healthcare to everyone, NOT quibble about piecemeal, temporary gimmicks like price-posting.

I recently saw the new film Escape Fire and felt like it provided a pretty good introduction to the problems with American health care at the moment. It was up to date in detailing why Obamacare is an imperfect solution, and it did explore the issue of why for-profit corporations might not be in the best position to reduce health care costs. Just because of the wide variety of issues the filmmakers chose to look into, it was naturally limited in the depth it could go, but it seemed to provide a reasonably fair assessment overall.

I was struck by one example of lowering costs and improving health that I hadn’t heard about before – that of the grocery store Safeway. Faced with rising health insurance premiums like most companies, Safeway decided to implement a behavioral motivation program where it based the costs of its (non-union) employees’ premiums on a variety of health indicators: “tobacco usage, healthy weight, blood pressure and cholesterol levels” according to an article written in the WSJ by Safeway CEO Steven Burd in 2009. He claimed that insurance costs almost immediately stabilized after implementation of the program in 2005 and that they were “building a culture of health and fitness.” The idea, of course, is that if people are financially motivated to behave themselves in a way that will reduce their future need for health care utilization, everyone will benefit.The movie showed happy-looking employees jogging around the building.

I got a feeling of unease when I heard this story, although I couldn’t immediately figure out why. What’s wrong with giving people an extra reason to improve their own health? After all, they’re the ones who are benefiting from losing weight, quitting smoking, etc. It took me awhile, and I had to dig into it a little bit, but I think I have an explanation.

Burd’s tone in the article struck me as condescending and infantilizing to the workers, although I’m sure he didn’t see it that way. To me, the subtext was, “if only these fat smokers would just QUIT IT ALREADY, they would save us all a ton of money.” He emphasized that 70% of health care costs are the direct result of behavior. (I wasn’t able to find sources in his article, but it very well may be true.) Regardless, such statements are oversimplifications that grossly devalue the truly transformative experience of changing an unhealthy habit. And it shames and punishes people who are unable to make the changes.

Why is that a problem? If 70% of health care costs truly are the result of unhealthy behaviors, then that must mean those behaviors are probably pretty hard to change. I don’t think that people were totally ok with making themselves ill and just looking for an insurance discount to provide that final incentive to get rid of their pesky congestive heart failure caused by a combo of uncontrolled hypertension, high cholesterol, and diabetes-induced heart attacks.

What seems to be difficult for most super-rich people to grasp is that behaviors aren’t just about an individual’s choices. An individual isn’t isolated from the influences around them, but certainly does suffer from them. Not having a car because you are poor, work a low-paying job with weird hours, take a bus home to a neighborhood where there aren’t any grocery stores, and as a result end up eating crap from the local corner store which contributes to your early-onset diabetes certainly could be considered a “behavior” but I think it’d be more accurate to call it a “complete failure of our unjust society.” Granted, most people’s situations are not that drastic, but it’s an illustration of how even calling something a “behavior” neglects the complexities inherent to real people’s lives.

I’m reminded of a (by all accounts middle-class, relatively privileged) person I met whose weight-loss efforts had stalled recently because of severe depression accompanied by some pretty terrible family and social circumstances through absolutely no fault of their own. Any one of us would have found it difficult to continue losing weight in their shoes, despite this individual being highly motivated. It seems incredibly uncompassionate to just toss that person into the policy. It contributes to the myth that meeting these objective, population-based benchmarks are possible for every person at every time if they’d just work hard enough and take personal responsibility, dammit!  It pits workers against each other – hey, fatty 2 cubicles over! Put down the donut and take a walk around the damn building to get your blood pressure down! I don’t wanna have to pay for your expensive, fancy diabetes drugs!

And perhaps most frustrating of all, it’s based on the premise that absolutely everything, even our own health and well-being, has a price and can be commodified.

I should note that in no way am I attempting to minimize the accomplishments of Safeway employees who actually did make these changes and come out far healthier. I have no doubt that such a program was just what some people needed to provide that extra oomph to get the exercise ball rollin’. But even if that were the case for every employee, isn’t it a bit creepy and invasive that your boss cares so much about your waistline and your cholesterol level?  A “culture of health and fitness” starts to look a little more like a culture of coercion, shame, and anxiety.

And what does this market-based solution do to fundamentally address the inequities in accessing health care? That is, even if every employer had a similar program, what would that mean for people who are unemployed due to say, chronic illness? Would they be further shamed and isolated from society? The program is based, by definition, on employees, so that means the people participating were at least healthy enough to work. Almost certainly this would mean that the care of the very sick would continue to fall in the public domain, decreasing private, corporate health care expenditures, but further increasing publicly funded healthcare (ie., Medicare). Though this type of system, Medicare will continue to be fantastically expensive, making it easier to demonize until we finally move toward a total privatization of health care, dissolution of Medicare and Medicaid entirely, with safety nets only being provided by voluntary, charity care.

Well, it turns out that even though Safeway medical costs did stabilize from 2005-2009, it may not have really been related to the incentive program at all and was heavily weighted towards the early years. That is, costs dropped 12.5% in 2005 when the company drastically changed the benefits it was offering. However, 2009 was the first year that insurance premiums were tied to test results at Safeway. According to David Hilzenrath in the Washington Post, “Even as Burd claimed last year to have held costs flat, Safeway was forecasting that per capita expenses for its employees would rise by 8.5 percent in 2009. According to a survey of 1,700 health plans by the benefits consultant Hewitt Associates, the average increase nationally was 6.1 percent.”  When Safeway Senior Vice President Ken Shachmut was asked why premiums rose so much despite their terrific program, he said “we frankly did not have as much control over things as we should have.”

Maybe they had too much control.

Of note, the idea of financial incentives being not only ineffective in reducing health care costs and improving societal health, but actually impeding these goals is one that I intend to explore in future posts!

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