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Archive for the ‘Healthcare Policy’ Category

Tuesday, October 22nd 2013

As If Healthcare Is, Was Or Will Be A Free Market

There are ways to argue that healthcare costs are to high and that American physicians earn too much. But as preeminent healthcare economist Uwe Reinhardt has pointed out, comparing American doctors earnings to foreigners isn’t the way to do it.

In fact that’s an absolutely absurd argument. It’s based on such a glaring fallacy that it makes it difficult to take seriously anything else put forward by people who make it.

But here is the Center for Economic and Policy Research putting forward such in a criticism of Paul Ryan’s plan to end the government shutdown.

Of course, the cuts to Medicare proposed had no real viability and weren’t part of the final solution in Washington last week. Never the less in taking up the challenge to Ryan’s proposal the CEPR piece notes,

If we got our health care costs in line with the rest of the world, there is no budget problem whatsoever.


There are two ways to reduce costs. One is to get our costs in line with what people pay in every other country. This would mean taking on the health care industry. Our doctors (who comprise close to 20 percent of the country’s richest 1 percent) would see their pay cut by roughly 50 percent, on average. We would cut what we pay for drugs and medical equipment by roughly the same amount. This could be done if we were prepared to eliminate the government protections that keep these prices so out of line with prices in the rest of the world.

Organized medicine has done a great job of keeping physician supply low. But it doesn’t explain the discrepancy between American physician earnings and those of their counterparts; not close to in full. To pretend that physicians in other countries earn something like a market based wage is ridiculous.

To discuss the market in healthcare, supply and demand, we need to realize on the flip side there are significant artificial restrictions on what physicians can charge. The most impressive case is the example of emergency situations where the supply, restricted by acuity, is extremely limited. I know that’s not the substantial portion of health care and is more pertinent to my field than say that of a family practice physician but the point is considerable artificial downward pressures exist.

Arguing a market based approach to healthcare reform for liberals runs some risks. To stop short of hypocrisy many government policies that hamper physician income would have to be conceded in exchange for something like lifting the artificial barriers to physician supply. Considering such, I’m not sure a true free market healthcare system would do anything to reduce healthcare costs.

Stopping short of that and demanding physicians unilateraly stop their anti-capitalistic practices seems hypocritical.

So maybe the CEPR should stop the call on Washington to “take on” physicians.

Monday, October 21st 2013

The Rollout Isn’t Going To Fell Obamacare

The roll out of healthcare.gov has been a poorly mitigated disaster. For the federally run exchanges, which represent the majority, connection problems and webpage load times and login dogles have made signing up for health insurance essentially impossible for perhaps hundreds of thousands of people.

These problems, seen by consumers, underlie even larger issues with the system however,

[E]xperts said the technological problems of the site went far beyond the roadblocks to creating accounts that continue to prevent legions of users from even registering. Indeed, several said, the login problems, though vexing to consumers, may be the easiest to solve. One specialist said that as many as five million lines of software code may need to be rewritten before the Web site runs properly.

“The account creation and registration problems are masking the problems that will happen later,” said one person involved in the repair effort.

Those who have successfully started or completed applications are having, at times, their data transmitted ineffectually to the insurers they’re trying to purchase from.

Insurance executives said in interviews that they were frustrated because they did not know the government’s plan or schedule for repairs. Insurers have found that the system provides them with incorrect information about some enrollees, repeatedly enrolls and cancels the enrollments of others, and simply loses the enrollments of still others.

Correcting those errors, specialists said, could require extensive rewriting of software code. Insurers said it could be weeks before their data and the government’s could be reconciled.

It is a source of major criticism of the entire endeavor. And also some humor.

The task of integrating the expensive and numerous contractors who built the exchange website has been something seemingly hairbrained.

CMS did not hire a general contractor to manage the exchange project but handled that overall technical management task itself. None of the people I spoke with wanted to get into how this decision was made or at what level, but all of them agreed that it was a very bad idea and was at the core of the disaster they have so far experienced.

The work to fix this is going to take months and such long term problems are calling into question how the exhanges’ numbers are going to look after the first year with low volume enrollment of generally sick people.

One key worry is based on the fact that what they’re facing is not a situation where it is impossible to buy coverage but one where it is possible but very difficult to buy coverage. That’s much worse from their point of view, because it means that only highly motivated consumers are getting coverage. People who are highly motivated to get coverage in a community-rated insurance system are very likely to be in bad health. The healthy young man who sees an ad for his state exchange during a baseball game and loads up the site to get coverage—the dream consumer so essential to the design of the exchange system—will not keep trying 25 times over a week if the site is not working. The person with high health costs and no insurance will. The exchange system is designed to enable that sick person to get coverage, of course, but it can only do that if the healthy person does too. The insurers don’t yet have a clear overall sense of the risk profile of the people who are signing up, but the circumstantial evidence they have is very distressing to them. The danger of a rapid adverse selection spiral is much more serious than they believed possible this summer. They would love it if the administration could shut down the exchange system, at least the federal one, until the interface problems can be addressed. But they know this is impossible.

But such pressures are not insurmountable and despite some critics’ contentions a bad year for the insurers is not going to ruin the program or dry up the marketplaces. The subsidies are going to be too large and the pressures from the administration too great. And even if this substantially drives up the costs and delays the program – even delaying the individual mandate – it isn’t going to be a death kneel to Obamacare.

The technical architecture of the federal exchanges and to a lesser extent the state ones has been very badly screwed up. The problem may be so bad as to render Obamacare’s rollout impossible in practice at this point. But it may not be. And right now no one knows if it will or will not. My gut sense after listening to these insiders, for what little it’s worth, is that it’s not likely that the situation will prove to be much worse than it now seems, and it’s more likely that it will prove to be less bad than it now seems.

The time frame for Obamacare may change and the costs may grow but the program is going to keep pressing on and do, eventually, what it was decided to. Nor do I think we can judge the program solely based on this royal screw up. It will fly or fall when the glitches are finally overcome and the marketplaces are truly up and running and then we’ll get a feel for whether this part of the Affordable Care Act can improve access and health and help keep down costs.

Sunday, October 20th 2013

Fee For Service And More Care

On anecdote all physicians claim, and perhaps believe, they provide services irregardless of its impact on their own financial bottom line. And likely on anecdote all physicians will, sincerely, claim the same for most of their colleagues. And so it’s always controversial to claim that physicians provide more care, of marginal or no necessity, based on their own financial gain. But here we are again with evidence for such. A paper from the NBER concludes that California obstetricians are performing c-sections in part motivated by billing.

[P]hysicians are almost 10 percent less likely to receive a C-section, with only a quarter of this effect attributable to differential sorting of patients to hospitals or obstetricians. Financial incentives have a large effect on C-section probabilities for non-physicians

This follows oft forgotten research which has consistently shown that financial interests motivate some surgical procedures. Indeed a two decade old NBER paper implied c-sections were being driven by decreasing child birth. For instance, when the reimbursement for coronary artery bypass graft surgery went down, the number of surgeries performed went up. Many other papers have concluded the same.

Deincentivizing procedures and more healthcare are difficult things. Shifting some of the reward away from volume has been attempted with capitation and basing some reimbursement on things other than volume i.e. pay for performance but as long as there remains substantial reward for doing more it is difficult to imagine doing less healthcare.

Friday, October 18th 2013

What You’re Charged Versus What You Pay

Not to make light of the anecdote Timothy Murphy just posted over on Mother Jones but it doesn’t 100% reflect how health care costs work for those paying out of pocket for ER care. Those being namely the uninsured. In the story he gets stitches in the emergency room and then gets a shocker of a bill.

[I]f I didn’t have insurance, like 47 million working-age adults nationally and approximately 23 percent of 18-to-25 year-olds, it would have increased the bill by a factor of more than a hundred.


I don’t have $5,000 of disposable income just lying around. My unfortunate encounter with typically wayward millennials could have left me broke.

I’m not sure it changes greatly the point of his story but what you’re charged and what you pay as an uninsured individual are two greatly different things. In fact, the charges and bills people tout as examples of the exorbitant costs of health care are absolutely meaningless in terms of what people actually pay. Those paying for hospital care out of pocket can probably more reliably expect to actually pay somewhere between zero to a half of those charges.

The reasons hospitals actually present a bill with such a big sticker price is complex to say the least but the initial bill is a starting point and one far removed from what the hospital is actually going to try to collect.

If Mr. Murphy didn’t have insurance he’d be unlikely to be expected to have $5,000 in disposable income by George Washington University hospital. The final payment would probably be something much less and would’ve almost certainly been financed into monthly payments over a length of time. No $5000 or even $1500 lump sum.

Here’s a good New York Times profile of someone with a similar experience.

Still, those costs can create a significant burden. Maybe not so dramatic.

Where health care costs really hamper the uninsured is probably not emergency care but in chronic illnesses and in long term acute care. You’ll get treated in an ER no matter your ability to pay and the hospital is probably gonna work with you on your bill. You’re much less likely to get that chemotherapy without a funding source.

No doubt medical bills are a major contributor to financial ruin and costs for the uninsured are a major obstacle to access. But ER visits probably isn’t where the big problem is.

Nitpicking maybe.

Friday, October 18th 2013

Competency Not Guaranteed By Malpractice Threat

Been a while since I wrote about medical malpractice reform. It used to dominate posts on this blog. But an interesting story from Texas is making the rounds and so it seemed appropriate to comment.

I had this idea, even through medical school, that all physicians were essentially equivalent. Of course there are the great surgeons or clinicians. But in general, you get a level of basic competency that means for the most common things it probably doesn’t matter which surgeon takes your gallbladder out or does your lumbar fusion.

Training has taught me that such is not the case. But sometimes the disparities are stunning.

Dr. Randall Kirby was another surgeon at Baylor Plano. In January 2012, he assisted on one of [Dr. Christopher] Duntsch’s surgeries. Kirby had spent 16 years performing general surgery in the Dallas area, in which time he’d assisted on more than 2,000 spine operations. Duntsch, he said, was the worst.

“His performance,” Kirby wrote, “was pathetic . . . He was functioning at a first- or second-year neurosurgical resident level but had no apparent insight into how bad his technique was.”

Another surgeon took to faxing the UTHSC a picture of Dr. Duntsch to make sure he had actually graduated from neurosurgical residency, convinced he was an impostor.

“He had amputated a nerve root,” Henderson said. “It was just gone. And in its place is where he had placed the fusion. He’d made multiple screw holes on the left everywhere but where he had needed to be. On the right side, there was a screw through a portion of the S1 nerve root.”

At first, Henderson thought Duntsch might be an impostor. He faxed over a picture of Duntsch to the residency program at the University of Tennessee Health Science Center to see if Duntsch had graduated.

“I couldn’t believe a trained surgeon could do this,” Henderson told me. “He just had no recognition of the proper anatomy. He had no idea what he was doing. At every step of the way, you would have to know the right thing to do so you could do the wrong thing, because he did all the wrong things.”

The facts conceded, its difficult to buy the conclusions of the Texas Observer.

Up until 2003, medical care in Texas was regulated by a system of checks. Hospital management, the court system and the Texas Medical Board formed a web of regulation that penalized and prevented bad care.

[I]n the past 10 years, a series of conservative reforms have severely limited patients’ options for holding doctors and hospitals accountable for bad care. In 2003, the Republican-dominated Texas Legislature capped pain-and-suffering damages in medical malpractice lawsuits at $250,000. Even if a plaintiff wins the maximum award, after you pay your lawyer and your experts and go through, potentially, years of trial, not much is left.

The Legislature has also made suing hospitals difficult.


The medical malpractice cap and the near-immunity for hospitals snapped two threads from the regulatory web. What remained was the Texas Medical Board.

But the Medical Board wasn’t designed to be an aggressive enforcer. It was mostly designed to monitor doctors’ licenses and make sure the state’s medical practitioners are keeping up with professional standards.


What all this means is that the Texas Legislature has committed the state to a policy of medical deregulation—a free-market system in which doctors can practice as they please with limited government interference. Only their consciences, and those of their fellow doctors, limit them.

It’s true that since capping malpractice awards, complaints to the Texas Medical Board and medical board investigations of physicians has gone up. But such may easily reflect legislation that broadened the responsibilities of the Texas Medical Board, to conduct such investigations, rather than the legislation capping awards.

The increases in investigations and disciplinary actions were mainly driven by the legislature, according to Dr. Stewart. The lawmakers mandated greater oversight by the medical board, so that undoubtedly led to an increase in enforcement.

The limited evidence seems to imply that the threat of litigation serves as no significant deterrence against medical error or poor medical outcomes.

Among the key rationales typically invoked to support a system of medical malpractice law is the notion that fear over medical liability may incentivize a physician to provide a level of quality that she would not have otherwise provided absent the law.


[T]he literature has generally failed to provide systematic support for any contention that the existing medical liability system is effective in improving health care quality.


[T]here is little evidence to suggest that the geographic standardization of medical malpractice law is associated with a corresponding standardization of observed quality, implying that healthcare quality may not be so responsive to liability standard

I’m disheartened to see such at the heart of the Texas Observer’s thesis. And to have been picked up by economists and other journalists.

That is a totally baseless argument. The errors that occurred in the Texas Observer story – all of them – would’ve still occurred in pre-cap Texas.

We can have a legitimate debate on whether the caps hinder justice for those patients injured. Whether they deserve more compensation. I’ve voiced my thoughts on such. The fact that most claims are frivolous and the costs of defense of such claims are enormous, and the fact that most truly injured by negligence don’t even seek compensation factors strongly into my opinion.

What we shouldn’t pretend, but what the Texas Observer does, is that tort reform in Texas made these horrors more likely or even inevitable. It didn’t. The threat of litigation doesn’t deter medical errors.

Saturday, October 12th 2013

More Undergraduate Medical Education For Texas

I went on a rant a while ago about the University of Texas system promising two new medical schools. One for Austin and one for the Rio Grande Valley.

[P]lenty of money will come from state general revenue afforded to the university systems. That is money from tax payers across the state who are likely to see no to nominal benefit from these new schools.

New medical schools in Texas are unlikely to improve our statewide physician shortage and may even do little to correct disparities in the communities they’re joining. We’re already graduating enough medical students and in a strong position to continue to do so for our growing population without new medical campuses. The schools will bring new graduate medical education funding, in the form of new Medicare dollars, but such will not keep pace with the new medical school graduates they promise. The costs of these new medical schools would be much better put towards improving graduate medical education in the state. That is something that would truly improve Texas’ doctor shortage and potentially the public’s health.

IN 2011 Texas’ had 2.36 medical school seats per 10000 population. That was 10th in the nation. Since then the state has opened a new public medical school in El Paso, expanded the class size of every existing medical school in addition to the two new University of Texas schools currently in planning.

Now, my hometown, San Antonio, is looking to get a new school of osteopathic medicine.

The City Council voted unanimously Thursday to approve a $7.7 million funding agreement for infrastructure improvements and job incentives, some of which will literally help pave the way for the University of the Incarnate Word to build an osteopathic medical school in downtown San Antonio.

With too few GME spots this will do nothing to help the physician shortage in Texas or San Antonio and is likely to have little impact on health in the surrounding community. Of course it has some economic and prestige effects but there should be more skepticism about the long term goals of such a school. Even more so in terms of the choice of an osteopathic focus.

Thursday, June 6th 2013

Alternatives To Medicaid Expansion

Tuesday, June 4th 2013

Medical School Is A Good Return On Investment

I return to the topic of what American physicians earn. Actually, I point you to a piece in the New York Times by noted healthcare economist Uwe Reinhardt. Dr. Reinhardt has done considerable work on the subject and others in healthcare. Here he is explaining the situation well in layman’s terms.

Standard economic theory suggests that over all, American doctors are overpaid, although perhaps not the primary-care specialties. This position leans on the fact that at existing incomes there is still considerable excess demand for places in medical schools among bright American youngsters – not to mention a huge pool of highly qualified foreign applicants. This suggests that the lamented doctor shortage in the United States is the result of an artificially constrained supply of medical school places and residency slots, which serves to inflate physician incomes above what they would be in a better functioning market without supply constraints.

He does dismiss the argument that American physicians are overpaid based on the earnings of their counterparts in the international market. I appreciate that.

[T]he relevant comparison should not be doctors in other countries, but the incomes earned in the United States by members of the talent pool from which American physicians are recruited, a group that includes many who end up in the superbly well-remunerated financial markets, where they are well paid almost independently of their actual net contribution to society.


[T]he rate of return on the investment in human capital (i.e., education and training) to become a doctor is attractive – especially for the higher-paying medical specialties – but it is not as high as the rate earned on human-capital investments for other professions.

I agree with everything above. Obviously physician earnings are highly influenced by the self regulation of medicine which keeps supply low. But as I’ve said before, working in a high acuity specialty, I’d trade restrictions on training and practice for a a similar lifting of some consumer protections which also constrain earnings, especially in emergencies.

Monday, May 27th 2013

Does It Matter Where You Die?

Injury to the brain continues to be a unique thing in medicine. These injuries are scary and unfamiliar to many health care providers. There is a finality to them. Their consequences are hidden a little bit; the asystole is easy to figure in the emergency room but the suppression and brain death isn’t something so easily recognized.

They’re what you might imagine, along with polytrauma, as poster child conditions for tertiarization and transfer to a higher level of care.

In truly catastrophic injury to the brain however, I’m not sure that’s a good thing.

My institution has had a small discussion lately on just what ethics and the law requires of us as a place with full neuro specialty coverage.

I’ll make up an example:

A 61 year old man comes into a small community hospital’s emergency room. He was found down at home by his wife and last seen normal four hours previously. He wouldn’t wake up and he was breathing slowly and shallowly. The ambulance crew intubated him. In the emergency room his pupils are large and don’t react to light and he doesn’t do anything when the doctor hurts him. He’s in a very deep coma. If the physician working the emergency room felt comfortable doing a brain death exam, which he doesn’t, the patient might have some very primitive reflexes left but his condition is very serious.

A CT scan of the head is performed and shows a large bleed within the brain.

The bleed was probably caused by high blood pressure. In reality however, the patient’s condition is essentially terminal and the cause of the bleed isn’t important at this point.

The small hospital has an intensive care unit and an open bed. It however has no neurosurgeons, nor indeed even neurologists who round at the hospital. And so the physician in the emergency room starts trying to transfer the patient to a hospital where a neurosurgeon can see the patient.

There are really two issues here. The first is a legal issue concerning a law called EMTALA. EMTALA is a law that dictates transfers for higher care amongst hospitals that accept Medicare (virtually all hospitals). In very broad terms it puts responsibilities and requirements on both the hospital trying to transfer the patient and the hospital that might accept the patient. The former has a responsibility to stabilize a patient. They cannot refuse care in an emergency as a matter of lack of payment or inquire about payment prior to treatment to stabilize. Nor can they transfer a patient after stabilization merely as a matter of lack of ability to pay. The latter has a non-discrimination requirement, that specifically reads,

A participating hospital that has specialized capabilities or facilities (such as burn units, shock-trauma units, neonatal intensive care units, or (with respect to rural areas) regional referral centers as identified by the secretary in regulation) shall
not refuse to accept an appropriate transfer of an individual who requires such specialized capabilities or facilities if the hospital has the capacity to treat the individual.

Case law on the non-discrimination provision is scarce but in catastrophic injury, where no specialized intervention will alter the course of the patient’s condition, I would argue that the patient doesn’t require specialized care. And not merely cases where the patient is brain dead at the time of the transfer request but also in situations where brain death is inevitable or the condition is otherwise not survivable. The patient and family can proceed to comfort measures at any hospital, there is no specialization about such care.

The second issue is an ethical one. Do hospitals with specialized capabilities owe something to patients and families to transfer as a matter of finality and closure. In that we’re saying, “Watch, we did everything we could…”?

While I’m somewhat empathetic to such an argument I have trouble with it. I think it reflects a problem in both the expectations we have of health care as patients and how physicians are trained to deal with end of life. Really it is a shame for physicians to come out of training without basic palliative and communication skills. Even the physician in the small rural emergency room should have such a skill set. The capability to have an end of life discussion with families, even if the medical issue falls somewhat outside their scope of specialty.

I’m also somewhat disappointed in how some referring physicians appear to place priority in getting the patient off their hands over the patient’s well being. I’ve had cases where even after discussion with the consulting physician at an outside hospital and having seen the films and described in no uncertain terms to the other doc that the injury is not survivable that they continue to press for transfer.

I may be wearing blinders here but, and I think much of this is subconscious, I can only draw a single conclusion from such arguing. The continued pressure to accept the patient in transfer, after I’ve explained there is nothing to do for them, is a condemnation of my analysis of the situation. They’re basically calling into question my competency; my faculty’s compentency.

And I’m okay with that in the sense that I’m not going to take offense. What I have trouble with is they’re now trying to transfer their patient to a consultant who they don’t think is competent.

I don’t know how they can have the patient’s best interests in mind and work to transfer them to another physician they’ve basically said they don’t trust.

The issue gets more complex of course and I could continue writing. What if the patient was 6 months old instead of 61 years but the situation, in terms of the finality of the condition, remained the same? How many physicians on the line at the accepting hospital are literally too lazy to accept the transfer and work for any reason not to?

In general however, in an honest physician-to-physician phone call, with terminal conditions, where nothing will be done at the accepting hospital, no matter the patient’s age, I’m not sure transfer is a good thing. It significantly contributes to costs, provides false hope and contributes to our societal expectations at the end of life.

Saturday, May 25th 2013

Maryland Wants More Control Over What Hospitals Charge

Maryland is unique amongst states,

In other states, each time a hospital provides a service, it has to negotiate how much money it receives from an insurer. The time-consuming and often contentious process results in widely varying prices for the same procedures.

Hospitals pushed for the highest possible payouts partly because they say they do not receive enough from Medicare, the federal program that reimburses medical providers for their care of the elderly.

Maryland put an end to the wrangling. It established a state commission that directly set rates for procedures at all of its 46 hospitals. Over time, hospitals and insurers embraced the system because they knew exactly what to expect.

But, as expenses in health care grew rapidly, the program did a poor job keeping up for hospitals and creating an incentive for hospitals to admit as many patients as possible,

Part of the problem with the old system is that it gave hospitals an incentive to admit as many people as possible. The more patients who walked through the door, the more the hospitals would get paid.

So Maryland officials came up with a new approach. On top of setting rates for individual procedures, they are proposing a cap on the growth of the total amount the hospital system spends per person in the state. The plan also allows hospitals to charge higher prices if they adopt preventive-care methods that improve patient health and reduce repeat visits, said Maryland’s health secretary, Joshua Sharfstein.

Boy, can’t say I support this proposal.