-SPC
Shocked, Shocked, Over Hospital Bills
By UWE E. REINHARDT
Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.
Capt. Louis Renault’s famous line in the movie “Casablanca” comes to mind as I behold the reaction to the journalist Steven Brill’s 36-page report “Bitter Pill: Why Medical Bills Are Killing Us,” published in a special issue of Time last week. Mr. Brill was swiftly invited to appear on “The Daily Show with Jon Stewart” and on “Charlie Rose.”
Americans are shocked, just shocked. But what they should have known for years is that in most states, hospitals are free to squeeze uninsured middle- and upper-middle-class patients for every penny of savings or assets they and their families may have. That’s despite the fact that the economic turf of these hospitals – for the most part so-called nonprofit hospitals – is often protected by state Certificate of Need laws that bestow on them monopolistic power by keeping new potential competitors at bay.
As George Bernard Shaw, whose works include “The Doctor’s Dilemma,” might have put it, that any lawmaker would grant hospitals monopolistic powers plus the freedom to price as they see fit is enough to make one despair of political humanity.
Mr. Brill vividly illustrates the harsh financial mauling that the hospitals covered in his report – all nonprofits – visit on uninsured middle-class Americans stricken with serious illness.
Mr. Brill vividly illustrates the harsh financial mauling that the hospitals covered in his report – all nonprofits – visit on uninsured middle-class Americans stricken with serious illness.
Often these people operate small businesses or are entrepreneurs in start-ups and cannot afford anything other than skimpy health insurance with strict upper limits on coverage. When they fall ill and require hospitalization, they become easy marks for what I think of as “extreme billing.”
In fairness, let me note that we cannot be sure whether the vignettes Mr. Brill presents are representative of the entire hospital industry or the policies of the proverbial few bad apples, a line that may well be taken by representatives of the hospital industry.
It does not take away from Mr. Brill’s brilliant journalism – especially his use of the Form 990 on which nonprofit hospitals must report their financial performance to the Internal Revenue Service – nor from Time’s brilliant marketing to note that the practices Mr. Brill reports have been well known to health-policy analysts and health-policy makers for at least a decade. And they should have been known to broad segments of the public as well – certainly to news organizations.
As early as 2003, Marilyn Werber Serafini’s “Health Care — Sticker Shock” was published in The National Journal, which is well known to Congressional lawmakers and their staffs.
Also in 2003, The Wall Street Journal began publishing on its front page a series of investigative reports by a staff reporter, Lucette Lagnado. In one article she reported on patients being hounded by collection agencies and their lawyers, only to end up in jail for failing to make court appearances in connection with their hospital bills.
To the Editor:
Re “For Medical Tourists, Simple Math” (“Paying Till It Hurts” series, front page, Aug. 4):
Your series about the causes of the United States’ notoriously high spending for medical care is truly a public service. The latest article adds fresh and compelling details about how our medical costs are linked to the prosperity of a handful of implant device makers.
The peer-reviewed literature on this country’s outlandishly high pricing, administrative complexity and waste, outsized salary and profit levels, and other contributors to medical unaffordability is both extensive and often ignored in public debate. Thank you for shining a brilliant reportorial light on this policy disaster.
JON KINGSDALE
Charlestown, Mass., Aug. 4, 2013
Charlestown, Mass., Aug. 4, 2013
The writer is a managing director at Wakely Consulting Group, a health care consultant.
The health spending mystery
By Robert J. Samuelson,
In today’s contentious political climate, when hardly anyone agrees on anything, here’s a rare subject of consensus: Health spending is slowing, and almost everyone thinks that’s a good thing. Aside from relieving pressures on federal and state budgets, it could help reverse stagnant wages by moderating the cost of employer-paid insurance. Compensation would shift from insurance to wages. What the experts don’t agree on is who (or what) caused the slowdown and whether it will continue.
First, the basic figures. In each of 2009, 2010 and 2011, U.S. health spending increased a modest 3.9 percent, virtually identical with the slow growth of the economy (gross domestic product, or GDP). So health spending remained steady at 17.9 percent of GDP after years of increases. Almost no one predicted this.
Not surprisingly, the Obama administration suggests that the Affordable Care Act (”Obamacare”) is a main cause. “As ACA Implementation Continues, Consumer Health Care Cost Growth Has Slowed” is the headline of a recent White House blog post by Alan Krueger, head of the Council of Economic Advisers. Many statistical sources, he notes, confirm the slowdown.
As of May, actual health-care prices (hospital admissions, doctors’ visits, drugs) had risen just 1.1 percent over the previous year, “the slowest rate of increase in nearly 50 years,” Krueger reports. Meanwhile, the Bureau of Labor Statistics survey of business compensation finds that “real” (inflation-adjusted) health insurance costs rose 1.8 percent annually from the end of 2009 to the end of 2012, down from 2.2 percent from 2006 to 2009.
But is Obamacare responsible? Be skeptical.
To be fair: Krueger never actually makes that claim. The blog post is something of a sleight of hand. It simply says that the spending slowdown and the ACA’s implementation have coincided. There’s no explicit language linking the two, though unsuspecting readers would surely take away that message. The post is both politically self-serving and intellectually defensible.
Among the skeptics is economist Timothy Taylor, whose “Conversable Economist” blog is consistently nonpartisan. In a post, Taylor notes that the ACA “is mostly not yet implemented,” casting doubt on its impact. He also cites several studies indicating that the slowdown has complex origins.
One study comes from the Organization for Economic Cooperation and Development (OECD), a group of 34 mostly rich nations. Growth in health spending has collapsed in most of its member countries, says the OECD. A global slowdown calls into question Obamacare’s role.
Rides go wrong for Maine's poor
Posted: August 7Updated: Today at 12:24 AM
Complaints about no-shows and confusion pour in from parents and patients after federal changes disrupt the MaineCare-funded transportation system.
For two tense hours, Jennifer Ruel of Old Orchard Beach didn't know what had happened to her 3-year-old son.
When he wasn't home as expected in the early afternoon, she started making frantic phone calls. "Nobody could tell me where my son was," said Ruel. "I was freaking out."
The driver eventually figured out how to get to Ruel's house, and her son, who had fallen asleep, was delivered safely. But the experience has made Ruel leery of using the rides paid for by MaineCare, the state's Medicaid program.
Since Aug. 1, complaints like Ruel's have been rolling in to the state from MaineCare recipients who need rides to doctor's appointments and therapy, and other non-emergency transportation.
http://www.pressherald.com/news/Changes-generate-complaints-about-MaineCare-transportation-.html
Maine hospitals rank well, but a dozen face Medicare penalties for readmissions
Posted Aug. 07, 2013, at 6:08 p.m.
A dozen Maine hospitals face Medicare penalties in round two of the federal government’s push to lower the number of patients who wind up back in the hospital within a month of being discharged.
Compared to other states, Maine’s hospitals ranked near the top, at seventh nationally by the amount of the average penalty.
Nationally, Medicare will impose $227 million in fines on 2,225 hospitals by reducing their payments for a year starting on Oct. 1, according to an analysis by Kaiser Health News. The analysis describes the penalty program, which launched in October 2012 under the Affordable Care Act, as among the toughest of Medicare’s efforts to pay hospitals for the quality of care they deliver rather than the number of patients they treat.
Nationally, the overall number of penalized hospitals remained about the same at two-thirds of eligible facilities. Hospitals that treated a high number of low-income patients were more likely to be penalized.
With nearly one in five Medicare patients returning to the hospital within a month of discharge, the federal government has set its sights on lowering readmissions to reduce costs and better coordinate patients’ care. The penalty program upends hospitals’ incentive for repeat visits; they get paid again when patients return for more treatment.
Medicare counts patients who originally went into the hospital with at least one of three diagnoses — heart attack, heart failure or pneumonia — and returned within 30 days for any reason, including complaints unrelated to the original visit. If the readmission was planned when the patient originally left the hospital, it didn’t count, a change from last year.
In Maine, no hospitals will face the maximum penalty of 2 percent — up from 1 percent in the first round — of every Medicare payment for a patient stay. Statewide, the penalties average 0.10 percent, significantly less than the national average of 0.38 percent.
Nancy Morris, communications director with the Maine Health Management Coalition, a Portland nonprofit made up of employers, hospitals and others working to improve the quality and value of health care, praised the government’s efforts to tie payments to the quality, rather than quantity, of patients’ care. The goal, she said, should be zero preventable readmissions.
“The more the hospital does to prevent these readmissions, the better value we’re getting — all of us,” Morris said. “The fact that the government is doing this is great, the fact that we are better than the average is great.”
Medicare evaluated 20 of Maine’s 39 hospitals. Twelve hospitals will be penalized and eight face no fines.
Obamacare Foes Make Final Push To Stop Health Law's Implementation
A screenshot from the FreedomWorks website, which is urging citizens opposed to the Affordable Care Act to opt out of the law's requirement to have insurance. It asks Americans to symbolically "burn your Obamacare card." In reality, no such card will exist.
FreedomWorks
With less than eight weeks to go before the official launch of the new health care marketplaces under the federal health law, backers of the law are ramping up to encourage people to sign up.
But there's another effort gearing up this month as well. Opponents of the health care law are making one last-ditch effort to run Obamacare off the rails before it gets fully implemented.
Probably the most aggressive effort is coming from FreedomWorks, a conservative advocacy group. It's urging people, particularly young people, not to sign up for health insurance.
"They can skip the exchange, pay the fine, and in doing that, do what's best for them financially, and we hope help hasten the collapse of Obamacare," said Dean Clancy, the group's Vice President for Policy.
FreedomWorks has also created a bit of civil disobedience theater as part of its campaign — inviting people tosymbolically burn (fictional) Obamacare insurance cards. Of course there is no such thing as an Obamacare card. But that's not a problem. FreedomWorks is making its own, and distributing them.
"We're going to be holding burnings around the country," said Clancy. "Without burning anything down," he's quick to add. "It's all peaceful and lawful."
New Sign of Stimulants’ Toll on Young
By SABRINA TAVERNISE
WASHINGTON — The number of young adults who end up in the emergency room after taking Adderall, Ritalin or other such stimulants has quadrupled in recent years, federal health officials said Thursday, fresh evidence of the unexpected consequences that can result from the wide use of medicines for conditions like attention deficit disorder.
The number of emergency room visits related to stimulants among people ages 18 to 34 increased to 23,000 in 2011, from 5,600 in 2005, according to national datafrom the Substance Abuse and Mental Health Services Administration, a branch of the Department of Health and Human Services. Peter J. Delany, the director of the office that oversees statistics for the administration, said the rise was particularly pronounced among 18- to 25-year-olds. He said it was part of a broader pattern of negative health effects from prescription drug abuse across American society.
Scientists have not firmly established the reasons for the rise, but Dr. Delany said one clue was the way that people who misused prescription drugs obtained them: in 2011, more than half got them at no charge from a friend or a relative, and 17 percent bought them from a friend or a relative. That suggests that a large share of the misuse is of medicines not prescribed by the abuser’s doctor.
“We have a huge issue of easy access,” said Dr. Elinore F. McCance-Katz, the chief medical officer of the substance abuse administration, adding that it applies to stimulants as well as to opioids, another category of widely abused prescription drugs.
The report focused on emergency room visits that were the result of abuse or misuse of the stimulants, like taking larger-than-prescribed doses or taking stimulants in combination with alcohol.
Misuse of these drugs has been linked to heart and blood vessel problems, as well as to drug abuse or dependence. When combined with alcohol, the stimulants can hide the effects of being drunk, which increases the risk of alcohol poisoning and alcohol-related injuries. About a third of all emergency room visits related to the stimulants among people ages 18 to 34 involve alcohol, the report said.
NH moves to implement federal health care overhaul
9:06 AM
The Associated Press
CONCORD, N.H. — A committee advising New Hampshire state agencies on implementing the federal health care overhaul law is getting an update on where things stand.
The Health Exchange Advisory Board, which represents consumers, health care providers, insurers and businesses, is meeting Friday in Concord. On the agenda is a discussion of the latest attempt to bring federal money to New Hampshire to help consumers understand their options under the new law.
The state insurance department has been awarded a $5 million grant to educate consumers before enrollment in new insurance markets starts Oct. 1, but Republicans have blocked the state from accepting it. Last week, the insurance department said a different group — the quasi-governmental New Hampshire Health Plan — had applied to accept the money, instead.
Red State Idaho Embraces Obamacare Insurance Exchange -- Reluctantly - Kaiser Health News
EAGLE, Idaho — On Election Night, Bill McCarrel Jr. watched teary-eyed residents crowd into his historic bar, The Gathering Place, after President Barack Obama won a second term. His customers worried aloud about losing access to their guns and having to accept the federal health law that many revile as socialized medicine.
McCarrel, 55, is thankful the Idaho legislature -- prodded by Gov. C.L. "Butch" Otter and powerful employer groups -- decided to have the state operate the exchange rather than leave it to the federal government. "People in Idaho don't trust the state government, but they trust Washington D.C. even less," he says in his spacious bar housed in a former drugstore built in 1906.
Of the 16 states that are gearing up to operate their own online marketplaces -- a central feature of the effort to expand coverage to millions of people starting in January -- Idaho is the only one where Republicans are in total control of state government. Republicans outnumber Democrats 4 to 1 in the state Legislature and only a third of Idahoans voted for Obama last fall – the third lowest tally nationwide.
http://www.kaiserhealthnews.org/Stories/2013/August/09/Idaho-reluctantly-pushes-forward-on-obamacare-exchange.aspx
The Health Care Battle Over Navigators - Kaiser Health News
By Nicholas Kusnetz, Center for Public Integrity
Early in the summer of 2009, when lawmakers were starting work on what would become the largest health care overhaul in decades, the industry associations that represent insurance agents and brokers caught wind of an obscure provision.The plan called for state and federal governments to hire so-called "navigators" — members of social service organizations or advocacy groups — to help people use the new online marketplaces created by the law to chose among insurance plans and enroll in coverage.
The navigator program garnered little attention in the midst of the larger legislative battle. But agents and brokers, worried that navigators would cut into their business, immediately took aim, labeling the initiative "reckless."
When President Obama finally signed the law in March 2010, the Affordable Care Act did include a navigator program — but that hasn't stopped insurance agents and brokers from fighting against it. Over the past three years, the groups have waged an intense but little-noticed lobbying effort to regulate navigators in the states, leading to the passage of 16 state laws over the past year and a half. Most of the laws contain language that closely resembles recommendations that agents and brokers have been pushing in statehouses nationwide — a push receiving received crucial aid from a legislators’ group focused on insurance policy that is supported with industry funds.
http://www.kaiserhealthnews.org/Stories/2013/August/09/cpi-states-and-insurance-brokers-opposition-to-navigator-programs.aspx
Many Consumers With High-Deductible Plans Are Concerned About Health Law Changes
Rod Coons and Florence Peace, a married couple from Indianapolis, pay $403 a month for a family health plan that covers barely any of their individual medical care until each reaches up to $10,000 in claims. And that’s just the way they like it."I'm only really interested in catastrophic coverage," says Coons, 58, who retired last year after selling an electronic manufacturing business. Since they're generally healthy, the couple typically spends no more than $500 annually on medical care, says Coons.
"I'd prefer to stay with our current plan because it meets our existing needs."
That won’t be an option next year for Koons and Peace. In 2014, plans sold on the individual and small group markets will have to meet new standards for coverage and cost sharing, among other things. In addition to covering 10 so-called essential health benefits and covering many preventive care services at no cost, plans must pay at least 60 percent of allowed medical expenses, and cap annual out-of-pocket spending at $6,350 for individuals and $12,700 for families. (The only exception is for plans that have grandfathered status under the law.)
Plans with $10,000 deductibles won’t make the cut, say experts, nor will many other plans that require high cost sharing or provide limited benefits, excluding prescription drugs or doctor visits from coverage, for example.
http://www.kaiserhealthnews.org/Features/Insuring-Your-Health/2013/080613-Michelle-Andrews-on-high-deductible-insurance.aspx?utm_source=khn&utm_medium=internal&utm_campaign=viewed
The Sleeper in Health Care Payment Reform
By UWE E. REINHARDT
Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.
In late June news organizations reported on a practical application in the United States of “reference pricing” for hospital care.
The concept has been well known for decades to health policy wonks and already applied to prescription drugs in many other countries, but it is still novel in the United States.
In the arsenal now being assembled on the payment side of health care to address rising costs, reference pricing may well turn out to be the sleeper, because it is apotentially powerful method of “putting the patient’s skin in the game,” the delicate phrase we use for “cost-sharing by patients.” As it is able to shift significant market power from the supply side to the payment side of the health sector, reference pricing is much feared by the providers – physicians, hospitals, pharmaceutical companies and others.
Reference pricing also leads to concerns that it could be used simply for rationing by income class in disguise, unless good care is taken to enforce high quality standards for the health care being delivered.
In theory, the concept of reference pricing is simple.
In theory, the concept of reference pricing is simple.
Consider any arrangement under which a third-party payer – a government program or a private insurer — protects individuals substantially from the cost of receiving a particular good or service, say, a drug aimed at a given therapeutic target or a hip replacement. Suppose different vendors of the good or service charge different prices for it.
Prices may vary for one or both of two reasons. First, vendors may differ in their efficiency and cost of producing the good or service. Second, there may be differences in quality, with higher quality costing more to produce. In the case of prescription drugs aimed at a given therapeutic target, some drugs with fewer side effects may be higher priced because they are still under patent protection.
The market power of reference pricing stems from the fact that the third-party payer covers only a low-priced version of the good or service in question – the “reference price,” leaving the recipient buying from a higher-priced vendor to pay out of pocket the entire difference between that higher price and the reference price. This cost-sharing method is thus more powerful in engaging patients in cost control than are co-payments or co-insurance.
Hammurabi’s Code and U.S. Health Care
By UWE E. REINHARDT
Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.
Sometime around 1780-70 B.C., the Babylonian King Hammurabi promulgated the now famous Code of Hammurabi, covering both civil and criminal law.
The code is said to have informed both Jewish and Islamic law. Remarkably, it has echoes also in modern health policy in the United States.
Among the 282 laws in Hammurabi’s Code, nine (215 to 223) pertain to medical practice:
215. If a physician make a large incision with an operating knife and cure it, or if he open a tumor (over the eye) with an operating knife, and saves the eye, he shall receive 10 shekels in money.
216. If the patient be a freed man, he receives five shekels.
217. If he be the slave of someone, his owner shall give the physician two shekels.
218. If a physician make a large incision with the operating knife, and kill him, or open a tumor with the operating knife, and cut out the eye, his hands shall be cut off.
219. If a physician make a large incision in the slave of a freed man, and kill him, he shall replace the slave with another slave.
220. If he had opened a tumor with the operating knife, and put out his eye, he shall pay half his value.
221. If a physician heal the broken bone or diseased soft part of a man, the patient shall pay the physician five shekels in money.
222. If he were a freed man he shall pay three shekels.
223. If he were a slave his owner shall pay the physician two shekels.
Not all of these laws have survived the millennia. Relative to Hammurabi’s draconian medical malpractice code, for example, modern medical malpractice penalties represent mere slaps on the wrist.
On the other hand, our modern, differentiated payment system for health care does resemble the Code of Hammurabi in some respects.
To illustrate, for a primary care office visit with a new patient of 30-minute duration (using Current Procedural Terminology, or C.T.P. codes, in this case Code 99203), New Jersey’s Medicaid in 2012 paid a nonspecialist $25 and a board-certified specialist $32.30. The comparable fees paid physicians for commercially insured patients are jealously guarded trade secrets, but it is reasonable to assume them to be $100 to $200. Other fees in the C.P.T. code are similarly low for Medicaid.
I recall addressing a group of New Jersey State legislators on this point a few years ago as follows:
http://economix.blogs.nytimes.com/2013/04/26/hammurabis-code-and-u-s-health-care/?pagewanted=printI teach my students that the price a buyer is willing to pay for a thing signals to suppliers of that thing the monetary value the prospective buyer puts on it. It is a basic tenet of economics. Leaning on that tenet, I conclude that the value you in your role as state legislators put upon the professional work of, say, a pediatrician, if applied to a poor child on Medicaid, is less than a quarter of the value you put upon that same professional work it applied to your own commercially insured children.
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