Selling expensive health care lemons
Posted March 14, 2013, at 11:11 a.m.
In 1970, University of California economist George Akerlof wrote a paper titled “Selling Lemons.” In it he explained that a market characterized by a large asymmetry of information between seller and buyer would also soon become characterized by a decrease in the quality of goods and dominated by crooked sellers and gullible buyers. In 2001 he won the Nobel Prize for his work.
Sad to say, I can think of no market that better fits these criteria than health care. In a March 4 TIME Magazine cover story, “The Bitter Pill: Why Medical Bills Are Killing Us,” reporter Steven Brill dissects a number of hospital bills and traces the detailed charges back to their origins. He concludes, “everyone along the supply chain – from hospital administrators (who enjoy multimillion-dollar salaries) to the salesmen, executives and shareholders of drug and equipment makers — was reaping a bonanza. The only exceptions, I found, were those actually treating the patients — the nurses and doctors.”
When you need medical care there is absolutely no way you can accurately determine ahead of time what that care will cost you. Don’t hope to get anything approaching a rational explanation for what you are charged after the fact, either. The best you can hope for is that whatever insurance you have will cover most of the costs. If not, you are at the mercy of the hospital and, if you can’t pay, its collection agency.
So you can’t know much about the prices of health care. How about the appropriateness or quality of that care? Again, unless you are a doctor you have very few ways to independently judge the safety or benefits of tests, procedures or prescriptions.
And sometimes not even then. Even among well-trained and conscientious doctors, a great deal of uncertainty exists about the risks and benefits of tests and procedures they order and perform.
As the number of doctors who have become employees of profit or nonprofit corporations has increased (now about 80 percent of Maine doctors and rising), they have come under pressure to increase the number of “units of service” they provide — visits, tests, procedures and prescriptions — in order to maximize the revenues and profits of the institutions that employ them.
Lately, the need for many commonly performed procedures has come under question by both government and private health care organizations. The U.S. Preventive Services Task Force recently warned against the routine performance of some, including mammograms for young women, hormone replacement therapy for older women, prostate cancer tests for older men and drug treatment to prevent osteoporosis. Many are now thought to do more harm than good.
Similarly, the American Board of Internal Medicine, one of the medical profession’s most important credentialing bodies, recently launched a program called “Choosing Wisely.” Its purpose is to identify tests and procedures that are overused, and to persuade doctors and patients to use fewer of them. More than 35 medical specialty societies have joined this campaign, each selecting five or more tests or procedures that they believe are significantly overused. Among these are imaging procedures, such a CT scans and MRI, the use of which has exploded in frequency and cost in recent years. It is almost impossible for patients to accurately assess the need for and quality of care.
Applying for Obama health care plan not easy
- Article by: RICARDO ALONSO-ZALDIVAR
- Associated Press
- March 13, 2013 - 2:09 AM
WASHINGTON - Applying for benefits under President Barack Obama's health care overhaul could be as daunting as doing your taxes.
The government's draft application runs 15 pages for a three-person family. An outline of the online version has 21 steps, some with additional questions.
Seven months before the Oct. 1 start of enrollment season for millions of uninsured Americans, the idea that getting health insurance could be as easy as shopping online at Amazon or Travelocity is starting to look like wishful thinking.
At least three major federal agencies, including the IRS, will scrutinize your application. Checking your identity, income and citizenship is supposed to happen in real time, if you apply online.
That's just the first part of the process, which lets you know if you qualify for financial help. The government asks to see what you're making because Obama's Affordable Care Act is means-tested, with lower-income people getting the most generous help to pay premiums.
Once you're finished with the money part, actually picking a health plan will require additional steps, plus a basic understanding of insurance jargon.
And it's a mandate, not a suggestion. The law says virtually all Americans must carry health insurance starting next year, although most will just keep the coverage they now have through their jobs, Medicare or Medicaid.
Some are concerned that a lot of uninsured people will be overwhelmed and simply give up.
"This lengthy draft application will take a considerable amount of time to fill out and will be difficult for many people to be able to complete," said Ron Pollack, executive director of Families USA, an advocacy group supporting the health care law. "It does not get you to the selection of a plan."
"When you combine those two processes, it is enormously time consuming and complex," added Pollack. He's calling for the government to simplify the form and, more important, for an army of counselors to help uninsured people navigate the new system. It's unclear who would pay for these navigators.
Drafts of the paper application and a 60-page description of the online version were quietly posted online by the Health and Human Services Department, seeking feedback from industry and consumer groups. Those materials, along with a recent HHS presentation to insurers, run counter to the vision of simplicity promoted by administration officials.
"We are not just signing up for a dating service here," said Sam Karp, a vice president of the California HealthCare Foundation, who nonetheless gives the administration high marks for distilling it all into a workable form. Karp was part of an independent group that separately designed a model application.
The government estimates its online application will take a half hour to complete, on average. If you need a break, or have to gather supporting documents, you can save your work and come back later. The paper application is estimated to take an average of 45 minutes.
http://www.startribune.com/lifestyle/health/197457351.html?page=all&prepage=1&c=y#continue
The government's draft application runs 15 pages for a three-person family. An outline of the online version has 21 steps, some with additional questions.
Seven months before the Oct. 1 start of enrollment season for millions of uninsured Americans, the idea that getting health insurance could be as easy as shopping online at Amazon or Travelocity is starting to look like wishful thinking.
At least three major federal agencies, including the IRS, will scrutinize your application. Checking your identity, income and citizenship is supposed to happen in real time, if you apply online.
That's just the first part of the process, which lets you know if you qualify for financial help. The government asks to see what you're making because Obama's Affordable Care Act is means-tested, with lower-income people getting the most generous help to pay premiums.
Once you're finished with the money part, actually picking a health plan will require additional steps, plus a basic understanding of insurance jargon.
And it's a mandate, not a suggestion. The law says virtually all Americans must carry health insurance starting next year, although most will just keep the coverage they now have through their jobs, Medicare or Medicaid.
Some are concerned that a lot of uninsured people will be overwhelmed and simply give up.
"This lengthy draft application will take a considerable amount of time to fill out and will be difficult for many people to be able to complete," said Ron Pollack, executive director of Families USA, an advocacy group supporting the health care law. "It does not get you to the selection of a plan."
"When you combine those two processes, it is enormously time consuming and complex," added Pollack. He's calling for the government to simplify the form and, more important, for an army of counselors to help uninsured people navigate the new system. It's unclear who would pay for these navigators.
Drafts of the paper application and a 60-page description of the online version were quietly posted online by the Health and Human Services Department, seeking feedback from industry and consumer groups. Those materials, along with a recent HHS presentation to insurers, run counter to the vision of simplicity promoted by administration officials.
"We are not just signing up for a dating service here," said Sam Karp, a vice president of the California HealthCare Foundation, who nonetheless gives the administration high marks for distilling it all into a workable form. Karp was part of an independent group that separately designed a model application.
The government estimates its online application will take a half hour to complete, on average. If you need a break, or have to gather supporting documents, you can save your work and come back later. The paper application is estimated to take an average of 45 minutes.
http://www.startribune.com/lifestyle/health/197457351.html?page=all&prepage=1&c=y#continue
Maine hospitals: Repayments 'a huge issue'
Capital projects are on hold and layoffs loom as facilities await Medicaid reimbursements.
By Jessica Hall jhall@pressherald.com
Staff Writer
Staff Writer
Central Maine Medical Center in Lewiston wants to renovate its 30-year-old maternity and neonatal unit and turn an empty parking lot into a medical office building.
Northern Maine Medical Center in Fort Kent needs to replace a 14-year-old MRI machine.
Those and other investments at hospitals around the state are on hold as Maine's 39 hospitals wait for $484 million in overdueMedicaid reimbursements.
They may not have to wait much longer.
On Monday, Democratic leaders in the Legislature released a plan to repay the hospitals by using an upfront payment for the state's next wholesale liquor contract.
Gov. Paul LePage has a proposal to repay the hospitals with a different process. The state would borrow to pay off the hospitals, then repay the bonds with future liquor revenue.
While there's no agreement yet on which of the competing plans would be used to repay the hospitals, the consensus from Democratic and Republican leaders appears to be that the debt will soon be settled.
Hospitals would receive $186 million in back payments from the state, which would trigger $298 million in payments from the federal government.
"We desperately need to be paid for the services already provided to move forward," said Charles Therrien, president and CEO of Maine Coast Memorial Hospital in Ellsworth, in testimony Monday before the Legislature's Veterans and Legal Affairs Committee.
Our View: Deal could be struck on hospital debt, liquor cash
The elements of a grand bargain are in place if the parties are willing to compromise a little.
The trick with divided government is being able to make a deal after a long day of dropping bombs on each other.
Failure to pull that off has made Washington dysfunctional at least since 2010, and early signs indicated that Augusta, with a Republican governor and Democratic Legislature for the first time in almost 20 years, might be heading in the same direction.
But by the time Gov. LePage got up to testify at a public hearing Monday on his bill to pay past hospital debt with money from a renegotiated liquor contract -- the bill that prompted him to threaten to veto all other legislation that crossed his desk until it was enacted -- the outline of a workable deal began to take shape.
Democratic leaders announced their alternative to his proposal. Like the governor, they would use money from the liquor contract to pay off the hospitals, but instead of having the state borrow money and pay it back with liquor revenue, the Democrats would demand a one-time payment from the winning bidder in a liquor contract auction.
This was a major concession by the Democrats, who before Monday had been saying that the question of the liquor contract should be resolved separately from the issue of the hospital debt.
Their step back is an unspoken acknowledgment that LePage won the message war and successfully married the two issues. While it makes some sense to consider the liquor contract and hospital debt separately, it would not be possible politically.
Now the only real issue separating the two sides is whether the state will borrow the money or whether the liquor contractor would take out the loan.
But the Democrats did more than step back. They rightly point out that the reason the debt accumulated was not the cost of the state programs, but the high cost of health care generally.
http://www.pressherald.com/opinion/deal-could-be-struck-on-hospital-debt-liquor-cash_2013-03-13.html
LePage’s selection for Dirigo Health board withdraws nomination
Posted March 12, 2013, at 2:14 p.m.
AUGUSTA, Maine — Jonathan McKane, the former state representative whose nomination to serve on the Dirigo Health board of trustees was rejected by a legislative committee last week, withdrew his nomination Tuesday, but not before appearing before the same committee to rebut some of the criticism raised at his confirmation hearing.
McKane, a Republican from Newcastle, appeared again before the Legislature’s Insurance and Financial Services Committee, which voted 8-5 along party lines last week to reject his nomination.
The committee was reconsidering the nomination after Republicans protested that McKane didn’t have the chance to respond to testimony opposing him and the Senate agreed to return his nomination to the insurance panel. Gov. Paul LePage, who nominated McKane and protested last week’s committee vote, plans to keep the Dirigo Health board seat vacant rather than make another selection, said LePage spokeswoman Adrienne Bennett.
In remarks he delivered to the committee, McKane decried what he called a “coordinated attack” from three left-leaning groups that had representatives testify in opposition to his nomination: the Maine People’s Alliance, Maine Education Association and Consumers for Affordable Health Care.
“These are three powerful groups who control much in Maine politics,” he said.
He compared their efforts opposing his nomination to efforts from left-leaning groups opposing Republican state legislative candidates during last year’s campaign season.
“We watched as good people, good legislators, were attacked relentlessly and got painted as hard-core ideologues,” McKane said. “I feel honored to be in the company of those same folks who were attacked so mercilessly.”
Democratic members of the Insurance Committee last week pointed to comments McKane made online and in opinion columns about supporters of the Dirigo program, male and female, whom he and others have called “Dirigirls,” and his description of a series of pro-Dirigo editorials in the Portland Press Herald in 2005 as an “all out jihad against any Dirigo health non-believers.”
Other opponents of his nomination said McKane’s opposition to the Dirigo Health mission and his past comments about Dirigo Health and its supporters should disqualify him.
“I take offense at the implication that I would not be able to work with those with whom I disagreed because I have over the life of my career,” he said.
McKane said his comments, largely on the conservative online message board As Maine Goes, were often made “tongue-in-cheek.” Sometimes, he said, he took the opposite positions to stir the debate.
He warned users of Twitter, Facebook and other social media.
Clamor to Be Spared the Pain as Budget Cuts Descend
By ROBERT PEAR
WASHINGTON — Construction companies are lobbying the government to spare their projects from across-the-board cuts. Drug companies are pleading with the White House to use all the fees they pay to speed the approval of new medicines.
And supporters of Israel have begun a campaign to make sure the Jewish state receives the full amount of military assistance promised by the United States.
A frenzy of lobbying has been touched off by President Obama’s order to slice spending this year by $85 billion, divided equally between military and civilian programs. The cuts have created new alliances and strange bedfellows.
Hunter R. Rawlings III, a historian of ancient Greece who is the president of the Association of American Universities, joined Wesley G. Bush, the chief executive of Northrop Grumman, the maker of surveillance drones and B-2 bombers, in a news conference in which they denounced the automatic cuts known as sequestration.
Health care and education groups, advocates for poor people, and state and local officials who fought in the past for bigger budgets are now trying to minimize the pain.
Anne Kauffman Nolon, the president of Hudson River HealthCare, which operates 22 community health centers in New York, is urging Congress to provide money to offset the cuts. If that is not possible, she said, it would be better to delay opening new clinics so she and her colleagues did not have to cut back care for patients they already served.
Ms. Nolon said her clinics were losing $1 million of the $10.8 million they expected from the federal government this year to care for 87,000 patients. Nationwide, the number of clinics increased sharply under President George W. Bush, and Congress provided more money for clinics to serve people expected to gain insurance under Mr. Obama’shealth care overhaul.
The Medicare debate we need
Sen. Paul Ryan's proposed overhaul may be going too far, but he is raising the kinds of questions that Congress should be dealing with.
March 14, 2013
One criticism of the Medicare overhaul that House Budget Committee Chairman Paul D. Ryan (R-Wis.) has championed is that it would shift more and more of the program's costs onto seniors. In the latest version of his plan, Ryan acknowledges that capping the growth of the program could, in fact, make health insurance more expensive for some retirees. But that's part of the point of the change, which would concentrate Medicare spending on the poorest and sickest seniors.
This page has argued that Ryan's overhaul goes too far, threatening Medicare's fundamental promise of affordable health insurance for all seniors. But the questions he poses about who the government subsidizes and to what end are the kind of debate that Congress can't afford to duck.
Ryan wants to transform Medicare from a health insurance plan into subsidies for coverage, starting with those who become eligible for the program in 2023. Seniors would shop for insurance at a new Medicare exchange, where private insurers would offer standardized plans alongside the government's traditional Medicare coverage. The subsidies would be large enough to pay for the second-least-expensive plan, with a notable caveat: The subsidies could not grow more than half a percentage point faster than the economy as a whole. If the subsidies didn't keep up with the increase in premiums — and they wouldn't, if Medicare costs grow at the same rate they did in the 1990s and 2000s — the government would increase its aid to the poorest and sickest beneficiaries to cover their out-of-pocket costs. Everyone else would have to pick up a larger share of the tab.
The federal government has been heading in this direction for a decade, requiring higher-income seniors to pay larger premiums for the portions of Medicare that cover doctor visits and prescription drugs. Ryan would go one step further, offering a smaller benefit to those with a greater ability to pay for it. That runs counter to Medicare's social insurance model, in which everyone who pays into the program receives the same benefits regardless of their income. But that model was created at a time when there were far fewer retirees; in 1965, there were more than 4 1/2 workers paying into Medicare for every person collecting benefits from it. The retirement of the baby boom generation will nearly double the number of people on Medicare, leaving fewer than 2 1/2 workers for each beneficiary.
Some opponents of the Ryan plan argue that Congress should focus on fixing inefficiencies and misplaced incentives that plague the entire healthcare system. They also argue that Medicare doesn't need radical change; the growth in its costs per beneficiary slowed dramatically in the last three years, increasing only 0.4% in 2012. The Obama administration credits the 2010 healthcare reform law for that; more skeptical analysts warn that it may be just a temporary break. Regardless, the flood of new retirees is going to strain the federal budget no matter how slowly the cost per Medicare recipient grows. Even if lawmakers don't like Ryan's proposed answers, they still have to grapple with the questions he asks about the sustainability of the Medicare model.
This page has argued that Ryan's overhaul goes too far, threatening Medicare's fundamental promise of affordable health insurance for all seniors. But the questions he poses about who the government subsidizes and to what end are the kind of debate that Congress can't afford to duck.
Ryan wants to transform Medicare from a health insurance plan into subsidies for coverage, starting with those who become eligible for the program in 2023. Seniors would shop for insurance at a new Medicare exchange, where private insurers would offer standardized plans alongside the government's traditional Medicare coverage. The subsidies would be large enough to pay for the second-least-expensive plan, with a notable caveat: The subsidies could not grow more than half a percentage point faster than the economy as a whole. If the subsidies didn't keep up with the increase in premiums — and they wouldn't, if Medicare costs grow at the same rate they did in the 1990s and 2000s — the government would increase its aid to the poorest and sickest beneficiaries to cover their out-of-pocket costs. Everyone else would have to pick up a larger share of the tab.
The federal government has been heading in this direction for a decade, requiring higher-income seniors to pay larger premiums for the portions of Medicare that cover doctor visits and prescription drugs. Ryan would go one step further, offering a smaller benefit to those with a greater ability to pay for it. That runs counter to Medicare's social insurance model, in which everyone who pays into the program receives the same benefits regardless of their income. But that model was created at a time when there were far fewer retirees; in 1965, there were more than 4 1/2 workers paying into Medicare for every person collecting benefits from it. The retirement of the baby boom generation will nearly double the number of people on Medicare, leaving fewer than 2 1/2 workers for each beneficiary.
Some opponents of the Ryan plan argue that Congress should focus on fixing inefficiencies and misplaced incentives that plague the entire healthcare system. They also argue that Medicare doesn't need radical change; the growth in its costs per beneficiary slowed dramatically in the last three years, increasing only 0.4% in 2012. The Obama administration credits the 2010 healthcare reform law for that; more skeptical analysts warn that it may be just a temporary break. Regardless, the flood of new retirees is going to strain the federal budget no matter how slowly the cost per Medicare recipient grows. Even if lawmakers don't like Ryan's proposed answers, they still have to grapple with the questions he asks about the sustainability of the Medicare model.
Bill would let CanaRx sell drugs in Maine
Lawmakers hear arguments for and against letting international brokers send pharmaceuticals here.
By Michael Shepherd mshepherd@mainetoday.com
State House Bureau
State House Bureau
AUGUSTA — Public and private employers urged lawmakers Wednesday to allow a Canadian mail-order company that saved workers and employers millions of dollars on prescription drugs to resume operations in Maine.
The major arguments for and against the bill, heard by the Legislature's Labor Committee, boiled down to price versus the safety of buying drugs sight unseen from other countries.
Officials from state government, the city of Portland and a wood products company in Guilford said they collectively saved more than $6 million and had no quality problems buying through CanaRx until state regulators barred it from operating in Maine last year.
The drug broker said its brand-name drugs come from well-regulated pharmacies in countries that negotiate prices with drug companies, unlike the United States.
That's why it can pass savings – often 50 percent or more on certain types of drugs – on to American consumers.
But Maine pharmacists said consumers can't be sure of the safety of products they get from mail-order sources and that state pharmacies are at a disadvantage against unregulated, international brokers.
Health care leaders celebrate successes of Bangor’s effort to keep costs low
Posted March 12, 2013, at 5:19 p.m.
BANGOR, Maine — Kay Hunter of Hampden, a registered nurse at Lafayette Family Cancer Center in Brewer, couldn’t walk 10 steps without needing a rest after she spent six days in a local hospital in 2011 recovering from congestive heart failure caused by an infection.
Three months later, she was back on her feet, working two days per week thanks to the home-based rehabilitation she underwent through the Bangor Beacon Community program.
“It meets patients where they are with the needs they have at the moment,” Hunter said Tuesday.
Bangor health care leaders gathered Tuesday to celebrate the third and final year of a program aimed at changing the way health care works across the country.
In May 2010, Eastern Maine Healthcare Systems received a three-year, $12.7 million federal grant to found the Bangor Beacon Community, which is aimed at reducing health care costs by working with chronically ill patients at home in order to keep them out of hospitals.
Bangor is one of just 17 Beacon Communities across the nation. Partners in Bangor’s branch include Acadia Healthcare, Eastern Maine Medical Center, Penobscot Community Health Care and St. Joseph Hospital.
In the United States, 20 percent of the population accounts for 80 percent of the country’s health care costs, according to Jill McDonald, spokeswoman for Eastern Maine Medical Center in Bangor.
“If you concentrate on the most high-risk people … you can reduce the whole cost of health care,” McDonald said.
The goal of Beacon Communities is to limit the amount of emergency room visits by people with chronic illnesses such as diabetes, asthma, chronic obstructive pulmonary disease and heart disease. Instead, registered nurses work with patients recovering from illnesses while at home, both in person and during regular phone calls discussing health issues and recovery.
Hospital officials say the program is showing results. For example, in 2011 nearly 20 percent of chronic heart failure patients visiting Eastern Maine Medical Center were readmitted to the hospital. In 2012, that number dropped to 10 percent, according to Eastern Maine Healthcare Systems’ annual report.
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