Tag: health economics

A Full-Scale Assault on Medical Debt, Part 3

Mar 10, 2020

By BOB HERTZ

The only way to fully eliminate medical debt would be a comprehensive single payer plan, which allowed no fees at the point of service.

However, such a plan would require setting all prices for all doctors, hospitals, labs, and drug companies. All providers would have to be satisfied – in advance — with what the government is going to pay them on each procedure.

Countries like Germany accomplish this through collective bargaining. Japan, France, Taiwan, Israel and Scandinavia also have national fee schedules. However, I do not think you could get all the providers in Toledo to agree on one schedule, much less every provider group in America.

Single payer would also require new income and payroll taxes of at least ten per cent more than we pay now, if we want first-dollar coverage.

A Full-Scale Assault on Medical Debt, Part 2

Mar 9, 2020• 3

By BOB HERTZ

The first section of this article stated that many forms of medical debt can be reduced or cancelled by stronger enforcement of consumer protection laws. These debts are not inevitable and are not due to poverty. It would not require trillions of federal dollars to cancel them, either – just the willingness to go against lobbyists.

Therefore I advocate the following attacks on medical debt:

Phase One

We must cancel balance bills and surprise bills if there was no prior disclosure.

In most cases, providers will not have the right to collect anything more than what the insurers pay them.

Phase Two

We must cancel the older, inactive “zombie debts” that are being purchased by collection agencies.

This line of business must terminate. Providers throughout the country are selling uncollected medical debt for pennies on the dollar to collection agencies, who aggressively attempt to force patients to pay the full amount due. These debt collectors harass patients at work and at home, deploying unscrupulous tactics even after the statute of limitations on the debt has expired.

A Full-Scale Assault on Medical Debt, Part 1

Mar 6, 2020• 3

By BOB HERTZ

The recent proposal by Sen. Bernie Sanders to cancel $81 billion of medical debt is a very good start—but it is only a start.

The RIP Medical Debt group—which buys old medical debts, and then forgives them—is absolutely in the right spirit. Its founders Craig Antico and Jerry Ashton deserve great credit for keeping the issue of forgiveness alive.

Unfortunately, over $88 billion in new medical debt is created each year; most of it still held by providers, or sold to collectors, or embedded in credit card balances.

Tragically, none of this has to happen! In France, a visit to the doctor typically costs the equivalent of $1.12. A night in a German hospital costs a patient roughly $11. German co-pays for the year in total cannot exceed 2% of income. Even in Switzerland, the average deductible is $300.

U.S. patients face cost-sharing that would never be tolerated in Germany, says Dr. Markus Frick, a senior official. “If any German politician proposed high deductibles, he or she would be run out of town.”

Hotspotting, Superutilizers, and Avoiding “RTM Traps”

Mar 2, 2020

By THOMAS WILSON PhD, DrPH and VINCE KURAITIS JD, MBA

A recent study in the New England Journal of Medicine reported on the results of a “hotspotting” program created by the Camden Coalition of Healthcare Providers (Camden Coalition). Hotspotting targets interventions at all or a subset of healthcare superutilizers – the 5% of patients that account for 50% of annual healthcare spending.

The results of the study were disappointing. While utilization (hospital readmissions) declined for the hotspotting group, the declines were almost identical in the control group. At least three headlines implied that the conclusion of the study was that hotspotting care management approaches have been proven not to work:

“’Hot spotting’ doesn’t work. So what does?” Politico Pulse

“Reduce Health Costs By Nurturing The Sickest? A Much-Touted Idea Disappoints.” NPR

“Hotspotting” Apparently Doesn’t Reduce Superutilizers’ Readmissions” NEJM Journal Watch

NOT SO FAST!

As we’ll explain, we believe that much of what’s going on here can be explained by one or both of what we call “RTM Traps” (regression to the mean traps).

In this essay, we will:

Define RTM (regression to the mean)
Explain the RTM Traps and how many have fallen into the traps
Suggest how to avoid the RTM Traps

We believe our POV is relevant to clinical, technical, and executive staff in the many organizations focusing on the superutilizer population – hospitals, physicians, ACOs, health plans, community groups, etc.

Charting The Economic History of US Health Reform

Nov 25, 2019• 7

By MIKE MAGEE, MD

Adam Gaffney’s recent Boston Review article, “What the Health Care Debate Still Gets Wrong”, a landmark piece that deserves careful reading by all, reaches near perfection in diagnosing our health system malady.

Dr. Gaffney is president of Physicians for a National Health Program, and a co-chair of the Working Group on Single-Payer Program Design, which developed the “Physicians’ Proposal for Single-Payer Health Care Reform.”

A seasoned health policy expert, his article cross-references the opinions and work of a range of health commentators including Atul Gawande, Steven Brill, Sarah Kliff, Elizabeth Rosenthal, Zack Cooper, and Canadian health economist Robert Evans. But his major companion is Princeton health economist, Uwe Reinhardt, whose posthumous book, Priced Out: The Economic and Ethical Costs of American Health Care, was recently published by Princeton University Press.

Gaffney’s affection for Reinhardt is evident as he recounts his desperate upbringing in post-war Germany, challenged by poor living conditions, but made whole by access to health care. Quoting a 1992 JAMA interview, Reinhardt states, “When we needed medical care, we got it at the local hospital, no questions asked. When you were sick, society was there for you.”

That acknowledgment is not only personal but historically significant, as I outline in my recent book, Code Blue: Inside the Medical Industrial Complex. The services Reinhardt received were part of a new national health care system funded fully by American taxpayers as part of the Marshall Plan. At the very same time, American citizens were denied a national health plan of their own as Truman was effectively branded a supporter of “socialized medicine” by the AMA and a cabal of corporate partners.

The Rebellion of the Buyers

Aug 15, 2019• 1

By JOE FLOWER

Did you catch that headline a few weeks back?

An official of a health system in North Carolina sent an email to the entire board of the North Carolina State Health Plan calling them a bunch of “sorry SOBs” who would “burn in hell” after they “bankrupt every hospital in the state.”

Wow. He sounds rather upset. He sounds angry and afraid. He sounds surprised, gobsmacked, face-palming.

Bless his heart. I get it, I really do. Well, I get the fear and pain. Here’s what I don’t get: the surprise, the tone of, “This came out of nowhere! Why didn’t anyone tell us this was coming?”

Brother, we did. We have been. As loudly as we can. For years.

Two things to notice here:

What is he so upset about? Under State Treasurer Dale Folwell’s leadership, the State Health Plan has pegged its payments to hospitals and other medical providers in the state to a range of roughly 200% of Medicare payments (with special help for rural hospitals and other exceptions). In an industry that routinely says that Medicare covers 90% of their costs, this actually sounds rather generous.
What is the State Health Plan? It’s not a payer, that is, an insurer. It’s a buyer. Buyers play under a different set of rules and incentives than an insurer.

Economics Lessons from the Subcontinent: India’s Coronary Stent Policy

Apr 1, 2019• 3

By ANISH KOKA MD

It is commonly believed that deliberate, careful price regulation by enlightened technocrats trumps the haphazard and chaotic regulation of prices imposed by the free market—especially when the market is subject to greed and corruption.

A most interesting case study challenging that belief comes courtesy of the largest Democracy in the world: India.

In 2017, an arm of the Indian Government, the National Pharmaceutical Pricing Authority (NPPA) took action to control the price of coronary stents in India by capping their retail price. The problem that stimulated this action was their exorbitant price that made them unaffordable to many Indians.

The retail prices of US made drug-eluting stents ranged from Rs 80,000 – 150,000 (~$1000 – ~$2000), while the price of Indian made drug-eluting stents ranged from Rs 45,000 – 90,000 (~$600 – ~$1200). Considering that a good job for 90% of the Indian labor force pays about Rs 180,000 per year, these prices put most coronary stents out of the reach of a vast swath of the populace.

What regulators knew, however, was that the price point at which coronary stents were being imported into India was a fraction of the price being charged to Indians. The up-charge had everything to do with what happened after the stent was brought onto Indian soil: The Indian subsidiary of the US stent manufacturer would sell its product to a domestic distributor that would then employ all means necessary to ensure their stent was chosen by cardiologists to be implanted.

Win, Lose, or Draw: Not all ACA Enrollees Gain from Increased Competition

Dec 13, 2018• 3

By KATHERINE HEMPSTEAD PhD

The 2019 ACA plan year is notable for the increase in insurer participation in the marketplace. Expansion and entry have been substantial, and the percent of counties with one insurer has declined from more than 50 percent to approximately 35 percent. While urban areas in rural states have received much of the new participation, entire rural states have gained, along with more metropolitan urban areas.

Economic theory and common sense lead most to believe that increased competition is unquestionably good for consumers. Yet in the paradoxical world of the subsidized ACA marketplace, things are not so simple. In some markets, increased competition may result in a reduction in the purchasing power of subsidized consumers by narrowing the gap between the benchmark premium and plans that are cheaper than the benchmark. Even though the overall level of premiums may decline, potential losses to subsidized consumers in some markets will outweigh gains to the unsubsidized, suggesting that at the county level, the losers stand to lose more than the winners will win.

One way to illustrate this is to hypothetically subject 2018 marketplace enrollees to 2019 premiums in counties where new carriers have entered the market. Assuming that enrollees stay in the same metal plan in both 2018 and 2019, and that they continue to buy the cheapest plan in their metal, we can calculate how much their spending would change by income group.

Under these assumptions, in about one quarter of the counties with federally facilitated marketplaces (FFM) that received a new carrier in 2019, both subsidized and unsubsidized enrollees would be better off in 2019, meaning that they could spend less money and stay in the same metal level. In about thirty percent of these counties, all enrollees are worse off. In almost all of the rest, about forty percent, there are winners and losers, but in the aggregate, the subsidized lose more than the unsubsidized win. Overall, in about 70 percent of FFM counties with a new carrier, subsidized enrollees will lose purchasing power, while in about 66 percent of these counties, unsubsidized customers will see premium reductions. In population terms, about two-thirds of subsidized enrollees in counties with a new carrier will find plans to be less affordable, while a little more than half of unsubsidized enrollees will see lower premiums.

A Libertarian’s Case Against Free Markets in Health Care

Aug 2, 2018• 27

By ROMAN ZAMISHKA

In the final act of Shakespeare’s Richard III, the eponymous villain king arrives on the battlefield to fight against Richmond, who will soon become Henry VII. During the battle, Richard is dismounted as his horse is killed and in a mad frenzy wades through the battlefield screaming “A horse, a horse! My kingdom for a horse!” Richard shows us how market value can change drastically depending on the circumstances, or your mental state, and even the most absurd exchange rate can become reasonable in a moment of crisis.

This presumably arbitrary nature of prices should be the first thing about the US healthcare market that catches the attention of any student of economics. Prices for the same procedure vary greatly between hospitals on opposite sides of the street and even then appear to have no basis in reality. Further investigation reveals many other features of the healthcare market that economics teaches us will increase transaction costs and the misallocation of resources. The prices we discussed are generally not paid by the patient, but by a third party insurer. Often the patient isn’t even able to select the insurer but is assigned one by his or her employer. What the patient thinks of the insurer’s ability as a steward of his or her premiums is irrelevant. Further, contracts between providers or pharmacies and the insurer completely hide the true price from the patient’s view. In addition, anti-competitive certificate of need laws limit competition between providers and expensive regulations compel providers to merge to compete in a nuclear arms race with the insurers, although the real victim is the patient’s wallet over which the providers and insurers fight their proxy wars. The best way to explain the US healthcare system is if you took every economic best practice and then did the opposite. How does one get out of this mess?