Wednesday, May 16, 2018

Medical Mystery: Something Happened to U.S. Health Spending After 1980

The spending began soaring beyond that of other advanced nations, but without the same benefits in life expectancy.

The United States devotes a lot more of its economic resources to health care than any other nation, and yet its health care outcomes aren’t better for it

That hasn’t always been the case. America was in the realm of other countries in per-capita health spending through about 1980. Then it diverged.

It’s the same story with health spending as a fraction of gross domestic product. Likewise, life expectancy. In 1980, the U.S. was right in the middle of the pack of peer nations in life expectancy at birth. But by the mid-2000s, we were at the bottom of the pack.


Health spending and life expectancy are not necessarily closely related, so it’s helpful to consider them separately. 
“Medical care is one of the less important determinants of life expectancy,” said Joseph Newhouse, a health economist at Harvard. “Socioeconomic status and other social factors exert larger influences on longevity.”

For spending, many experts point to differences in public policy on health care financing. “Other countries have been able to put limits on health care prices and spending” with government policies, said Paul Starr, professor of sociology and public affairs at Princeton. The United States has relied more on market forces, which have been less effective. 

“Confronted with fiscal pressures, as the share of G.D.P. absorbed by health care spending began to get serious, other nations had mechanisms to hold down spending,” said Henry Aaron, a health economist with the Brookings Institution. “We didn’t.”

One result: Prices for health care goods and services are much higher in the United States. Gerard Anderson, a professor at Johns Hopkins and a lead author of a Health Affairs study on the subject, emphasized this point. “The differential between what the U.S. and other industrialized countries pay for prescriptions and for hospital and physician services continues to widen over time,” he said. Other studies also support this idea. However, by some measures, growth in the amount of health care consumed has also been a factor. 

The degree of competition, or lack thereof, in the American health system plays a role. A recent study by economists at the University of Miami found that periods of rapid growth in U.S. health care spending coincide with rapid growth in markups of health care prices. This is what one would expect in markets with low levels of competition.

Although American health care markets are highly consolidated, which contributes to higher prices, there are also enough players to impose administrative drag. Rising administrative costs — like billing and price negotiations across many insurers — may also explain part of the problem. 

The additional costs associated with many insurers, each requiring different billing documentation, adds inefficiency, according to the Harvard health economist David Cutler. According to a recent study, the United States has higher health care administrative costs than other wealthy countries.
“We have big pharma vs. big insurance vs. big hospital networks, and the patient and employers and also the government end up paying the bills,” said Janet Currie, a Princeton health economist. 

Though we have some large public health care programs, they are not able to keep a lid on prices. Medicare, for example, is forbidden to negotiate as a whole for drug prices, as Ms. Currie pointed out.

But none of this explains the timing of the spending divergence. Why did it start around 1980?
Mr. Starr suggests that the high inflation of the late 1970s contributed to growth in health care
spending, which other countries had more systems in place to control. Likewise, Mr. Cutler points to related economic events before 1980 as contributing factors. The oil price shocks of the 1970s hurt economic growth, straining countries’ ability to afford health care. “Thus, all across the world, one sees constraints on payment, technology, etc., in the 1970s and 1980s,” he said. The United States is not different in kind, only degree; our constraints were weaker. 

Later on, once those spending constraints eased, “suppliers of medical inputs marketed very costly technological innovations with gusto,” Mr. Aaron said. They “found ready customers in hospitals, medical practices and other entities eager to keep up with rivals in the medical arms race.”

The last third of the 20th century or so was a fertile time for expensive health care innovation. Sherry Glied, an economist and a dean at New York University, offered a few examples: “Coronary artery bypass grafting took off in the mid-to late 1970s. Later, we saw innovations like drug treatments for H.I.V. and premature babies.” 

These are all highly valuable, but they came at very high prices. This willingness to pay more has in turn made the United States an attractive market for innovation in health care.

 
Yet being an engine for innovation doesn’t necessarily translate into better outcomes. Almost no matter how it’s measured, longevity in the United States has not kept pace with that of other nations. Again, the inflection point is around 1980. Why?

A study examining the period 1975 to 2005 by Ms. Glied and Peter Muennig, from Columbia, suggests that international differences in rates of smoking, obesity, traffic accidents and homicides cannot explain why Americans tend to die younger. 

Some have speculated that slower American life expectancy improvements are a result of a more diverse population. But Ms. Glied and Mr. Muennig found that life expectancy growth has been higher in minority groups in the United States. Another study, published in JAMA, found that even accounting for motor vehicle traffic crashes, firearm-related injuries and drug poisonings, the United States has higher mortality rates than comparably wealthy countries.

The lack of universal health coverage and less safety net support for low-income populations could have something to do with it, Ms. Glied speculated. “The most efficient way to improve population health is to focus on those at the bottom,” she said. “But we don’t do as much for them as other countries.” 

The effectiveness of focusing on low-income populations is evident from large expansions of public health insurance for pregnant women and children in the 1980s. There were large reductions in child mortality associated with these expansions. “Those reductions were much larger for poor children than for richer children,” Ms. Currie said.

A report by RAND shows that in 1980 the United States spent 11 percent of its G.D.P. on social programs, excluding health care, while members of the European Union spent an average of about 15 percent. In 2011 the gap had widened to 16 percent versus 22 percent.

Although this is a modest divergence over time, Mr. Anderson says it could be significant nonetheless. “Social underfunding probably has more long-term implications than underinvestment in medical care,” he said. For example, “if the underspending is on early childhood education — one of the key socioeconomic determinants of health — then there are long-term implications.”

Slow income growth could also play a role because poorer health is associated with lower incomes. “It’s notable that, apart from the richest of Americans, income growth stagnated starting in the late 1970s,” Mr. Cutler said.

Even if we can’t fully explain why the United States diverged in terms of health care spending and outcomes after 1980, one thing is clear: History demonstrates that it is possible for the U.S. health system to perform on par with other wealthy countries. That doesn’t mean it’s a simple matter to return to international parity. A lot has changed in 40 years. What began as small gaps in performance are now yawning chasms. And, to the extent greater American health spending has spurred development of valuable health care technologies, we may not want to trade away all of our additional spending.

Nevertheless, Ashish Jha, a physician with the Harvard T.H. Chan School of Public Health and the director of the Harvard Global Health Institute, is hopeful: “For starters, we could have a lot more competition in health care. And government programs should often pay less than they do.” He added that if savings could be reaped from these approaches, and others — and reinvested in improving the welfare of lower-income Americans — we might close both the spending and longevity gaps.

Austin Frakt is director of the Partnered Evidence-Based Policy Resource Center at the V.A. Boston Healthcare System; associate professor with Boston University’s School of Public Health; and adjunct associate professor with the Harvard T.H. Chan School of Public Health. He blogs at The Incidental Economist, and you can follow him on Twitter.@afrakt

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Thursday, May 10, 2018

Gnawing Away at Healthcare

Paul Krugman - May 7, 2018 - At the beginning of 2017, Republicans promised to release the kraken on Obamacare — to destroy the program with one devastating blow. But a funny thing happened: Voters realized that repealing the Affordable Care Act would mean taking health insurance away from tens of millions of Americans. They didn’t like that prospect — and enough Republicans balked at the backlash that Obamacare repeal fizzled.

But Republicans still hate the idea of helping Americans get health care. So instead of releasing the kraken, they’ve brought on the termites. Rather than trying to eliminate Obamacare in one fell swoop, they’re trying to undermine it with multiple acts of sabotage — while hoping voters won’t realize who’s responsible for rising premiums and falling coverage.

Which is why it’s important to place the blame where it belongs.

The first thing you need to understand is that Obamacare has been a highly successful program. 

When the legislation was passed, Republicans insisted it would fail to cut the number of uninsured and would blow a huge hole in the federal budget. In fact, it led to major gains in coverage, reducing the uninsured rate to its lowest level in history, at relatively low cost.

It’s true that the coverage expansion was somewhat less than originally predicted, although the shortfall was much less than you may have heard. It’s also true that after initially offering surprisingly cheap policies on the Obamacare exchanges, insurers found that the people signing up were sicker, on average, than they expected, leading to higher premiums. But as of last year, the markets appeared to have stabilized, with insurers generally profitable.

Nobody would claim that Obamacare is perfect; many Americans remain uninsured, and too many of those with coverage face troublingly high out-of-pocket expenses. Still, health reform delivered most of what its advocates promised and caused none of the disasters its opponents predicted.

Yet Republicans still want to destroy it. One reason is that much of the coverage expansion was paid for with taxes on high incomes, so repeal would be a way to cut taxes on the wealthy. More broadly, conservatives hate Obamacare precisely because it works. It shows that government actually can help tens of millions of Americans lead better, more secure lives, and in so doing it threatens their low-tax, small-government ideology.

But outright repeal failed, so now it’s time for sabotage, which is taking place on two main fronts.

One of these fronts involves the expansion of Medicaid, which probably accounted for more than half the gains in coverage under Obamacare. Now a number of Republican-controlled states are trying to make Medicaid harder to get, notably by imposing work requirements on recipients.

What is the point of these work requirements? The ostensible justification — cracking down on able-bodied Medicaid recipients who should be working but aren’t — is nonsense: There are very few people meeting that description. The real goal is simply to make getting health care harder, by imposing onerous reporting and paperwork requirements and punishing people who lose their jobs for reasons beyond their control.

The other front involves trying to reduce the number of people signing up for private coverage. Last year the Trump administration drastically reduced outreach — the effort to let Americans know when and how to get health insurance.

The administration is also promoting various dodges that would in effect let insurance companies go back to discriminating against people in poor health. And when Congress passed a huge tax cut for corporations and the wealthy, it also eliminated the individual mandate, the requirement that people sign up for insurance even if they’re currently healthy.

Preliminary evidence suggests that these efforts at sabotage have already partially reversed the coverage gains achieved under Obama, especially among lower-income Americans. (Curiously, all the coverage losses seem to have happened among self-identified Republicans.) But the worst is yet to come.

You see, G.O.P. sabotage disproportionately discourages young and healthy people from signing up, which, as one commentator put it, “drives up the cost for other folks within that market.” Who said that? Tom Price, President Trump’s first secretary of health and human services.

Sure enough, insurers are already proposing major premium hikes — and they are specifically attributing those hikes to G.O.P. actions that are driving healthy Americans out of the market, leaving a sicker, more expensive pool behind.

So here’s what’s going to happen: Soon, many Americans will suffer sticker shock from their insurance policies; federal subsidies will protect most of them, but by no means everyone. They’ll also hear news about declining insurance coverage. And Republicans will say, “See, Obamacare is failing.”

But the problem isn’t with Obamacare, it’s with the politicians who unleashed this termite infestation — who are doing all they can to take away your health coverage. And they need to be held accountable.

Wednesday, May 2, 2018

Tom Price, Somewhat Belatedly, Starts Telling the Truth About Obamacare


It took longer than expected, but disgraced former Health and Human Services Secretary Tom Price appears to have been welcomed back into polite society. Untethered from the political concerns that dictated what he could say either as a congressman or Cabinet member, Price is now able to tell certain truths about health care policy—though, in telling them now, he only confirms his own dishonesty about them when it mattered. 

Speaking at the World Health Care Congress on Tuesday morning, Price laid out the consequences of congressional Republicans’ decision to eliminate the individual mandate penalty in last year’s tax reform bill. 

“There are many, and I’m one of them, who believes that [removing the mandate] actually will harm the pool in the exchange market, because you’ll likely have individuals who are younger and healthier not participating in that market,” he said, “and consequently, that drives up the cost for other folks within that market.” 

You’ve got to love the “actually” here. Actually, the mandate—an imperfect instrument—was put into the Affordable Care Act for a policy purpose. Democrats didn’t, actually, put the mandate into the bill because they found it politically wise to irritate constituents for the sport of it, actually. No, really. They actually did it to achieve balanced risk pools. And now that it’s gone, it will actually upset the balance of risk pools and increase premiums. This is an actual thing. 

Price’s point about the mandate is actually the opposite of what he said in his capacity as the administration’s point person on health care reform during negotiations over the bill last year. 

“The individual mandate is actually one of those things that is driving up the cost for the American people in terms of coverage,” Price said in a July 2017 interview on ABC’s This Week shortly after the dramatic failure of health care reform on the Senate floor. 

With legislative repeal-and-replace seemingly dead, Price was considering what administrative relief he could bring to health care markets, and an expansion of individual mandate waivers was high on the list. He didn’t get very far. In September, he resigned under scrutiny for chartering fancy planes for lengthy flights between D.C. and Philadelphia. Good to see that he’s landed on his feet. 

Thursday, April 26, 2018

(Montana) Hospitals prep for Medicaid funding cuts

Hospitals across Montana are preparing for a decrease in Medicaid funding through layoffs and program “realignments” as the fallout from last year’s state budget shortfall continues to land on Montana’s health care providers.

The cuts are coming to Montana’s Medicaid reimbursement rate, which provides hospitals with funding to serve patients on the federal health care program. It’s part of an attempt by the Montana Department of Health and Human Services to address the $49 million in cuts assigned to the department last fall in a special state legislative session following a statewide budget shortfall of $227 million.

Medicaid — the program which combines federal and state funds to provide coverage to people who can’t afford health insurance or nursing home care — was expanded in Montana under the Affordable Care Act in 2016.

Kalispell Regional Healthcare is expected to lose $6.6 million in Medicaid funding this year, and has begun to address the funding gap through staff layoffs in recent weeks. Kalispell Regional Communications Director Mellody Sharpton did not specify the number of layoffs but said that it was “considerably less than 1 percent” of those employed by the health system and that none were involved in direct patient care. Kalispell Regional employs over 4,000 people in Northwest Montana.

That $6.6 million loss will also land, in part, on North Valley Hospital in Whitefish, which has been under the Kalispell Regional umbrella since an affiliation in 2016. North Valley Community Relations Manager Allison Linville said she had no additional information on layoffs or potential staff changes at the hospital.

Statewide, hospitals in Montana have also been strained by the reimbursement cuts. The Bozeman Daily Chronicle reported last week that Bozeman Health expects a $2.6 million cut in reimbursements and will absorb the loss without cutting services or staff. Instead, they will attempt to recoup the difference by saving money on supplies such as medications or equipment.

Community Medical Center in Missoula announced Friday that it was eliminating 16 staff positions in response to the cuts, which they said would decrease its funding by more than $6 million in 2018.
More changes could be forthcoming if Montana’s Medicaid expansion is not renewed in next year’s meeting of the state Legislature. The 2-year-old program, which expanded Medicaid under the Affordable Care Act, now enrolls over 94,000 Montanans — nearly one in 10 residents.

The program has cost $802 million during its first two years. The state of Montana has paid for 5 percent of that number, while the federal government contributed the other 95 percent.

A recent report by the Montana Healthcare Foundation predicted that the program could pay for itself by generating $350 million to $400 million of new spending in Montana’s economy between 2018 and 2020. According to the report, the Medicaid expansion injects money into Montana’s economy by supporting new health care spending, shifting the cost of Medicaid care from providers to the federal government and promoting economic activity, such as 5,000 jobs and $270 million in personal income by 2020.

As of now, the expansion is set to expire next year.

source med

Tuesday, April 17, 2018

Why Is U.S. Health Care So Expensive? Some of the Reasons You’ve Heard Turn Out to Be Myths

""There were two areas where the United States really was quite different: We pay substantially higher prices for medical services, including hospitalization, doctors’ visits and prescription drugs. And our complex payment system causes us to spend far more on administrative costs. The United States also has a higher rate of poverty and more obesity than any of the other countries, possible contributors to lower life expectancy that may not be explained by differences in health care delivery systems."

In a new, detailed international comparison, the United States looks a lot more like its peers than researchers expected.

Maybe the United States health care system isn’t that bizarre after all.

Compared with peer nations, the United States sends people to the hospital less often, it has a smaller share of specialist physicians, and it gives people about the same number of hospitalizations and doctors’ visits, according to a new study. The quality of health care looks pretty good, it finds, while its spending on social services outside of health care, like housing and education, looked fairly typical. 

If you’ve been listening to many of the common narratives that seek to explain the high costs of America’s health system and the nation’s relatively low life expectancy, those results might surprise you. Analysts are fond of describing the system as wasteful, with too many patients getting too many services, driven by too many specialist doctors and too few social supports.

But a large and comprehensive review in The Journal of the American Medical Association punctures a lot of those pat explanations. The paper, conducted by a research team led by Ashish Jha, compiled detailed data from the health care systems of the United States and 10 other rich developed nations, and tried to test those hypotheses. The group included nations with single-payer health care systems, like Britain and Canada, and countries with competitive private insurance markets, like Switzerland and the Netherlands. 

Dr. Jha, the director of the Harvard Global Health Institute, said he came to the project with a sense of the conventional wisdom about how the United States differed from its peers. But, after assembling the data from the countries’ health ministries, he changed his mind about a number of key assumptions. 


“We know we spend a lot more than everyone else, and we have looked for easy explanations — things like greed in the system, fee-for-service medicine, overutilization,” he said. But the research, he said, didn’t match his expectations. “I’ve been looking at other countries and seeing there’s a lot of fee-for-service in other countries, and other countries are struggling with overutilization.”

When it came to many of the measures of health system function, the United States was in the middle of the pack, not an outlier, as Dr. Jha had expected. Many analysts have called for the country to shift its physician training away from specialty care and toward more primary care medicine, for example. But the study found that 43 percent of U.S. doctors practice primary care medicine, about typical for the group. 

It’s often argued that patients in the United States use too much medical care. But the country was below average on measures of how often patients went to the doctor or hospital. The nation did rank near the top in its use of certain medical services, including expensive imaging tests and specific surgical procedures, like knee replacements and C-sections.

The data are consistent with other evidence that health care systems are beginning to converge, as information and technologies spread around the world among doctors and administrators.
Bruce Landon, a professor of policy and medicine at Harvard Medical School, said that the complaints about rising health care costs are a worldwide issue. Even though other countries spend less than the United States, few believe they have found a way to tame spending forever. 

“I don’t think there’s any of these countries where if you went and talked to them individually, they wouldn’t say they’re having a health care cost crisis,” he said. “They’re all struggling with paying for new technology and the cost of the system.”

The data did not suggest that any country had a plug-and-play policy template for devising a lower-cost, high-performing system. The systems tended to perform better than the United States on some measures and worse on others, with lots of idiosyncrasies.

Some experts who reviewed the results wondered about the accuracy of all the paper’s data points, which were numerous and drawn from an array of international sources. Dr. Jha acknowledged that the numbers may not be perfect but described the effort as careful and more comprehensive than previous comparisons.

There were two areas where the United States really was quite different: We pay substantially higher prices for medical services, including hospitalization, doctors’ visits and prescription drugs. And our complex payment system causes us to spend far more on administrative costs. The United States also has a higher rate of poverty and more obesity than any of the other countries, possible contributors to lower life expectancy that may not be explained by differences in health care delivery systems.

Just because other countries use the hospital more doesn’t mean that every hospitalization in the United States is appropriate. Jonathan Skinner, a professor at Dartmouth, who has studied patterns in health care use in the United States, noted that there probably is money to be saved by eliminating some of the extra scans and operations that are much more common in the United States than elsewhere. 

“It’s not that we’re buying more pizzas, we’re just paying more for each pie,” Dr. Jha said. “But that doesn’t mean that you can’t still buy fewer pizzas.”

Wednesday, April 4, 2018

Premiums shoot up, but many are paying less for ‘Obamacare’

WASHINGTON (AP) — Consumers getting financial assistance under former President Barack Obama’s health care law will pay lower premiums this year, even though the “list price” for their health insurance shot up.

That odd result is reflected in a report issued Tuesday by the Trump administration.

After federal aid, the average monthly premium paid by subsidized customers on HealthCare.gov is dropping to $89 from last year’s $106. That’s a 16 percent savings even though the “list price” premium went up about 30 percent, now averaging $639 for those subsidized customers.

The bottom line is counterintuitive, but it shows how “Obamacare” subsidies cushion consumers from rising premiums.

Seema Verma, head of the Centers for Medicare and Medicaid Services, says more affordable health care options are needed for people who aren’t eligible for the Affordable Care Act’s income-based financial assistance.

But independent analysts say a big part of this year’s premium increases is due to actions by the Trump administration, including the cancellation of major payments to insurers.

Insurers jacked up premiums to make up for the loss of federal dollars to cover discounted copays and deductibles that the companies were required to provide to low-income customers. Congressional authorization of the payments was under a legal cloud, and President Donald Trump pulled the plug. Bipartisan efforts to restore the money recently fell apart over disputes about abortion coverage.

“These numbers show for the first time how the Trump administration’s termination of payments to insurers in a sense backfired,” said Larry Levitt of the nonpartisan Kaiser Family Foundation. “The result, which is a little bizarre, is that consumers eligible for government premium subsidies are actually paying less out of their own pockets for insurance on average than last year.”

About 11.8 million people signed up for coverage this year through HealthCare.gov and state insurance markets, a slight dip from last year.

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TRUMPCARE

NOTE:  Since Obama left office, Trump has concentrated his efforts on changing and weakening the Affordable Care Act.  Obama has now left office and full responsibility for the mutated Affordable Care Act belongs only to Trump and should henceforth be known as Trumpcare.