Healthy Policy

Top Health Policy Stories of 2005

The Commonwealth Fund and Kaiser bring you the top health policy stories of 2005:

The leading vote-getters were:

• The number of uninsured continues to grow, hitting nearly 46 million, with another 16 million reported to be "underinsured."

• Hurricane Katrina draws dramatic attention to holes in the nation's health care safety net.

• Registration begins for new Medicare prescription drug benefit, despite widely reported confusion among seniors over the myriad choices for coverage.

• New cross-national studies add to evidence that U.S. health care system, the most expensive in the world, doesn't perform as well as that of several other industrialized nations on various clinical indicators and in reported patient experiences.

• Health care costs continue to increase, putting increased pressure on consumers, particularly the growing number citing trouble paying off medical debt.

I've written on all of them except Katrina, click on the categories links to the right to read more.

Estimating malpractice costs

The Washington Post reports on a new realization from a recent study on malpractice costs:

The insurance industry has long argued that huge losses from malpractice suits -- now running more than $7 billion a year -- have forced it to hike malpractice premiums, which more than doubled last year in some cities and for some specialties.

But a new study by a consumer group shows that losses reported to state regulators -- the figures often cited by the industry -- were much larger than losses actually paid during a nine-year period.

The study, by the Foundation for Taxpayer and Consumer Rights, a Santa Monica, Calif., advocacy group, found that from 1986 to 1994 the industry reported to regulators losses of $39.6 billion but actually paid only $26.7 billion, 31 percent less. The losses were overstated in each of the nine years.

That's quite an overstatement when you're dealing with billions of dollars. But it appears one of the biggest problems in the malpractice puzzle is a lack of information:

Fueling frustration on all sides: a surprising lack of data available from the nation's patchwork system of state regulation. Two years ago, the Government Accountability Office studied the problem and said that although insurance losses "appeared to be the greatest contributor" to higher premiums, a "lack of comprehensive data . . . prevented us from fully analyzing the composition and causes of those losses." The study concluded that Congress "may want to encourage" state regulators to collect data on "the frequency, severity and causes of losses on medical malpractice claims."

Even how much doctors actually pay in premiums is not readily available. Annual rates are kept by individual state insurance departments, and all sides rely on an industry newsletter, Medical Liability Monitor, based in Chicago, to collect data.

With all the moaning and complaining about malpractice costs, why aren't doctors demanding more information? The article states that many malpractice insurance companies are owned by physician groups. Don't they have a stake in what's actually driving malpractice costs? Or maybe their best interests are served in claiming it's the size of the awards and limiting those at the expense of patients.

And costs aren't as high as we think -- go read my post on U.S. malpractice awards compared to other countries.

Knowledge is power, people.

Best of '05 -- Health Affairs Edition

The Health Law Prof Blog has the list of the most-read Health Affairs articles of this year. If you've got a subscription, the most-read list is a great resource. Head over to an article outside your usual health angle. For me, that'll be John Holahan and Arunabh Ghosh, "Understanding The Recent Growth In Medicaid Spending, 2000-2003".

Health spending abroad: it's not what you think

Ezra has a great post on Reinhardt and Hussey's Health Affairs paper on U.S. health spending and the rest of the world:

A lot of libertarian economists (Arnold Kling and the like) tend to argue that the high costs of care in America are a simple result of how much we pay for services. They, predictably, ascribe the sums to the awesome technologies and phenomenal operations we deploy. But it's more structural than that. In their (damn good) paper on the variance between US health spending and costs in other countries, Uwe Reinhardt, Peter Hussey, and Gerard Anderson explain.

According to the authors, higher costs can be attributed, in part, to health practitioner's wages and a fragmented delivery system that gives more market power to the supply side of the equation. Which puts a hole in arguments over technology, but lays open quite clearly that things like high deductible health plans (HDHPs) and other plans to shift cost to consumers won't make a huge difference. The increased spending vis a vis other nations is on the backs of doctor's and hospitals fees for care, as well as gaping holes in the delivery system that give them more market power. Integration of care within regions (and between them), coupled with larger payers with more power will help bring us back in line with the rest of the world.

UC continues the corruption parade

Via Health Care Renewal, more corruption comes to light in this wrap up of recent problems in the University of California system. The Santa Cruz campus is my alma mater (and one of the bullet points of shady dealings).

Former UC Provost MRC Greenwood was charged with violating conflict of interest policies by hiring Lynda Goff, a friend and business partner, first as an executive assistant, then in academic affairs at a salary of $192 K. In addition, Winston Doby, UC Vice President for Student Affairs, who reported to Greenwood, hired Greenwood's son into a specially created internship position. When these events came to light, the university launched an investigation, but permitted Greenwood to resign her administrative position before it was completed, agreeing to give Greenwood 15 months of leave at her $ 301 K salary (per the San Francisco Chronicle).

This caused major uproar on campus. The "friend and business partner" is actually (or at least was) Greenwood's lesbian partner, and when faculty (especially those non-tenured, who've gotten a bad deal with pay in the last five years) accused her of neoptism and misusing funds, Greenwood returned with claims of homophobia. Needless to say, a bad situation.

Then there's the debate over the salaries of top administrators:

The first was about lavish pay and other compensation given to many top UC administrators, while state support of the system shrunk, and fees paid by students grew. But UC leadership argued that high pay was needed to attract top quality executives.

This I'm actually somewhat sympathetic to. I know a UC administrator well, have stayed at their home and spoken with them at length about their position. This administrator, though well paid, would absolutely be making 2-3 times their salary at a private institution. Further, if you consider the cost of living in the majority of the UC's campuses -- Orange County, West LA, Santa Cruz, Santa Barbara, San Diego, Berkeley -- these administrators need substantial salaries. Now, in the context of budget crises and student fee increases (because I was out of state, my tuition increased 20% every single year), administrator's salaries should be tied to other wage increases. But this problem is part of our current corporate culture. Public universities have the privilege of making that unacceptable -- the rest of the private sector employees do not.

There's also problems with the liver transplant program at UC-Irvine (birth place of Ezra), so head over for the details.

Corruption and Medicine

Via the New York Times, the University of Medicine and Dentistry of New Jersey is in deep:

UMDNJ effectively becomes the first public university in the nation to be placed under federal oversight, according to a Justice Department spokesman in Washington. With its five regional campuses, more than 4,500 students and a $1.6 billion annual budget, UMDNJ is the nation's largest health care university.

If criminal charges had been brought, the university would be disqualified from receiving the federal aid that makes up much of its budget.

For nearly a year, federal agents have been investigating accusations that administrators at the university doled out patronage jobs and tens of millions of dollars in no-bid contracts to their political allies, sometimes for work that was not performed.

Visit Health Care Renewal, who's been following the case for awhile, for more.

In the meantime, I have a question for the seasoned health policy vets: there appears to be a large number of improper conduct events lately -- Vioxx, Guidant, Cleveland Clinic, Aubrey Blumsohn, and now UMDNJ. Are there more incidents than usual, or is this standard corruption fare?

Surgery Update

I'm officially two weeks out from surgery and things are going well. To be sure, there's good days and bad days. Half the time I feel like they didn't do anything to me, that I can throw off my crutches and do a jig. Then there's days like the last few, where it's become increasingly apparent that I'm allergic to the adhesive in the steri-strips (little white pieces of tape they put over the incision to protect it). Apparently only 1 out of 200 patients get this reaction and now my leg looks like it was branded by 20 steri-strips. Awesome, I beat the odds. (If you missed what they did to me, head over to this WebMD description of the procedure)

In other news, I ventured out of the house in the wheel chair for the first time yesterday. This led to some valuable realizations:

• Clothing stores represent huge headaches for wheelchairs. The reason is two fold: the racks are placed so close together you can't fit through, and you definitely can't turn around; clothing is often on high racks you can't reach or thumb through without serious neck strain

• Nordstrom (and other upper-scale department stores), however, is the best store ever to shop in when you have a wheelchair. The layout is incredibly spacious allowing for as much turning around as one desires, and hardly any of their clothing is up on high racks. Their staff is also very professional, and don't treat you like you're a starving African child (oh poor you in a wheelchair! let me look at you like your life is so terrible and like you're three!)

• Every door represents a problem. When you don't need walking assistance, you don't even notice the number of doors you go through in a given day. Once you're in a wheelchair (or crutches, for that matter), every door becomes literal -- it's closed to you! And it takes some work to get through.

• There are an unbelievable amount of rude people out there. My mom is struggling to hold open the door and push the wheelchair over the bump, and people just go around us through the other door and don't offer to help at all. That doesn't mean you need to run ahead through doors to open it and always be on the look-out, but pay some freaking attention to your surroundings. A little help is appreciated.

So, in sum: Nordstrom's is awesome, doors suck, and open the door for people with wheelchairs, for God's sake!

Bad News for Pharma Marches On

Health Care Renewal has an eloquent summary of Guidant's recent troubles, and what it means for patients:

Attorney General Elliot Spitzer has sued Guidant for fraud, charging it concealed defects in its implantable cardiac defibrillators (ICDs, devices that use electric shocks to the heart to attempt to restore normal rhythm). In summary:

• Guidant has admitted that it did not disclose information about defects in ICDs to doctors and patients.

• These ICDs are very expensive, costing about $25,000.

• Had the physicians and patients known prospectively that the ICDs were not as reliable as previously thought, they might have chosen not to implant them, and implanting such flawed defibrillators provided less benefit to the population of patients receiving them than they thought they would receive.

• Thus, by concealing the information, Guidant likely made more money and increased costs to the health care system, but decreased the benefits to patients.

It's as simple as that, folks. Go read the entire post for more of the story.

Labor and health care -- the start of a beautiful friendship?

The New York Times is all over labor and health care today. First is the news that transit workers will pay part of their insurance premiums for the first time ever:

The Metropolitan Transportation Authority and the transit workers' union announced a settlement yesterday in which the authority abandoned its demand for concessions on pensions and the union agreed to have all workers pay a portion of their health insurance premiums.

The agreement calls for transit workers to pay 1.5 percent of their wages toward the premiums, cutting into the raises they receive. That comes on top of the fines of slightly more than $1,000 that most transit workers face for participating in last week's illegal transit strike.

The settlement calls for raises of 3 percent in the deal's first year, 4 percent in the second year and 3.5 percent in the third year. The subway and bus workers' current base pay averages $47,000 a year, and with overtime, their average yearly earnings total $55,000.

"These were huge items for our membership," said Marvin W. Holland, a station cleaner and board member who voted to approve the contract. "If it took a strike to get it, so be it. I think this is an overwhelming success." The agreement on health premiums will save the authority nearly $32 million a year.

In the first year, if the average salary is $55,000, workers will pay $825 of their own health insurance premium. Given that the average annual premium for an individual is $610, that's no small concession.

Then there's this Robert Fitch op-ed decrying the labor movement and its stance on nationalized health care:

Most advocates of universal health care focus on the opposition of Republicans and insurance companies. But perhaps the most important factor keeping an overhaul off the national agenda is one that few Democrats acknowledge: most of Mr. Gettelfinger's fellow labor leaders don't support a single-payer system either.

The reason comes down to simple self-interest. The United Auto Workers is one of the few private-sector unions that doesn't run its own health plan. Rather, most have created huge companies to administer their workers' plans, giving them a large and often corrupt stake in the current system.

Except that he's about 10 years overdue, as Ezra writes over at TAPPED:

The union movement is changing. And it's not just the new guard. The older unions, UAW included, are rapidly realizing that the corporate welfare state they so lovingly constructed is readying to collapse, with them beneath it. Today, the transit workers grudgingly accepted a deal that cuts into health benefits -- they had no other choice. Corporations have established similar beachheads in the benefit packages at Ford, GM, Delphi, and countless others. Where Old Labor used to focus on preserving what they'd already won, the swift disintegration of those gains is forcing them to search out more durable delivery mechanisms for health care, pensions, and the like. Their hostile posture from decades back isn't sustainable, but unions aren't stubbornly clinging to it, something Fisk fails to mention. No reason to let facts obstruct a perfectly good point, I guess.

Moreover, the new breed of unions -- SEIU, UFCW and the other service and low-wage unions Fisk never mentions -- have long been enthusiastic supporters of national health care. UFCW's homepage is anchored by a photo of a grocery cashier saying:

“Bottom line: contract negotiations are all about health care now. Unless something happens for health care nationally, I don’t see it getting any better.”
--Laurie Piazza, Local 4289

At the end of the op-ed, Fitch claims:

The problem is getting American unions to fight for common concerns as opposed to narrow institutional interests. It may just be that a broad-scale union overhaul will have to precede one in American health care.

Many labor leaders know their decisions to block single-payer care in the past proved poisonous. Of the big three unified interest groups with the most influence on the nature of care in the U.S. (the AMA, insurance companies, and labor), labor is the only one we'll see defecting to single-payer anytime soon. If the UFCW is any indication, labor's put their finger in the air and felt which way the wind blows. Fighting to preserve the status quo when health costs are bringing down companies (and thus eliminating jobs) is no longer in their best interest.

Learning from Cerner

HIS Talk has a great post examining what really went wrong with Cerner's CPOE (computerized physician order entry) system. For those of us who strongly believe in the awesome potential of HIT, it's essential to know what went wrong, and what we can do better.

I'm glad they did the study, but it seems to me more of a "don't do what we did" lesson for hospitals, not an indictment of Millennium. I think their purpose was to raise the awareness of broad outcomes in a major system change and the article does a good job of that.

I'm always quick to jump in a vendor-bashing line, but anyone who sees this article as valid Cerner criticism is wrong, in my opinion. I doubt any other vendor would have done better. I doubt every Cerner implementation has these problems. I'm sure that the hospital would make better implement decisions if they were doing it over again, as would most CPOE early adopters.

Go read the original critique by the HIT expert -- it's a valuable discussion of the intricacies of HIT programming and hospital implementation and well worth your time.