Author Archive

Only 5% of Employers Affected?

Congressman Chris Van Hollen (D-MD) said on Fox News Sunday (September 15th) that the delay in the employer mandate is no big deal, since only five percent of employers would be affected by it. I’ve heard this argument from a large number of ObamaCare supporters now, so it must be part of the talking points circulating among Democrats. It raises two possibilities –

  1. Mr. Van Hollen is perfectly willing to lie to score political points, which is scary, or
  2. He thinks it is a true statement, which is scarier still.

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Sep 25, 2013 | 13 comments | by

The Real Don Berwick

Consider this –

…[F]or many patients the most basic elements of care were neglected. Calls for help to use the bathroom were ignored and patients were left lying in soiled sheeting and sitting on commodes for hours, often feeling ashamed and afraid. Patients were left unwashed, at times for up to a month. Food and drinks were left out of the reach of patients and many were forced to rely on family members for help with feeding. Staff failed to make basic observations and pain relief was provided late or in some cases not at all. Patients were too often discharged before it was appropriate, only to have to be re-admitted shortly afterwards. The standards of hygiene were at times awful, with families forced to remove used bandages and dressings from public areas and clean toilets themselves for fear of catching infections.

These conditions caused the deaths of an unknown number of patients. It may sound like a Nazi concentration camp or a third-world “failed state” like Yemen, but it wasn’t. It took place in one of the most advanced industrial democracies in the world.

What should happen in such a situation? Should the facility be closed? The staff fired? Management arrested and tried for manslaughter? At least sued for malpractice? Would it make any difference to you if it was a private or a public facility?

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Sep 18, 2013 | 32 comments | by

The Coming Revolution in Consumer Driven Care

From time to time I like to check in with Bill Boyles to find out what is happening in the market.

As you know, Bill is the publisher of the Consumer Driven Market Report (for subscription information, e-mail ipropubs@gmail.com.) He has been writing health care newsletters since dinosaurs walked the earth. He’s seen a lot of things come and go and has earned his skepticism the hard way. So when he identifies a revolution I take him seriously.

I called him this time because I was on my way to Pittsburgh to keynote the annual conference of the Pittsburgh Business Group on Health. I’ve had a pretty good idea of the direction the market is taking for quite a while, but Bill was able to provide some sharper focus. Here is what I took away from our discussion −

  1. Employees are extremely skeptical of and even hostile to the “legacy” players in health benefits including both government and insurers.
  2. Employers are flocking into defined contribution approaches to benefits, in which they make a fixed contribution and their employees decide how best to spend the resources.
  3. As part of that, employers are offering three different account options — Flexible Spending Accounts (FSAs), Health Reimbursement Accounts (HRAs), and Health Savings Accounts (HSAs).
  4. There is a new industry of “CDHC account administration firms” to manage these accounts and provide support services. [CDHC=Consumer Driven Health Care.] Bill recently completed a survey of these companies.

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Sep 16, 2013 | 16 comments | by

ObamaCare’s Biggest Worry: Collecting the Premiums

One of the long-standing problems in the individual health insurance market is collecting premiums.

The individual market is largely made up of people with tentative work histories. They may be self-employed or seasonal workers with surges of income, or they may work several part-time jobs, or they may even be fully employed in good paying positions but their employers don’t provide coverage.

In any of these cases, individuals are required to pay their own premiums in a timely fashion, even when money is tight in a given month. Insurers try to avoid lapses in payment by requiring automatic withdrawals from bank accounts, credit card back-ups, or prepayment of premiums on a quarterly basis. Like other businesses, the insurer may provide for a grace period of a week or so, but failure to pay means cancellation of the policy.

Coping with these issues is one of the reasons individual coverage has higher administrative expenses than group coverage.

It will be more than a little interesting to see how the Affordable Care Act deals with these problems, especially since cancellation means people will be in violation of a federal mandate.

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Aug 21, 2013 | 51 comments | by

Does the Doctor Need a Boss?

Einer Elhauge is a Harvard law professor and former adviser to the Obama campaign. He recently authored a paper that was published by the Social Science Research Network (SSRN) entitled,”ObamaCare and the Theory of the Firm.”

Is it just me, or do you also get bone weary of academics who have never actually been in business or the professions trying to re-order the world to their liking? After all the chaos these people have created over the decades, wouldn’t you think a little humility would be in order?

In this case, Mr. Elhauge thinks that fragmentation is the biggest problem in health care, and things would be much better if we had some well-managed firms directing the behavior of all the various elements, including doctors, hospitals, pharmacies, nurses, rehab centers, and so on.

Mr. Elhauge isn’t alone in this view. Some time ago I had a debate with my friends at Cato, Michael Cannon and Arnold Kling, over the same topic. They had written a paper that I reacted to pretty strongly. See the discussion here.

Modern medicine

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Aug 05, 2013 | 15 comments | by

IOM Debunks Dartmouth

According to Kaiser Health News the Institute of Medicine (IOM) recently released a report that contradicts the long-standing claims of the Dartmouth Health Atlas that variations in Medicare spending are attributable mostly to the greed of doctors.

The context of the report was to inform policymakers on the wisdom (or lack thereof) of proposals to pay providers more in low-cost areas and pay less in high-cost areas. The $8.5 million report found that local variations in Medicare spending do not correlate with variations in non-Medicare spending.

This finding is unsurprising. In fact, NCPA Scholars Andrew Rettenmaier and Thomas Savings came to precisely the same conclusion in a report published four years ago (surely for a whole lot less money).

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Aug 01, 2013 | 13 comments | by

Fee-For-Service Again

USA Today asked me to write a counterpoint to their editorial calling for the abolition of Fee-For-Service payment in health care. Their editorial is here, and my counter is here.

Unfortunately, USA Today did not show me the article I was responding to. Now that I have read it, I want to make a few other observations.

First, the paper thinks that putting physicians on salary would curb the problem of overtreatment. Yes, it might do that, and replace one problem with another — under treatment. Physicians might become clock-watchers, punching in at 9:00 and out at 5:00, regardless of patient need. While on the clock, they might slow-walk their services. After all, why hurry when you get the same pay regardless of how much work you do? Even factories have long figured this one out, preferring to pay piecework instead of flat wages.

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Jul 15, 2013 | 15 comments | by

The American Way of Birth

The New York Times recently published a major article by Elisabeth Rosenthal on “The American Way of Birth, Costliest in the World.”

The article is full of the usual, “The U.S. can’t do anything right: every European country is better than we are,” whining (it’s curious that the Left doesn’t apply the same thinking to abortion policy), but once you get beyond all that, there is plenty of food for thought here.

For one thing, we’ve been told for decades that American patients aren’t very well informed or assertive, so we need sharp-penciled experts to manage our health care for us. The experts will get us the best deal, and we don’t have to worry our pretty little heads about it.

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Jul 11, 2013 | 38 comments | by

EBRI’s Puzzling Study

Our friends at the Employee Benefits Research Institute (EBRI) have come out with a new study on consumer-directed health that raises far more questions than it answers. The study was published in Health Affairs, but EBRI also offers an extensive appendix with additional information.

The abstract sums up the lessons thusly –

We explored effects of consumer-directed health plans on health care and preventive care use, using data from two large employers — one that adopted a CDHP in 2007 and another with no CDHP. Our study had mixed results relative to expectations. After four years under the CDHP, there were 0.26 fewer physician office visits per enrollee per year and 0.85 fewer prescriptions filled, but there were 0.018 more emergency department visits. Also, the likelihood of receiving recommended cancer screenings was lower under the CDHP after one year and, even after recovering somewhat, still lower than baseline at the study’s conclusion.

The authors seem to be saying that CDHPs aren’t working all that well and are discouraging the use of preventive services. They also suggest that, by discouraging physician office visits, CDHPs may increase the use of emergency departments. They recommend exempting physician office visits from the deductible.

Maybe, but this research is an awfully thin reed to hang such a recommendation on.

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Jun 24, 2013 | 24 comments | by

Dehumanizing the Opposition

It is a whole lot easier to get people to kill or vilify other people when they think the opposition is less-than-human.

During World War I the Wilson administration called Germans “the Huns” to dehumanize them and undermine any allegiance German immigrants might have for their country of origin. Calling the foes “Japs” in World War II made it easier for the Roosevelt Administration to bomb civilian targets and place American citizens of Japanese origin in internment camps. It is notable that in both cases, these were extremely “progressive” administrations.

So, it may not be that surprising that during the current progressive administration the opposition has been dismissed as “racists” and “tea baggers.” Who cares about protecting the rights of racist tea baggers? They are illegitimate. They are not worth paying attention to. They are not your friends and neighbors; they are people to be shunned. Go ahead and audit them. Don’t allow them to organize or get tax exempt status ― their views are beyond the pale ― voicing racist tea bagger ideas is probably a hate crime anyway. So it goes in these days of total political war.

Still, it is jarring when the same approach bleeds into what should be a fairly innocuous discussion of insurance costs.

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Jun 13, 2013 | 31 comments | by
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