Tag: "Medicare"

How Much do Financial Incentives Matter to Physicians?

In this experiment, medical students were paid under fee-for-service and capitated payment to treat hypothetical patients. Here is Austin Frakt on the study:

Oh, before I get to the results, one more cool thing about the experiment. The physician (student) participants actually earn the money they generate from treatments prescribed in the experiment. Since there are no actual patients, the researchers included an incentive for the physicians to take patient concerns seriously by converting patient benefits into contributions to a charity that cares for real patients. Given the constraints of experimenting on actual people, I think this is a very cool design. Still, one might wonder how things might be different in the presence of real, flesh and blood patients.

 

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Aug 12, 2011 | 5 comments | by

Pushback On My Medicare Proposals

In response to my Wall Street Journal editorial, David Williams claims that my proposals would raise Medicare’s costs, not lower them.

I proposed to allow Medicare patients to pay market prices for walk-in clinics, doc-in-the-box clinics, surgi-centers, free standing emergency care clinics, etc. (An editor’s glitch muddied the editorial’s description of the idea a bit.) I also proposed to allow Medicare patients to pay market prices for telephone and email services, such as those offered by Teladoc.

I believe that all these outlets can accept Medicare patients right now, but most do not because Medicare’s fees are too low. Since the prices these outlets charge have been mainly determined by cash-paying patients, they are real market prices. And, since they are lower than what Medicare would have to pay at a primary care physician’s office or a hospital emergency room, I argued that Medicare would actually save money.

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Aug 12, 2011 | 46 comments | by

What Atul Gawande and the Dartmouth Atlas Completely Missed

Conventional research based on Medicare spending alone has led to the claim that some areas are high resource users because of the way doctors practice medicine. It is why so much emphasis is being placed on evidenced-based medicine and changing the way doctors practice.  See Gawande and Dartmouth and our response to both here and here.

Yet a new study, consistent with NCPA research, finds that where Medicare spending is high, non-Medicare spending is often low.

The study examined private insurance claims … [in areas] throughout the country that spent the most and least on health care across demographics. The researchers concluded that their findings challenged other established research that traditionally has used Medicare data for the elderly to determine geographic spending variations for people of all ages.

[For example], McAllen, Texas — a city known for having the highest Medicare spending in the U.S. — ranked among the 10 lowest-cost cities for health care among individuals with employer-sponsored health insurance, the report found.

Aug 11, 2011 | 7 comments | by

6 Billion Prices

From my Wall Street Journal editorial today:

Medicare has a list of some 7,500 separate tasks it pays physicians to perform. For each task there is a price that varies according to location and other factors. Of the 800,000 practicing physicians in this country, not all are in Medicare and no doctor is going to perform every task on Medicare’s list.

Yet Medicare is potentially setting about 6 billion prices across the country at any one time…. Is there any chance that Medicare can set prices and approve transactions in a way that does not cause serious problems? Not likely.

What happens when Medicare gets it wrong? One result is that doctors face perverse incentives to provide care that is costlier and less appropriate than the care they should be providing. Another result is that the skill set of our nation’s doctors becomes misallocated, as medical students and practicing doctors respond to the fact that Medicare is over-paying for some skills and under-paying for others.

Aug 11, 2011 | 32 comments | by

CBO: Private Insurers Better at Expenditure Growth Control than Medicare, Medicaid

Advocates for government run health care assert that it does a better job of cost control than private insurers. Here are some data from a 2007 Congressional Budget office report on the Long-term Outlook for Health Care Spending.

On a real per capita basis, private insurers had slower spending growth than Medicaid or Medicare. The CBO says that estimates were adjusted for changes in population composition.

The growth in per capita Medicaid spending is symptomatic of a program in which both the states and the federal government have an incentive to spend more to get more, and cost control remains someone else’s problem.

  Source: Congressional Budget Office

Aug 10, 2011 | 9 comments | by

Krugman Disposed Of

Game. Set. Match.

In a post at the Health Affairs Blog, Tom Saving and I have written what we think is the definitive response to the claim by Paul Krugman and Robert Reich that Medicare is efficient.

I want to add a brief word here about the sociology of health policy. Krugman and Reich don’t know anything about health economics. Yet they are the ones making the claims. What about all the real scholars who do know something? What have they been doing while all this gibberish is being tossed around?

Answer: they have either been sitting on the side lines saying nothing or, in the disappointing case of Austin Frakt and Aaron Carroll, allowing an otherwise excellent blog site to be used as a forum for Krugman’s uninformed ranting and raving.

BTW, this is not unusual in the field of health policy. It is normal. When people who should know better don’t speak up, the public is ill served by their silence.

Aug 09, 2011 | 18 comments | by

How Bad is the Debt Crisis?

Worse than you probably think. Using an econometric model, Ray Fair estimates what it would take to stabilize the debt-to-GDP ratio indefinitely into the future by 2020. Answer:

  • We would need increased taxes of $650 billion a year in 2011 dollars, or $6.5 trillion over the next decade.
  • The economic effects of higher taxes would be slower growth, resulting in about $2 trillion in lost output, or almost $1 of reduced output for each $3 of higher taxes.
  • This tax increase is equivalent to 45% of all personal income taxes, or 51% of all social security taxes, or a 44% sales tax on all purchases of goods and services.
  • Alternatively, the same goal could be achieved by eliminating almost one of every four dollars of transfer payments (Social Security, Medicare, Medicaid, etc.), including payments to state and local governments.

HT: Tyler

Jul 27, 2011 | 4 comments | by

Quote of the Day

Between 1966 and 2007, the entire increase in the size of government relative to the economy resulted from growth in tax-financed health spending.

Christopher J. Conover

The American

Jul 22, 2011 | 4 comments | by

Can the Gang of Six Change the Way We Pay For Health Care?

A bipartisan group of senators is proposing to reduce the federal deficit by $3.7 trillion over the next ten years. This is seen as a way to overcome the debt ceiling impasse and deal with the nation’s long term financial crisis at the same time. What does this mean for health care?

The proposal would require Congress to find $300 billion in health care spending cuts in order to avert a planned cut in Medicare doctors’ fees. It may also require another $200 billion in cuts. And remember, this is on top of about $550 billion in Medicare cuts already legislated as part of last year’s health reform bill. If I were running a hospital, I would be feeling very nervous right now.

In general, the plan follows the outlines of the Bowles-Simpson (Obama debt commission) proposal. Yet when Erskine Bowles and Alan Simpson were in Dallas earlier this year, they said their health care proposal was nothing more than a line on a piece of paper. “We need you to tell us how to make that work,” Sen. Simpson told me.

Readers of this blog know that we regard all of the deficit reduction proposals as nothing more than lines on a piece of paper when it comes to health care. That includes the health reform law. The Obama administration’s talk about “value purchasing” is nothing more than empty rhetoric, backed by the threat of senseless price controls that the Medicare actuaries office says will put hospitals out of business and severely reduce access to care for the elderly and the disabled.

In general, there has been no serious proposal to reduce health care spending over the next ten years on Capitol Hill. Not on the right. Not on the left. Not Republican. Not Democrat.

So let us veer from the pack and ask what is shaping up to be the most serious question of the moment: How should the federal government pay hospitals?

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Jul 20, 2011 | 31 comments | by

More Bad News for ObamaCare

This is from Chris Fleming’s summary at Health Affairs:

James Robinson of the University of California, Berkeley, sheds new light on the simple story line that hospitals “cost shift” to make up for low Medicare payments. Evaluating data from a value-based purchasing initiative and twenty-seven local hospital markets in eight states, he concludes that the story is more complicated. In markets where there is little competition among hospitals, hospitals do in fact try to offset lower Medicare payments with higher prices for private insurers. However, in competitive markets hospitals cut costs to better survive on lower rates. As a result, Medicare payment cutbacks and integration of providers into accountable care organizations may increase costs in areas where competition is scarce, cautions Robinson.

Unfortunately, the whole thrust of ObamaCare reforms is to replace competition with monopoly.

Jul 18, 2011 | 3 comments | by
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