Sebelius Says

By Kim Bellard, April 16, 2013

If I was HHS Secretary Kathleen Sebelius, I think I’d be asking for a pay raise, or maybe a (verbal) flak jacket.  Of course, there’s probably no money for them.

Sebelius is front and center for any developments with ACA, and she has been a very visible spokesperson for the controversial legislation.  I don’t know whether she actually believes all the things she says, or is just a loyal soldier for the Obama Administration.  Either way, the news about ACA seems like a slow drip of continued bad news, and I fear that the news is going to keep getting worse before it gets better.

Latest up was the request, included in the Administration’s 2014 budget, for an additional $1.5 billion to run the health insurance exchanges for the 26 states who have opted to have the federal government run their exchanges, plus another seven that are to be jointly run.  That’s far more than had been originally expected, which means much more work for HHS.  Congress refused a similar request for just under $1 billion last year, and is likely to view this request equally skeptically.  

In testimony before the House Ways and Means Committee last Friday, Secretary Sebelius vowed that the exchanges will be up and running by the October 1 deadline, but admitted there’s no backup plan in case she’s wrong.  Presumably she’s lined up someone to blame in case she’s wrong.

Curiously, even though far fewer states are planning to run their own exchanges, HHS expects their grants to those states to be more than twice as much as they estimated last year – some $4.4 billion instead of the earlier $2 billion.  HHS doesn’t need to ask Congress for this money, but the increase certainly raises eyebrows.  Twice as much for half as many states?

The Washington Post recently pointed out that, even though ACA is arguably the signature accomplishment of the Obama Administration, the President’s recent budget proposal doesn’t do anything to spell out its expected costs.  They are spread out through the budget and not always cleared spelled out.  Cynics might argue that the budget deliberately obfuscates the costs to avoid drawing attention to how much they are.  CBO had recently estimated, for example, that the subsidies are now expected to be much more expensive than originally forecast.  Some of that is because health insurance premiums are expected to be higher than expected – the Administration had promised they would drop due to ACA, something Secretary Sebelius now acknowledges isn’t going to be the case.

The Administration has already started to cut corners on how the exchanges will operate.  They recently announced that employees of small employers who get coverage from the exchange will not initially get options of health plans; they will be limited to a single option.  I’ll be waiting for the other shoes to start dropping about what else they will be cutting back on.  Maybe they can start with their complicated application… 

Then there is Medicaid expansion, which is not going well at all.  I’d previously written on this, and the situation isn’t getting better.  The Arkansas approach, which relies on purchasing private insurance, was seen to be a potential solution for wavering states, but the Arkansas House recently failed to approve the approach.  Similarly, in Ohio, Gov. Kasich faces rebellion from his own party on his support for their version of expansion.  The number of states who have not opted to expand Medicaid should, ironically, hold down the projected federal spending, but it is not clear how the Administration is scoring the impact of those states’ reluctance.

ACA used employer coverage as a continued cornerstone for source of coverage – remember “if you like your health plan, you will be able to keep your health plan”? – but that cornerstone is weakening.  The Robert Wood Johnson Foundation recently detailed what has long been known: employer coverage has declined drastically over the past few years, dropping 10 percentage points nationwide from 1999/2000 to 2010/2011.   Some states saw even worse results, led by Michigan with a 15.2% decline.  And that was before ACA’s biggest impacts. 

Optimists are pointing out that there is no sign yet of employers planning to drop coverage or cutting back on full time hours to avoid their 2014 mandate requirements, but I think their optimism is premature.  Even if 70% of benefit professionals say their companies would “definitely will” keep health coverage, as cited by the International Foundation of Employee Benefit Plans survey, that number is still alarmingly low, and those same professionals are coming to be more pessimistic about how much ACA has been increasing their costs. 

Similarly, quoting the recent Minneapolis Federal Reserve survey results -- which indicated 89% of employers hadn’t shifted full-time employees to part-time – as good news seems slightly Orwellian.  Eleven percent is a lot for something that hasn’t happened yet, and the Fed notes that the 89% didn’t exactly say they wouldn’t in the future. 

When one adds up the various things that are becoming visible problems about ACA, the list starts to get long.  For example, the tax on employer plans, the medical device tax, and the affordability test for large employers’ contributions to dependent coverage have all come under fire in the past few months.  And let’s not forget that the Class Act was the first part of ACA to go, with Secretary Sebelius killing it back in fall of 2011. 

According to Kaiser Family Foundation’s latest survey, three years after the passage, over half of Americans report they don’t understand how ACA will impact them, and a plurality still oppose the law.  One wonders how many members of Congress who supported ACA originally would still vote for it if they had a second chance. 

One way or the other, we’re going to put putting increasing numbers of people in the exchanges in 2014 and beyond, which will increase the strain on them and will increase the cost of subsidies.  Maybe that’s not so bad, but we better go into 2014 with our eyes open about the difficulties the system may face.  No matter what Secretary Sebelius says.


53% percentage of young adults using social media for healthcare reviews

By Claire Thayer, April 15, 2013

PWC's Health Research Institute released a new report on consumers’ experience in seeking health related information as well as effectiveness of healthcare ratings and reviews.  When consumers in the study were asked on their sources of healthcare reviews, the HRI survey finds that Consumer Reports topped the list of sources, with 43% respondents who have read reviews indicating that they have used the well-known products review source to look for health-related information.  Not surprisingly, there are generational differences too. Consumers age 65 and older prefer government sources for their health-related information, while consumers 18-24 prefer reviews on blogs or social media sites such as Facebook or online patient discussion forums.  For more information about HRI's report - Scoring healthcare: Navigating customer experience ratings, click here: http://www.pwc.com/us/scoringhealthcare


Health Sector Economic Indicators – Altarum Institute

By Clive Riddle, April 12, 2013

Altarum Institute each month issues Health Sector Economic Indicators Briefs through its Center for Sustainable Health Spending. The brief cover health care spending, utilization, prices, and employment, and are worth perusing each time. 

Altarum’s Charles Roehrig, Director of the Center, had this to say about their current assessment of health care in the economy:  “Health spending has remained at about 18 percent of gross domestic product since mid-2009, but health employment continues to slowly increase as a share of total employment.  Expanded coverage under the Affordable Care Act should push these figures upward, but an improving economy will push in the other direction as non-health spending and jobs accelerate. We look forward to tracking how these forces play out.”

Here’s the current pulse of the health care economic sector from Altarum’s just issued April briefs, which incorporate February and March 2013 data:

  • National health care spending in February 2013 grew 3.9% relative to February 2012
  • Health care price growth rose to 1.7% in February 2013 compared to February 2012, two-tenths above January 2013 reading
  • This was still the second lowest rate of price increase since 1.3% growth recorded in December 1997.
  • The 12-month moving average price growth at 1.9% in February 2013 is the lowest since the same figure recorded in November 1998.
  • In February 2013, health spending increased to a seasonally adjusted annual rate of $2.89 trillion, slightly higher than its value of $2.88 trillion in January.
  • The health spending share of the gross domestic product was steady at 18.0% in January 2013, up from 16.4% at the start of the recession in December 2007.
  • Health spending by category in February 2013: Hospital – 32%; Physician & Clinical – 19%;  Prescriptions – 10%; Nursing Home – 5%; Dental – 4%; Home Health – 3%; Other personal healthcare – 11%; Other health spending – 16%
  • Year-over-year, hospital prices rose to 2.6% in February (from 2.0% in January). Physician and clinical services rose 0.8%, barely above the low 0.6% January print.  Prescription drugs saw price growth tumble to 0.8%, from 4.0% as recently as August 2012, and the lowest since 0.7% in June 2007.
  • Implicit per capita health care utilization averaged 1.3% growth over the last 12 months.
  • Health care employment rose by 23,000 jobs in March 2013, somewhat below the 24-month average increase of 24,000
  • Health care represented 10.74% of total employment in March 2013, compared to 10.67% a year ago and 9.49% in December 2007.

Getting Healthy

By Cyndy Nayer, April 1, 2013

In January 2013, US News published a report on why Americans aren’t healthier and gave us the concept of a health lag.  In fact, the gap between America’s health status and that of other industrialized nations is a 30-year trajectory of lower outcomes.

Last week, Modern Healthcare published a review of Kaiser Family Foundation findings in which the highest hospital readmissions were directly correlated to the unhealthiest counties in the US.

On the same day as the MH-KFF release, I was privileged to receive a tweet on patient engagement that highlighted the blog of Gilles Frydman  on PatientDriven.org, which highlights the real engagement and outcomes of patients who seek to understand their conditions and treatment by conversing with others.  The point here is in the definition of engagement, per the blog, “An engaged patient is someone deeply involved in the scientific understanding of their disease, fully aware at all times of the entire spectrum of available therapeutic options. It requires a set of learning, cognitive and psycho-social tools that can only be acquired by conversing often with a real network of peers who are similarly involved in this complex endeavor. 

This, says the author, is exactly opposite of the current definition of patient engagement as used by HIT, care professionals, benefits personnel, and service providers:  “the engagement flows from the various professional stakeholders of the health care system to the patients. It is a direct extension of the concept of consumer engagement.”

It’s exactly the discussion I am most involved in, most of the time, in which the (choose one) doctor/ IT developer/ hospital administrator/ national thought leader talks about patient engagement as the patient behaving according to the “guidance” he/she is provided.  But what if the guidance reaches the patient at the same time she is dealing with her teenager who had a car accident, or her husband who may lose his job? What if the “guidance” is a follow-up visit or test, but the office isn’t open late when she is off work? What if the “guidance” is the purchase of a pharmaceutical that she either can’t afford or that may cause side effects for her?  What if she simply didn’t understand the instructions or, three months later, is feeling better and stops the medication or falls off her nutrition plan?

Unfortunately, the problem here is that the engagement and persistence (which, by definition is part of engagement) did not occur because people have other parts to their lives than the body parts with issues.  They have financial needs, emotional needs, social needs, even transportation needs that interfere with engagement. While the most-influential people in the patient’s life, according to surveys, is the clinical “face” (doctors, pharmacists, nurses, etc.), these people do not follow the patient everywhere, and others in her sphere of influence take precedence.

Emergency department visits drop when medical practices extend hours. There are examples of patient engagement strategies that work and that translate directly to saved dollars.  In surveying more than 9,500 people with steady sources of care, the Center for Studying Health System Change focused its results on 1,470 individuals who had tried to contact their primary care practices after normal business hours in the past year. The study, published online in Health Affairs on Dec. 12, found that nearly 21% had difficulties reaching their physicians after hours, and those who reported more difficulty accessing after hours had higher rates of emergency department use (37.7%  and higher rates of unmet medical needs (13.7%).

As I’m on my relentless pursuit of solutions that deliver better health outcomes, I have to  emphasize this, re-emphasize it, and then state it many times more.  Those who doubted the power of value-based benefit design or outcomes-based clauses did not fully understand the suite of services and, what I call surround-sound messaging, that is necessary for patient engagement in health.

We cannot be paternalistic, nor maternalistic, in making health the end goal.  We have to meet people where they are and stop treating body parts separately (you know, hypertension over there and depression over here and diabetes…).  We have not only organize in patient-centric efforts but, perhaps more importantly, in patient-driven circles.  This is the success of the senior-citizen breakfasts that promote Medicare health plans, of the breast-health discussions that occur in churches and hair salons, and of the Dr. Oz and Dr. Phils of the world who reach through social media (including TV) to their audiences.

Transparency will only matter if the patient is seeking healthcare.  If, instead, she is seeking a carpool for her kids or the money for rent, then transparency of treatments may not be as meaningful, if it’s on the radar at all.  ”Entitlement programs,” as Medicare and Medicaid are increasing called, cause splits in peer groups and often in the same family, pitting seniors against young working adults in the “subsidy” allotment.

These are not directly related to the delivery of treatment from the health system, but they are distractions to the patient decisions.  If the incentives to the prescriber are different than the incentives to the patient, the patient will more often seek the treatment recommended by the doctor, as this is the trusted relationship.  In survey after survey for many years, the clinician advice trumps the insurance benefit advice, yes, but it also relieves the patient of asking price or quality or convenience questions of the physician.  To this point, in my March 15 2013 I sent out the Health Affairs link to the Kaiser study showing that consumers do not want to be responsible for their healthcare costs, and they don’t want their doctors to be responsible, either.  

If we want to close the health valley that we are in, if we want to use the amazing healthcare resources in our country wisely and widely for all of us, then we have to stop this narrow focus of hospital v doctor v benefit plan v pharmaceutical manager v insurance and get back to the basics:  making healthcare understandable, actionable, and most of all, relevant WITH the patient not TO the patient.  Patient engagement IS the holy grail for healthcare and health improvement.  But it can’t be done around the patient, it must be done with the patient fully present and asking questions and envisioning the future of his or her health.  If he or she can’t see it, he or she can’t achieve it.


If Kaiser Is Not the Answer, What Is the Question?

by Kim Bellard, March 28, 2013

The New York Times recently published an interesting article, “The Face of Future Health Care,” that raised questions about whether even a model like Kaiser is delivering what we need to reform our health care system.  It’s the old “be careful what you wish for…” dilemma.

After all, Kaiser could be considered a prototype for what ACA wanted when it created Accountable Care Organizations (ACOs).  It is a fully integrated hospital-physician organization, delivering care and managing risk with salaried physicians and other health care practitioners, and its own hospitals.  Hospitals all over the country are rushing to build their own versions, buying up physician practices at a record pace – one survey indicated that 52% would do so this year, while another predicted 75% of physicians would be so employed by 2014.

Kaiser may not have been the first integrated delivery system, nor are they the only one, but they certainly are the largest and have been around for decades.  With all those decades, though, one would expect they would be dramatically lower in cost, and that is not generally the case.  San Francisco public radio station KQED did a report “Why Isn’t Kaiser Less Expensive?” last spring.  In their report, critics accuse Kaiser of shadow-pricing, while Kaiser’s CEO George Halvorson insists they don’t and are usually at least 10% cheaper.  That’s nothing to brag about: with even 1% lower annual trend, they should have gotten 10% cheaper in these early years of the 21st century alone.

All this is not to pick at Kaiser.  I have long admired models like Kaiser, Geisinger Health System, Group Health Cooperative of Puget Sound, Intermountain Healthcare, or The Mayo Clinic.  It just seems intuitively obvious that like an integrated system, without the same incentives to overtreat that are pervasive elsewhere, should produce better results.  Each of the systems has been fairly successful in their core markets, although less so the further away from home they get, yet none are delivering radically different cost or quality results than other providers.

And, really, why should they?  They only have to be a little better each year than their competition.  The new mantra in health care is “value-based purchasing,” but we’re a long way from there.  The Catalyst for Payment Reform reports that only 11% of payments to doctors and hospitals are based on performance, while the Commonwealth Fund reports that less than 1% of health insurance premiums was spent on quality improvement in 2011.  This is disappointing but hardly surprising.  Most purchasers are buying with essentially house money; that is, someone else’s money. 

The biggest sources of health coverage are Medicaid, Medicare, and employer-sponsored health insurance.  The persons covered under all of these are largely shielded from the true cost of that coverage.  Medicaid is funded entirely by taxes, Medicare is also largely tax-funded, even when considering beneficiaries’ lifetime contributions, and, of course, employer coverage has the tax preference.  The “tax expenditure” for employer health insurance is, by far, the largest such expenditure – more than twice as large as the mortgage deduction, for example.  It’s all just compensation to employers; money “contributed” to employee benefits is simply money not spent on employee wages.  The tax preference helps shield employees from how much is being spent on their behalf, and it creates a huge disparity with people buying individual coverage, who receive no tax break.

ACA doesn’t equalize the tax preference, but it does introduce a vast set of new subsidies for individual coverage.  The Society of Actuaries has recently reported that individual premiums may be 32% higher due to ACA, joining the chorus of warnings about what may start happening in 2014.  Even HHS Secretary Sebelius now acknowledges they may be higher, but notes that the new subsidies will offset much of these.  While I think it is good public policy for more people to be covered and for economically disadvantaged people to get assistance in making coverage affordable, I worry greatly about creating a large new class of people sheltered from the true cost of health insurance.  It’s making a bad situation much, much worse.

Steve Brill has gotten much deserved attention for his lengthy and insight Time article “Why Medical Bills Are Killing Us.”  Brill painstaking walks through the crazy world of health care prices, especially their inconsistency between payors.  Some have used his work to call for single payor or other rate-setting, while I would argue that the system is a symptom of what happens when no one is paying enough attention to prices.

Frankly, I question whether the ACO/integrated delivery system is going to be the solution to our health care mess.  Hospitals are like factories: full of capital-intensive equipment and expensive to operate unless run at capacity.  Yet they aren’t really run like modern factories in terms of management practices, as a recent study in JAMA pointed out.  Similarly, physicians and other health care providers have some definite income expectations and fixed overhead obligations. 

All too often, combining hospitals and other providers in integrated delivery systems may be more about consolidating market power or assuring current revenue levels than about improving the cost and quality of the care for patients.  One AEI scholar recently pointed to the “humongous monopoly problem in health care,” and that’s with ACOs still in an early stage.  AEI is not the first to cite this issue, as I’ve written about previously, but I still don’t think enough attention is being paid.

We’re moving quickly to a health care system that features geographic provider monopolies or cartels, consumers too shielded from costs, and a regulatory environment that creates larger barriers to entry for new competitors in either delivery or financing of care.  That’s the perfect storm for a disaster. 

For radically different results, we’ll need radically different approaches.  Clayton Christian wrote about disruptive innovation in health care over ten years ago, and yet we’re still waiting to see it.  It may mean breaking the health/medical connection that HMOs led us to try to integrate in health coverage, giving consumers more fiscal accountability for the former while still protecting them from catastrophic expenses that can result from intensive medical interventions.  It should mean putting more of the data and technology – like mobile apps -- in the consumers’ hands, as advocated by people like Eric Topl (The Creative Destruction of Medicine) or Joe Flowers, and using that data to measure performance and help prescribe treatment. 

We’ve had a very paternalistic health care system, with health care experts telling us what care we need and other experts choosing coverage for us.  Let’s hope we can change that.  We need consumers engaged, taking responsibility, and demanding accountability from providers.  We need new types of competitors, using 21st century technology and science, to help consumers manage and finance their health needs.

We have to make sure that legislation and regulations focus on what’s best for the patient, not necessarily for existing health system entities, in order to help ensure we don’t stifle innovation (e.g., FDA regulation of mHealth).  The facts that traditional Medicare benefit design is still largely based on 1960’s Blue Cross Blue Shield designs, or that, generally speaking, you can’t use telemedicine to consult with an expert physician in a different state due to licensing or coverage restrictions, amply illustrate the problem. 

Whatever the future health system looks like, it won’t look like what we have today.  Dinosaurs were remarkable effective for hundreds of millions of years, but the environment dramatically changed and they became extinct.  A lot of the dinosaurs that have historically been the basis for our health care system will become extinct in the new health care environment, or evolve beyond recognition.  As with evolution, it will be messy, proceed with many false starts, and produce unexpected winners.

Personally, I can’t wait to see what the future looks like.