Tuesday, November 24, 2009

Emptying the cost control tool kit

Imagine that it is 2013, and a new President is sitting in the Oval Office. (If you prefer, imagine it is 2017, and we have a new President.) To make things interesting, let's imagine that the new President is a Republican. Imagine that he (or she) was elected on a platform of cutting taxes, rolling back the Obama administration's increased spending, and reforming the Medicaid and Medicare entitlement programs. To make things even more interesting, let's imagine that the Obama administration was able to get a substantial expansion of health insurance coverage enacted into law, but that most of the cost controls were stripped out or weakened as a result of political opposition. Health care spending has continued to rise at breakneck rates, and the Medicare trust fund is about to run out of money.

What is a new President to do?

Because the most promising approaches to gradually "bend the cost curve" - comparative effectiveness research, coverage of evidence-based preventive services, advance care planning, reductions in regional variations in the quality and cost of care, and the public option - were left out the health reform bills, the only cost-cutters left are hugely unpopular ones. Increase the age of eligibility and slash Medicare benefits? Means-test Medicare to exclude the rich? Slash payments to doctors and hospitals? Go back on your campaign promise and raise Medicare payroll taxes? Or let Medicare go broke? You either incur the wrath of the largest generation in history - the tens of millions of boomers who now depend on Medicare - or the younger tax payers who will be called upon to bail out the program.

(If you prefer, you can run a similar scenario with another Democrat President - only in this case, the most likely option is that the new President would propose a complete, U.K. style take-over of the health care system, to give the government all the regulatory levers it needs to control costs.)

These scenarios are very real if the critics of the cost controls in the current health reform bills have their way. Right now, notwithstanding the oft-repeated charge that the House and Senate bills "do nothing" to control costs, Marc Aminder writes in The Atlantic that the cost-benders in the legislation are getting praise from well-respected economists, Republican and Democratic alike.

But the same cost-benders are under unrelenting attack.

John Wennberg and Shannon Brownlee blog in Health Affairs about the efforts by some academic medical centers and hospitals to discredit and explain away Dartmouth Atlas data on regional variations in quality and cost. They fear that the research will lead to policies to reduce such variation, at their institutions' expense. Some physician membership organizations are flatly opposed to any policies that would redistribute payments among physicians based on efficiency and outcomes of care, specialty, or any other criteria, for that matter. They also don't like the idea of an independent commission to develop recommendations to control costs under a fast-track legislative review process. The end-of-life counseling in the House bill has been falsely labeled as leading to death panels. Research on the comparative effectiveness of different treatments has been called rationing of care. A public option is called socialized medicine. Even the medical home, which was developed by physician membership organizations, is labeled as this decade's version of HMO-style limits on care.

My point is that the politicians and interest groups who criticize these and other cost-benders may find that if they succeed in emptying the toolkit of the most promising approaches to gradually slow the cost curve and improve outcomes, they may leave a future President and Congress with nothing but draconian and enormously unpopular cuts in benefits and provider payments, tax increases, or the much-feared government take-over of health care. And it could be their guy and their party who will be in charge when the day of reckoning arrives.

(Oh, and by the way, Happy Thanksgiving to you and your loved ones!)

Today's question: What do you think about the above scenario? And what is your favorite Thanksgiving dish?


Rich Neubauer MD said...

I think it is very difficult to be a futurist and “pure” scenarios – that is ones that you lay out where other parameters don’t intervene and change the background so much that it forces a different direction than could ever be conceived in advance – are rare.

Having said that, I think that if the current round of health care system reform does succeed in extending coverage to virtually all, it will become evident in a very short time that we cannot just go about business as usual in health care as in the past. We will sink as a nation if that were the case.

At this point, it probably should not be that surprising that every interest group (including groups advocating for some segment of the patient population, hospitals, university hospitals, doctors, various specialty groups, drug companies, suppliers of durable medical equipment, etc.) all feel that their part of the system is not the problem and that they should be the last to give in any direction that might require painful change. And god forbid that we should consider throwing a bone to primary care if it means any kind of redistribution in physician payment because “I” not only need but deserve every red cent I get for what I do. Some of this has to stop, but I think it is unlikely that it will stop until something else happens to make it stop and I think that something is expanding coverage to all.

The Republican mantra seems to be that “health care reform will lead to reduced benefits to Medicare recipients, rationing of care, and more expensive insurance premiums (along with higher taxes) for the working man.

The REAL mantra should be that “health care reform will lead to changed benefits to Medicare patients that reflect better medical science, more rational coverage decisions, and some increase in taxes offset by forced improvements in the private insurance industry due to managed competition that reflect a societal commitment to the health of the nation.”

Steve Lucas said...

I feel you have covered many of the issues we face as a country in trying to get a handle on health care cost. Anytime you question even one component of our current system, those with a stake in that area rise up to protect income and professional standing.

A number of years ago my wife and I looked critically at the future and come up with some conclusions of our own. We feel Social Security will become welfare, or means tested program, resulting in those who meet an income threshold not receiving benefits. The same will hold true for Medicare. Those with the income will continue to purchase private insurance, possibly with a catastrophic Medicare rider.

While I find many appealing facets to the UK’s NHS I am reminded that they are the third largest employer in the world, after the Chinese Army, and Rail India. While many in the UK rile against the NHS they should remember they are the single largest voting block in the country.

Without bending the cost curve now we will never be able to afford the proposed systems and even the most severe changes in the future will not be enough to balance the budget. Doctors need to be he leaders in looking at the science of testing and prescribing, ignoring the marketing efforts of pharma, and others, with a financial stake in selling a often questionable product based on cost.

I must admit that I once had some sweet potato pie in Savannah Georgia that has left me looking for more, or a good recipe.

Steve Lucas

PCP said...

The SGR and its impact on physician payments over the last 12 yrs has left the medical profession in a severely weakened position. Added to this is the ridiculous inclusion of office administered medications in Medicare B costs, and the shift of some care from the inpatient to outpatient setting.
The result of all this has been more for less. We are now in a position that we have little left to give. Though as you said, everyone will say the same thing. Few other stakeholders can point to such a trifecta of factors that have weakened their hand.
This represents a failure of our collective advocacy efforts.
Added on to this, is the added burden for generalism/cognitive specialty specialties that is the the proceduralist dominated RUC. This has not only served to reduce the attractiveness of generalist careers, but has led to much resentment within medicine about the fairness of RBRVU system.

In regards to the issue of benefits reduction. There is no way to avoid that. Whatever the cost containment methods employed, the inevitable cannot be denied. We cannot afford the everything for everyone public mandate. As technology grows, as science develops, as people age, as chronic illness explodes, no method of cost containment without some rationing will work. Whether Doctor payments are slashed, administrative costs are cut, or we move to maximal use of generics, all of these are one off cost savings, the escalation of healthcare costs however, are not one off. We will therefore delay but not prevent the inevitable rationing. If we are to raise taxes, healthcare will have to compete with a multitude of other costs for this. Balooning debt interest payments, Defense in an unstable world, declining demographic dividend(fewer working population to aged, Infrastructure build out/renewal costs etc. are all worthy costs of the future.

On rationing however, we will have to decide who does it and on what terms, and with what liability. Eventually that is the debate we will get to. The sooner the better.

Arvind said...

Bob and Rich have their biases. It would be very interesting to see their comments if they were representing a specialty society; would they so generous to accept "redistribution of wealth". I don't think so.

It would benefit all to read a recent article in the WSJ about a cardiac surgeon in India who has revolutionized this procedure (cost & access) in India and is about to set up a similar program in the Cayman islands for Americans (can get CABG for $2000). He was able to do this purely because he was allowed by the Indian govt to set his own rates, which he used appropriately to collect lower prices from poor patients and higher from more affluent ones; a pure market-based process. Unfortunately, due to federal regulations in the US, this would not have been possible. This would a great market-based process to dramatically reduce cost of procedure-based care. But since the govt is so deeply involved with price-fixing in this country, there is no chance of this happening here.

In a Constitutional Democracy it is not the Federal government's role or responsibility to "bend the cost curve" for any profession or industry. And if you think there is not going to be an access to care issue if this plan is passed, I would like to resume this debate in 2013.

I get a question at least once a day from a new patient "why are there so few Endocrinologists like you in this area, and why does it take 3 months to get an appointment?" Guess what, its going to get worse from Jan, because Medicare beneficiaries here just lost another Endo - me, because of unilateral discriminatory policy (which my organization, ACP, supported) of discontinuation of Consult codes. If this is not lack of access to care, I am not sure what is? Perhaps Bob can elaborate...Happy Thanksgiving...hoping that the government will learn the wisdom of leaving us alone.

Robert J. Sobel, M.D. said...

Happy Thanksgiving. I am not sure these little experiments are worth our time. We simply need to finance the system in a coherent way. Insurance companies have had their impact on physician fees, hospital reimbursement, and lab costs. They have not done a very good job on drug costs. This is the government's fault. The proposals for universal coverage and outlawing pre-existing can stay. The rebate system is retroactive and ripe for gaming.

The lack of integrity in the marketing of the brand-generic dichotomy is the most egregious part of our current system. It subtly warps clinical decision making on multiple fronts. We need to add medications to some sort of price control system where physician-patient manipulation is eliminated. The cost curve can then be bent without infringement of patient and physician rights. The better the execution of the regulated royalties system, the better value we will get for our dollars. It won't be rationing to restrict billion dollar bonanzas in exchange for indefinite exclusivity and a long-term revenue stream. Pay as you go.

Anonymous said...

I know I am a bit late in answering the question, but I would advocate the adoption of the EMBRACE 3 tiered plan (published in the Annals on April 7th - http://www.annals.org/content/150/7/490.full).
You can get more information at http://hpfhr.org.