People in fair or poor health who have health insurance are less likely to drop or lose coverage if they have individual insurance than if they have small-group insurance, according to a study by Mark Pauly and Robert Lieberthal of Wharton. This finding, by the way, is stunning. It is the opposite of what all your friends and colleagues think.

The number of people traveling the globe for medical treatment is lower than commonly assumed, but there remains potential for huge growth in the industry, according to a gated study by consulting firm McKinsey & Co.

You do. A Commonwealth study finds that "on average, hospitals passed on 78% of the costs of all injuries and 70% of the costs of negligent injuries to outside payers."

I am sending out a second Health Alert this week because the news is so momentous.  The Commonwealth Fund is claiming success where so many others have failed:  Solving the triple problems of health care cost, quality and access [here].

IN THEIR OWN WORDS, the proposal would "ensure near universal coverage," cut insurance costs by "nearly one-third," and "potentially save $1.6 trillion over 10 years."

PLUS, no one has to make any hard choices between health care and other uses of money.   No patient.  No doctor.  No nurse.  No employer.  No insurance company.  No government agency.

AND no provider has to compete for patients based on price or quality.  No doctor.  No nurse.  No hospital administrator.  Nobody anywhere in the system.

UNBELIEVABLY, people can remain in the current "building blocks" - employer-sponsored plans, Medicaid, SCHIP, you name it. Also, there are connectors for small businesses and an optional Medicare plan for the under-age-65 set.

HOW DO THEY DO IT?  Better bureaucracy.

Have a great day.

John

P.S.  Why do I think we are looking at the blueprint for Obama's health plan?
If it is, I'll say more in the future.

In a rational world, deductibles and copayments serve an economic purpose.  Where it is appropriate and desirable for patients to make choices (e.g., primary care, small-dollar services), out-of-pocket cost sharing allows patients to bear some or all of the costs and reap some or all of the benefits of the choices they make.  Where patient choice is not appropriate or desirable (e.g., on a hospital gurney, large-dollar services), we would not expect to see cost sharing.  At least these are the principles that govern other insurance markets. 

Yet in the market for health insurance, those principles are increasingly being turned upside down.  In the small group market a typical plan covers primary care visits from the first dollar, but imposes high deductibles and copayments for inpatient hospital care.  And whereas tiered pricing for drugs once encouraged generics over more expensive brand names, today tiered pricing is being used to impose thousands of dollars of cost on patients who must take expensive drugs with no generic substitutes.  (See The New York Times article.) 

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You too can have high quality dental care for a very low price.  But only if you live in Alaska and only if you are a Native (Eskimo, Inuit, Indian, etc.).  Everyone else is barred from the market - by law.

I know what you are thinking.  Didn't the Supreme Court outlaw this sort of thing years ago?  Separate, but equal was banned in 1954.  Separate, but better is apparently okay.

Original story in the New York Times.

In the series of reports, called "Dying for Coverage," Families USA purports to show how many people are killed by a lack of health insurance in each state.  For example, they claim 6 people die every day in Florida because they are uninsured.  Seven die every day in Texas, 8 in California, and 25 in New York. 

How is Families USA able to tally up all this carnage with such pinpoint precision?  As it turns out, these claims are based on a 15-year cascade of studies - each repeating the errors and misinterpreting or mischaracterizing the findings of the previous one and ultimately relying on data that is 37 years old. 

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Some people marry for love, some for companionship and others for status or money. Now comes another reason to get hitched: health insurance. In a poll released this week, 7 percent of Americans said they or someone in their household decided to marry in the past year so they could obtain health-care benefits via their spouse.

THIS IS FROM A DETROIT NEWS STORY.

House Oversight and Government Reform Committee Chairman Henry Waxman (D-CA) and House Ways & Means Health Subcommittee Chairman Pete Stark (D-CA) chose to release a report they requested from the General Accountability Office on the same day as the AHIP survey was released, even though the report was delivered to the Chairmen on April 1.  The Chairmen's press release, seeking to throw cold water on the otherwise solid numbers from AHIP, says the report shows that HSAs are used more often as a tax shelter by wealthy individuals rather than as a mechanism to help working families obtain needed health care.

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America's Health Insurance Plans (AHIP) just released its 4^th annual survey of Health Savings Account plans.  As of January, 2008, more than 6.1 million Americans are covered by Health Savings Account (HSA) insurance plans, a 35 percent increase over last year and almost double the number in 2006.

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A woman's son dies in a hospital and she requests the medical records - which she is entitled to under federal law.  But the hospital doesn't comply until California's three-year statute of limitations has expired and she can no longer sue, according to a USA Today story. 

When hospitals do comply, they may play tricks.  "I see this all the time," says one expert witness.  "Pages are darkened, they are lightened, they are enlarged, shortened - put slightly down so you can't see a signature." 

A woman diagnosed with leukemia is sent to M.D. Anderson Cancer Center in Houston, according to a Wall Street Journal story:  

• She is told she can have an appointment only if she brings a certified check for $45,000.

• But the $45,000 covers only lab tests. For an admission for actual treatment, the hospital demands $60,000 more.

• A nurse refuses to change the chemotherapy bag in her pump until her husband makes another payment.

• While she is sitting on an exam table awaiting a doctor, a hospital administrator argues with her about money.

• She is charged $360 for blood-tests most insurers pay $20 or less for; $120 for saline pouches that cost less than $2 retail; and $314 for a penis clamp (to control incontinence), although she has no penis.

Since M.D. Anderson is nonprofit, it pays no taxes.  It has a $1.88 billion endowment and netted $310 million in income (profit) last year.  Contributions are tax deductible. 

Today I'm at the Centennial Conference on Medicare at the LBJ Library in Austin. All the usual suspects are here, and you can watch a live webcast. Here is something for you to ponder and even wager on: How many speeches will we have to listen to before someone says:

• This should be a day for atonement, not celebration, since the Trustees just announced that the unfunded liability in Medicare is $85 trillion and rising. (That's trillion with a "t".)

• The only way to control health care costs is for someone to choose between health care and other uses of money.

• We cannot continue elderly entitlements based on chain-letter finance; instead, each generation must save and invest and pay its own way.

Odds are, you won't hear anything nearly this sensible until yours truly approaches the podium around 4:00 pm.

Yes, I know. They probably won't invite me back next year.

Everyone agrees. Republicans and Democrats.  Conservative and liberals. Newt and Hillary.  Government should force doctors and hospitals to clean up their act by: adopting electronic medical records, practicing evidence-based medicine, coordinating care, integrating care, and doing numerous other things that all right-thinking health policy analysts have determined they should do.  Trouble is, what everybody knows turns out not to be true. 

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The FDA says they are.  Lots of patients say otherwise.  Here's a Wall Street Journal article about a generic that releases 34% of the drug in the first two hours compared to 8% for the brand name drug.  Four times the impact is apparently too much for some patients and there have been lots of complaints.  Bottomline:  people shouldn't be forced to choose one over the other.  But patients should pay the full costs and reap the full financial benefits of the choices they make.  

An ounce of prevention may have been worth a pound of cure in households down through the ages, but in the world of health economics the adage, alas, is not true….

Even when prevention greatly reduces future cases of a particular illness, overall cost to the health-care system typically goes up when lots of disease-preventing strategies are put into practice. This is usually true whether treating the preventable diseases is cheap or expensive.

This is from an article in the Washington Post.

The biennial Dartmouth Atlas of Health Care is out and the findings are as eye-popping this year as they have been in the past.  Among chronically ill patients in the last two years of life: 

• New Jersey patients spent almost three times as many days in the hospital as patients in Utah.
• Patients in Manhattan had 3½ times as many hospital days as patients in Bend, Oregon.
• Among teaching hospitals, the variation in the amount spent was more than four to one.

So what impact did this wide variation in care have on the health of patients?  Not a whit. 

• There is no evidence that extra care and extra spending produce better outcomes, and some evidence that they produce worse outcomes.
• Further, variations in care correlate with variations in supply: the more hospital beds, the more bed days; the more CT scanners, the more scans; the more cardiologists, the more cardiac care, etc. [See Associated Press article ]

Is this the whole story?  I'll shelve that question for another day.  For the moment, what do we make of all this? 

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For more than a year, I haven't received a single dollar from any insurance company. I work for my patients. A few hundred doctors across the country are working the same way, some in blue-collar towns. Routine care should be affordable to the middle class, and as more doctors and more patients form relationships that exclude insurance companies, prices will drop. Insurance doesn't make routine care affordable; it makes it more expensive by adding a middleman. I know that some patients can afford nothing, so two afternoons a month I volunteer at a clinic that cares for indigent patients, which I could not have done with the huge patient volume I was seeing a few years ago.

This is a doctor writing in the LA Times.

See Roy Ramthun summary and comments by Uwe Reinhardt and me.

Why isn't proliferation of Health Savings Accounts (HSAs) making the medical marketplace more transparent? Answer: Because HSAs piggyback on the current payment system rather than mount a challenge to it. Long before you (with HSA in hand) get to the doctor's office, your insurer and your doctor have already agreed on what services will be covered, what will not be covered and how much will be paid. By the time you get there, there is nothing left to negotiate. See my analysis at HSAs Explained. What follows is a discussion of this issue, edited by yours truly.

Tax law favors employer-provided group insurance and discriminates against individually purchased insurance. Should that inequity be corrected? What follows is a blogosphere debate, edited by yours truly.

Sherry Glied has a nice summary of the issues involved in the Democratic primary debate in the NEJM.  Which is better:  individual mandates or coaxing people to buy insurance with subsidies?  The problem with subsides: 

• To get the job done, the subsidies might well exceed the cost of the coverage itself.
• Subsidies will inevitably crowd out private spending, shifting to the taxpayers burdens people would otherwise shoulder on their own.

But mandates are no panacea either because of three risks: 

• First risk: a mandate is a tax and if government subsidies are insufficient, it will become a very regressive tax.
• A second risk: special interests will bloat the required benefit package.
• Third risk: to be effective there must be continuous coverage and enforcing such a mandate may require a degree of intrusiveness and bureaucracy that many will find unpalatable.

According to Elizabeth Edwards, the wife of former Democratic presidential contender John Edwards, neither she nor John McCain would be able to get health insurance under Sen. McCain's health plan.  He, because he has been treated for melanoma.  She, because she has breast cancer.  Under McCain's plan, says Edwards, insurance companies "wouldn't have to cover preexisting conditions like melanoma and breast cancer."  [link]  Here's what she doesn't know: 

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On the basis of a review of the research literature, the Congressional Budget Office has concluded that "for every 100 children who gain public coverage as a result of SCHIP, there is a corresponding reduction in private coverage of between 25 and 50 children."

An update by Roy Ramthun on the House Ways and Means assault on HSAs is attached as a comment.  Joint Tax Committee says the new rule change will have a big impact on CDHC plans.  Refuses to say why.  Members voted on the new rules without knowing what difference they would make. Other comments also attached.

[This article is a continuation of the previous FYI: A Bad HSA Idea]

The Food and Drug Administration regulates prescription drug sales.  However, 80% of the active ingredients in U.S. drugs originate overseas.  The GAO says that at the current rate it would take more than 13 years to inspect each foreign establishment even once!  So insuring FDA rules are followed is really up to each individual company.  And, unlike generics, brand companies have an incentive to protect the good name of their brand. 

But the overall problem is bigger.  Pfizer has found fake versions of its drugs in at least 75 countries and in the legitimate supply chain in at least 25 countries.  So a market for safety among outlets (pharmacies, mail order houses) is equally important.  Data is from a Melinda Beck article in the WSJ. 

[This article is a continuation of the previous Health Alert: Why Aren't You Dead]