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CARE RATIONED FOR THE INSURED BASED ON ABILITY TO PAY

Los Angeles Times of July 9, 2005 By Debora Vrana

UnitedHealth's William W. McGuire and PacifiCare's Howard Phanstiel described the $8.1-billion deal (the acquisition of PacifiCare Health Systems Inc. by industry giant UnitedHealth Group Inc.)... as a step toward a more rational healthcare system. "There is not enough money . to pay for the healthcare system as it operates today. It is indiscriminate, it is non-scientifically based, it is founded on anecdote as much as it is science," McGuire said. "We have to change course." Phanstiel, 56, would become an executive VP of UnitedHealth Group and would reap about $190 million from the transaction in PacifiCare stock options, restricted shares and other equity instruments (plus about $25 million in other benefits).

"I'm not doing this to get money...," Phanstiel said. McGuire's pay of $124.8 million (not counting benefits and stock options) could cover the average health-insurance premiums of nearly 34,000 people. [EINO: Remember we're talking about money collected out of our premiums - these are health care dollars - flushed down the corporate toilets.]

This article may still be accessible CLICK HERE

Statement of Patricia Neuman, Sc.D., Vice President and Director, Medicare, for the Policy Project, Kaiser Medicare Policy Project, Henry J. Kaiser Family Foundation

Testimony to House of Representatives, Committee on Ways and Means, Subcommittee on Health, May 1, 2003
Hearing on Medicare Cost-Sharing and Medigap:

One key consideration in redesigning Medicare's benefit package is an understanding of the effects of cost-sharing on beneficiaries' access to care. Some have suggested, for example, that beneficiaries should bear a greater share of their health-care costs to deter use of non-essential services. A review of the literature, however, identifies several concerns associated with proposals that would raise cost-sharing under Medicare: (1) higher cost-sharing requirements are likely to lower use of medically necessary services and may have a negative impact on beneficiaries' health status; (2) higher cost-sharing is inequitable, hitting the most financially vulnerable beneficiaries the hardest; and (3) many if not most seniors do not appear to have sufficient information and knowledge to navigate the health-care system and assess their options when faced with high cost-sharing requirements.

Increased cost-sharing can therefore be viewed, colloquially speaking, as a "triple jeopardy" for elderly and disabled beneficiaries with modest incomes:

* Those with low incomes are more likely to be without any form of supplemental insurance that covers Medicare's cost-sharing requirements;
* Since those with low incomes also tend to be in poorer health and need more medical services, Medicare's cost-sharing requirements will account for a greater portion of their limited incomes if they use the necessary additional services; and
* If they do not use the additional services they need, their health is likely to suffer as a result.

In summary, there is substantial evidence showing that cost-sharing leads to lower utilization of health-care services - both necessary and potentially non-essential services. A number of studies show that cost-sharing deters people from seeking diagnostic and preventive services, as well as services that are often used to treat chronic illness. Lower utilization may reduce health-care spending in the short term, but could ultimately result in poorer health outcomes for seniors and younger beneficiaries with disabilities. See the full congressional testimony at CLICK HERE 

Ref 4 - Heart Scanner Stirs New Hope and a Debate, By Gina Kolata of NYT November 17, 2004

What if doctors had a new way to diagnose heart disease that took only seconds and provided pictures so clear it showed every clogged artery, so detailed that it was like holding a living heart in your hand? In fact, that new way exists and is coming into use in scattered areas of the country, and there is wide agreement that it will revolutionize cardiology.

It is, medical experts agree, an extraordinary time in cardiology. Depending on which way the scanning market goes, the nation could save a fortune on diagnostic tests, and medical care could be improved. Or expenses could soar and patients could be harmed. The question is, how, if at all, can the technology be controlled? {Wouldn't it be nice if new miracle treatments in medicine were evaluated in cost and benefit by people who had the public welfare and society's benefit as their motive?]

Ref 5 Health Affairs, November/December 2004, "Consumer-Directed Health Plans And The RAND Health Insurance Experiment" By Joseph P. Newhouse

The RAND HIE (RAND Health Insurance Experiment) randomized families to health insurance plans that varied their cost sharing from none ("free care") to a catastrophic plan that approximated a large family deductible with a stop-loss limit of $1,000 (in late-1970s dollars), which was scaled down for the low-income population. If one uses the rate of increase in per capita medical spending to convert late-1970s dollars into 2004 dollars, a $1,000 deductible then would be more than a $6,000 deductible is today. The HIE participants in the large-deductible (95 percent coinsurance) plan used 25-30 percent fewer services than those in the free-care plan; on average, they had just under two fewer face-to-face physician visits per person per year and were 23 percent less likely to be hospitalized in a year. Substantial reductions in use were found among all income groups.

For those who were both poor and sick-people who might be found among those covered by Medicaid or lacking insurance-the reduction in use was harmful, on average. In particular, hypertension was less well controlled among that group, sufficiently so that the annual likelihood of death in that group rose approximately 10%. This adverse effect occurred in spite of the reduced cost sharing for low-income families, a feature generally not found in today's plans.

Just a Few of The Not Embarrassed CEOs
and the Funds They Remove from Health Care
Where have all our health care expenditures been going?

From Managed Healthcare Report of Apr 15, 2003

SPENDING ON HEALTH CARE BY NATION

Per capita annual spending is shown for 2002
Per Capita US Spending from public funds (taxes) exceeds what other nations spend to supply all country residents with health care. While spending twice what the others do on average, we fail to cover health care in any way for one out of three non-elderly adults (in any given month). The shown data is from OECD 2003 (Organization of Economically Developed Countries)

RATE OF HOSPITALIZATION BY NATION

Is our system in crisis because Americans want to be hospitalized for everything?

From OECD data of 2002, adding Australia and Canada date from 2000

Is our greater health care cost really due to our better quality and higher technology of care? So why does Japan have nearly 3-times more MRI’s than the USA?

From OECD 2003

Reforms for slowing the growth in health care spending and increasing the value of care have largely focused on insurance-based solutions. Consumer-driven health care represents the most recent example of this approach. However, much of the growth in health care spending over the past twenty years is linked to modifiable population risk factors such as obesity and stress. Rising disease prevalence and new medical treatments account for nearly two-thirds of the rise in spending. To be effective, reforms should focus on health promotion, public health interventions, and the cost-effective use of medical care. [In other words, the only real savings would come in strengthened public health systems/education and in preventive care with early disease detection. These latter two will never be achieved in a system where so few are well covered for their medical needs.]

Read the article in Health Aff. 2005;24(6):1436-1445

THE BREAK-EVEN POINT: WHEN MEDICAL ADVANCES ARE LESS IMPORTANT THAN IMPROVING THE FIDELITY WITH WHICH THEY ARE DELIVERED

SH. Woolf and RE Johnson

US society invests billions of dollars in the development of new drugs and technologies but comparatively little in the fidelity of health care, that is, improving systems to ensure the delivery of care to all patients in need. In 2 examples, we show that enhanced efficacy failed to achieve the health gains that would have occurred by delivering older agents to all eligible patients. Society's huge investment in technological innovations that only modestly improve efficacy, by consuming resources needed for improved delivery of care. Health, economic, and moral arguments make the case for spending less on technological advances and more on improving systems for delivering care [Such that everyone has access.]

An objective observer would concede that the United States devotes most of its resources to the second aim, the enhancement of efficacy. The pharmaceutical industry spends $32 billion annually to develop new drugs and biologics. This entire budget of the National Institutes of Health, which, in turn, spends most of its research dollars on basic science is about $29 billion. Although progressive institutions exemplified by the Veterans Administration, have enacted bold system redesigns and achieved notable success in delivering the right care at the right time, most health systems and private practices have moved less boldly. Policy makers have not resolved the barriers to access and health insurance that deny care to at least 45 million Americans [using official census data and underestimating current uninsured by about 50%].

As a society, we should confront the price we pay in human lives by maintaining a health care system that is not designed to deliver care well. Society can realign its priorities. It can spend less profligately on the enhancement of drugs and technology, and redesign systems of care to ensure a standard of excellence that fulfills the attributes of quality outlined in the Chasm report and the Future of Family Medicine project. Failure to act to correct deficiencies in fidelity is, in effect, an affirmative choice to subject patients to greater illness and suffering.

Ann Fam Med. 2005;3(6):545-552.

THE COST OF MARGINAL MEDICINE IS TOO HIGH

Ezekiel J. Emanuel, MD, PhD

We practice too much marginal medicine -- interventions that are not ineffective, but offer minimal benefits for their cost. One particularly disturbing example is Erbitux (cetuximab) of ImClone fame -- the stock that landed Martha Stewart in jail. Erbitux is used alone or in combination with irinotecan for patients with metastatic colon cancer. Treatment is purely palliative; no patient is ever cured. Erbitux isn't even first-line therapy. Randomized studies show that when used as second-line therapy, Erbitux extends life an average of only 1.7 months. The cost for the first 8 weeks of treatment is more than $30,000 per patient. If the 50,000 Americans per year who die of colorectal cancer were treated with Erbitux and irinotecan, the cost would exceed $1 BIL just for the drugs, not counting lab tests, physician fees, and antinausea drugs. Other prime examples of wasteful marginal medicine include lung volume reduction surgery for emphysema, antitumor necrosis factor drugs for rheumatoid arthritis, Macugen for macular degeneration, implantable defibrillators, and CT [computed tomographic] scans for the detection of heart disease. Some say that spending on marginal medical care doesn't hurt anything. Not true if the payment comes from public funds or insurance. Rising medical costs help create so many uninsured Americans.We doctors need to be more responsible in how we practice. We need to work toward eliminating marginal medical care and using interventions with more tangible benefits. I'm Dr. Ezekiel Emanuel, Department of Clinical Bioethics, the National Institutes of Health.

Posted at Medscape.com MedGenMed on Dec 12 2005 with references to N Engl J Med. 1978;298:1229-1238. N Engl J Med. 2004;351:337-345. N Engl J Med. 2004;351:317-319. Ann Intern Med. 2005;142:996-1002. Ann Intern Med. 2005;143:76-78.

WHEN PATIENTS HAVE TO PAY A SHARE OF DRUG COSTS: EFFECTS ON FREQUENCY OF PHYSICIAN VISITS, HOSPITAL ADMISSIONS AND FILLING OF PRESCRIPTIONS

AH Anis, DP Guh, D Lacaille, CA Marra, AA Rashidi, X Li and JM Esdaile

To accommodate continually rising prescription drug costs, various cost-containment policies have been implemented. One such policy, cost-sharing between patients and insurers, is common in developed countries. This financing mechanism is appealing because it supposedly reduces expenditures for medically unnecessary treatments by making patients pay for a proportion of all expenditures, making them more cost-conscious.

This was the first rigorous study that established the impact of cost-sharing for medical services. On completion of the RAND study, there was strong evidence to suggest that ill patients were less likely to seek treatment or be admitted to hospital if they had to pay a portion of the cost. We focused on the effect of cost-sharing of prescription drugs on overall health care utilization among elderly patients with existing rheumatoid arthritis and found that fewer had prescriptions filled but that they used more physician services than during a period when all drug costs were covered.

Our findings indicate that physician visits and hospital services are economic substitutes for prescription drugs: during the period when patients have to pay part of all of their drug costs, the frequency of doctor visits and hospital admissions increases. Our results show that, in a predominantly publicly funded health care system, the implementation of piecemeal cost-containment strategies such as cost-sharing of prescription drugs might have the unintended effect of increasing overall health care utilization.

CMAJ November 22, 2005. It may still be available at: CLICK HERE

ADVERSE EVENTS ASSOCIATED WITH PRESCRIPTION DRUG COST-SHARING AMONG POOR AND ELDERLY PERSONS

By R Tamblyn, R Laprise, JA Hanley, et al

In our study, increased cost-sharing for prescription drugs in elderly persons and welfare recipients was followed by reductions in use of essential drugs and a higher rate of serious adverse events and ED visits associated with these reductions.

JAMA January 24, 2001. It may still be available at: CLICK HERE

WHAT HEALTH INSURANCE POOLS CAN AND CAN'T DO

R Curtis and E Neuschler

Policymakers are often attracted to purchasing pools as a way to make health insurance less expensive for small employers and individual purchasers. The common assumption is that pools could aggregate a large number of small purchasers and thus realize administrative economies of scale and negotiate favorable rates with health plans. For small-firm workers, purchasing pools could also offer something not normally available in the small-employer market - choice of competing health plans. For individual purchasers, who can already choose among health plans, pools could help to simplify comparison shopping.

Unfortunately, establishing a purchasing pool does not automatically produce the same "market clout" as a large employer. RAND studied the three largest small-group health insurance purchasing "alliances" begun in the mid-1990s and found that they did not reduce small-group market health insurance premiums, nor did they raise small-business health insurance offer rates.

Merely establishing pools holds no hope for reducing the number of uninsured or the costs of coverage available to individuals or small employers. Unless a pool has the necessary cohesion to attract and retain a large enrollment base, it will not be in a position to achieve economies of scale and negotiate effectively with health plans.

However, these goals can be achieved if the pool represents a large natural group that health plans can effectively reach only through the pool, making it similar to a very large employer. One way to create such a group would be to channel subsidies for low-income workers and families, or low-wage employer groups, exclusively into coverage through the pool. In turn, a stable pool can efficiently perform a number of administrative roles that meet the needs of both its participants and the state. [EINO: So the best would be a pool including and affordable to all low-income folks, or available to everyone not otherwise covered? Okay, that makes sense. Than the government will subsidize it to make it affordable to these low-incomed people, but will throw in how much extra so that the insurance can be bought from this pool in the private marketplace? Why not just improve the quality and completeness of medicare and then open it to everyone, how many billions would that save, beyond the pooling advantage?]

California HealthCare Foundation. November 2005
It may still be available at: CLICK HERE

SEEING RED: AMERICANS DRIVEN INTO DEBT BY MEDICAL. BILLS

An estimated 77 million Americans (37 %) age 19 or older have difficulty paying medical bills, have accrued medical debt, or both. Two-thirds of people with a medical bill or debt problem went without needed care because of cost - nearly three times the rate of those without these financial problems. [This is one clear example of how health care is being rationed in our current system and affecting a huge number of Americans.]

"Seeing Red: Americans Driven Into Debt by Medical. Bills," Commonwealth Fund, August 2005, by Doty, M. et al

USE OF HEALTH CARE SERVICES BY LOWER-INCOME AND HIGHER-INCOME UNINSURED ADULTS By JS Ross, EH Bradley, SH Busch

Our study provides recent, nationally representative estimates of the use of recommended services for cancer prevention, cardiovascular risk reduction, and diabetes management for insured and uninsured adults with varying annual household incomes. We found that high numbers of uninsured and lower-income adults are not receiving recommended care-challenging the views of a majority of people in the USA who believe that the uninsured are able to get the care they need from physicians and hospitals.

In addition, our findings indicate that even among higher-income adults, lacking insurance was associated with significantly decreased use of recommended health care services; we found that increased income did not attenuate the association between being uninsured and using fewer recommended health care services for cancer prevention, cardiovascular risk reduction, and diabetes management.

Currently, many of the proposed health care reforms from both the public and private sector involve increased out-of-pocket cost-sharing or deductibles, such as the recent authorization of health savings accounts through the 2003 Medicare Modernization Act. The results of our study suggest that such reforms may increase the number of adults not receiving recommended health care; adults using out-of-pocket funds to purchase health care services, whether they are enrolled in health savings accounts or not, may not purchase recommended chronic and preventive care.

It is important to note that it is possible that in situations in which the net benefit to the individual is low, the net benefit to society may still be high.

This article is from JAMA of May 3, 2006 and may still be available at CLICK HERE Or for the abstract at CLICK HERE

^*1 Prof. Light suggests:  For a realistic, evidence-based overview see Chapter 3 of European Health Care Reform: Analysis of Current Strategies from WHO-Europe, Copenhagen 1997.

 REFERENCES

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