Transcript Pawlenty’s Plans: Progress or Relapse in the Quest for UHI?

Top Ten Health Policy Myths…
and How to Debunk Them!
Cantankerous Grumblings of a Jaded Health
Care Consultant
February 15, 2006
By: David Allen (952/835-2009, [email protected])
Myth #10: The Grass is
Greener Somewhere Else
Other Countries are having
problems, too
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Canada: Government financed health
system being challenged
Great Britain: Efforts to improve quality
and service by spending more is
instead resulting in increased waste
China: Employer sponsored health
coverage is leaving big gaps
Truth #10: The Grass is Brown
Everywhere
Myth #9: Consumer-Driven
Health Care Only Works for the
Wealthy
Capitalism Works for All
Income Levels

CMS “Independence Plus” Initiative

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The Self-Determination project
(19 states)
The Cash and Counseling project
(3 states)
Research shows the poor benefit more
from managing responsibility rather
than simply being given handouts
Truth #9: Consumer-Driven
Health Care Works for Every
Predictable Health Expenditure
Myth #8: Medicare Part D was
Designed to Give People
Coverage for Drugs
Medicare Part D: A Response
to a Major Gap in Medicare

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Insurance lobby made sure that
everything went through them, so they
could take their cut
Pharmaceutical lobby made sure that
the government didn’t allow price
negotiations
Then, the government cobbled
together Medicare Part D
Truth #8: Medicare Part D was
Designed to Protect Insurance
Companies and Pharmaceutical
Companies (while also give
Medicare eligibles drug coverage)
Myth #7: Health Plans have
Administrative Costs of “Only” 8%
to 10%
Administrative Expenses are
HUGE

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What Minnesota health plans report as
administrative expenses are incomplete
Contributions to reserves, insurance agent
commissions and costs, disease management,
case management clearly excluded
Health education, utilization review, quality
assurance are supposed to be counted as
administrative, but ambiguities allow much to be
excluded
Hospitals and physicians have huge costs
associated with billing, complying with rules and
waiting for payment – not counted
Truth #7: More than 30% of
Health Care Expenditures are for
Bureaucracy and Health Plans
are More to Blame than Anyone
Myth #6: All Doctors and
Hospitals Provide about the
Same Quality
Quality Varies

Hernia surgery, recurrence rates:




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5% mode
10% for some surgeons
0.2% for some surgeons
Treatable colon cancer, 10-year survival
varies from 20% to 63%, depending on
surgeon
Cardiac bypass surgery, risk-adjusted death
rates vary from 5% to <1%, depending on
hospital and surgeon
Quality Varies

Anecdotally:


Tremendous differences in quality of
hospitals
Substantial differences in the quality of
physicians
Truth #6: There are Significant
Variations in the Quality of Health
Care
Myth #5: Pay-for-Performance
is the Key to Improving Quality
Pay-for-Performance is Hot,
but Unproven


Health Plans and Government identify
PFP as key strategy for rewarding
quality
Problems with PFP:



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Controlling costs is a higher priority
Quality can’t be measured statistically
Quality varies by individual
Health plans don’t want informed patients
Truth #5: Information is the
Key to Improving Quality
Myth #4: High Drug Prices are
Necessary to Promote Innovation
The Drug Industry is Sick


Pharmaceutical industry historically
one of America’s most profitable
Research and Development



Number of new drugs declining
Many new drugs are “me too”
Marketing

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Distorts demand
Corrupts physicians and researchers
Truth #4: High Drug Prices are
Necessary to Maintain
Pharmaceutical Company Profits
Myth #3: Health Care Costs can
be Reduced by Using Group
Buying Leverage
Group Insurance is the
Premise of Health Care Today

Big group insurance plans drive costshifting, not economy

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Discounting payments to providers lead
to provider consolidation
Profitability of big groups shift costs to
small groups
Pawlenty’s “Smart Buy” Alliance
Truth #3: Group Purchasing is
Not an Alternative to Market
Competition
Myth #2: Consumer-Driven
Health Care won’t work because
80% of health care costs are
incurred by sickest 10% of
patients
Shouldn’t Group all Health
Care Expenditures Together
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Predictable and Affordable
(e.g. primary care)
Unpredictable and Affordable
(e.g. minor trauma)
Predictable and Unaffordable
(e.g. chronic conditions)
Unpredictable and Unaffordable
(e.g. major trauma)
Truth #2: Consumer-Driven
Health Care will work for most
health care
Myth #1: Health care services
are efficiently allocated
Examples of Misallocations

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Physicians: RVU-based
reimbursement distorts appropriate
care
Hospitals: Reimbursement rewards
high tech and patient volume,
penalizes value
Health care coverage: disincentives for
young and healthy
Truth #1: Health care services
are grossly distorted
Three Principles for
Debunking Health Care Myths
Principle #1: Insurance is optimal
financing mechanism only if two
conditions are met
1.
2.
Risk is unpredictable
Risk is unaffordable
Principle #2: Capitalism works
better than socialism

Lack of free competition:

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Distorts the health care market
Drives up costs
Capitalism also has negatives


Forces people to make choices
As Churchill said about Democracy…
Principle #3: The market must
come before special interests

Our government is the hostage of
special interests

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Lobbyists have disproportionate influence
Campaign financing takes precedence
over the best interests of the nation
The “establishment” naturally fights for
the status quo
Principle #3: The market must
come before special interests

Physicians need to be vocal and
community leaders
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Put competence ahead of ideology
(“Not right, not left, but forward”)
Demand campaign finance reform