Bob Coffield sent me a invitation to participate in a Thanksgiving Blog Rally being led by Paul Levy, CEO of Beth Israel Deaconess Medical Center in Boston and author of Running A Hospital Blog. I posted a template that came with the email and started to look at what Engage With Grace is all about. I encourage you to check out their web site at www.engagewithgrace.
But this subject really got me thinking. This past Sunday during the #HCSM chat on Twitter I was reminded of the difficult death of my mother after a struggle with Alzheimer's disease. Then I watched CBS News 60 Minutes "The Cost of Dying." So this Thanksgiving Day I am considering life and death.
I believe that our lives are a gift from God. And while I know that medical care has made some remarkable advances that allow us to live longer and healthier lives than ever before in history, sometimes keeping someone alive just for the sake of keeping them breathing may not be the best decision. But this is a deeply personal decision that I would never want to impose on another. That is why having these discussions with your loved ones is so important. Knowing our loved ones wishes is important when dealing with end of life issues.
I have served as a Deacon and now as an Elder at Gateway Presbyterian Church. I have watched families struggle as they see their mother, father, brother, sister or their sons and daughters die. I have seen good deaths, where it was more of a joyful parting, and some very difficult times where things went terribly wrong. One thing that I think is critically important is that your family understand your wishes regarding end of life care. An Advance Directive is a great way to accomplish this.
I encourage those reading this to consider what you want for end of life care and have this discussion with your family. Death is a natural part of life, and the only thing we can really be sure is coming (along with taxes I suppose). I am so thankful for the life of my mother. But her final passing was also a blessing. She is no longer suffering, and by her death as much as her life she has drawn her family closer together. Sometimes the best way you can show someone you love them is to let them die well...
Bob Coffield sent me a invitation to participate in a Thanksgiving Blog Rally being led by Paul Levy, CEO of Beth Israel Deaconess Medical Center in Boston and author of Running A Hospital Blog. I posted a template that came with the email and started to look at what Engage With Grace is all about. I encourage you to check out their web site at www.engagewithgrace.
But this subject really got me thinking. This past Sunday during the #HCSM chat on Twitter I was reminded of the difficult death of my mother after a struggle with Alzheimer's disease. Then I watched CBS News 60 Minutes "The Cost of Dying." So this Thanksgiving Day I am considering life and death.
I believe that our lives are a gift from God. And while I know that medical care has made some remarkable advances that allow us to live longer and healthier lives than ever before in history, sometimes keeping someone alive just for the sake of keeping them breathing may not be the best decision. But this is a deeply personal decision that I would never want to impose on another. That is why having these discussions with your loved ones is so important. Knowing our loved ones wishes is important when dealing with end of life issues.
I have served as a Deacon and now as an Elder at Gateway Presbyterian Church. I have watched families struggle as they see their mother, father, brother, sister or their sons and daughters die. I have seen good deaths, where it was more of a joyful parting, and some very difficult times where things went terribly wrong. One thing that I think is critically important is that your family understand your wishes regarding end of life care. An Advance Directive is a great way to accomplish this.
I encourage those reading this to consider what you want for end of life care and have this discussion with your family. Death is a natural part of life, and the only thing we can really be sure is coming (along with taxes I suppose). I am so thankful for the life of my mother. But her final passing was also a blessing. She is no longer suffering, and by her death as much as her life she has drawn her family closer together. Sometimes the best way you can show someone you love them is to let them die well...
Ben Fry, Director of Seed Visualization, explains the work his team is doing to create visualization tools that make draw on GEs vast collection of six million patient records.
To gain a deeper understanding of healthcare costs, GE combined the Medical Expenditure Panel Survey (MEPS) with 500K records from GE's proprietary database. By combining MEPS with GE's data, we gain a more complete picture of the costs associated with chronic conditions.
Drag the slider to view different ages, and click the pie wedges for each disease.
About this data
The Medical Expenditure Panel Survey (MEPS), from the Agency for Healthcare Research and Quality, is a set of large-scale surveys of families and individuals, their medical providers, and employers across the United States. MEPS is the most complete source of data on the cost and use of health care and health insurance coverage.
This application was downloaded from GE's web site here:
http://files.gecompany.com/healthymagination/visualization/health_cost/cost.zipAll content on their site GE (including, without limitation, text, design, graphics, logos, icons, images, audio clips, downloads, interfaces, code and software, as well as the selection and arrangement thereof), is the exclusive property of and owned by GE, its licensors or its content providers and is protected by copyright, trademark and other applicable laws. You may access, copy, download and print the material contained on the site for your personal and non-commercial use, provided you do not modify or delete any copyright, trademark or other proprietary notice that appears on the material you access, copy, download or print. Any other use of content on the site, including but not limited to the modification, distribution, transmission, performance, broadcast, publication, uploading, licensing, reverse engineering, transfer or sale of, or the creation of derivative works from, any material, information, software, products or services obtained from the site, or use of the site for purposes competitive to GE, is expressly prohibited.
With health care reform in the air, interest groups are spendinghuge sums of money to influence the final legislation and othermatters pending in Washington. Since 2006, the health sectorhas spent $1.7 billion lobbying Congress and federal agencies— more money than any other sector of the economy. BetweenJanuary and September 2009, health care interests spent $396.2million (see Figure 1), according to federal data collectedby the Center for Responsive Politics (www.opensecrets.org),a nonpartisan organization that researches the influence ofmoney on politics.
Figure 1. Top-Spending Sectors and Organizations Lobbying Congress and Federal Agencies, January to September 2009.
Panel A shows the five top-spending sectors and spending by the health sector and the insurance industry. (The breakdown in health sector spending does not include that classified as miscellaneous health.) Panel B shows the six top-spending organizations overall and additional top-spending organizations in the health sector. The total amount of money spent on lobbying Congress and federal agencies was $2.5 billion. Data are from the Center for Responsive Politics and include all data made available by the Senate Office of Public Records through October 2009. HMO denotes health maintenance organization, and PhRMA Pharmaceutical Research and Manufacturers of America.
If current trends continue, the health sector is likely to spendmore than a half-billion dollars on lobbying in 2009. Pharmaceuticaland health care products companies alone are likely to spendmore than $250 million, and the insurance industry, which ispart of another sector, more than $160 million. In all cases,these would be record annual expenditures.
The U.S. Chamber of Commerce, which represents businesses, invariablyspends more on lobbying than any other single organization.Many of the other organizations whose lobbying expendituresare among the highest in the country are members of the healthsector. Although some groups are spending about the same amountas in recent years, others are spending more. For example, thePharmaceutical Research and Manufacturers of America (PhRMA),which represents pharmaceutical and biotechnology companies,has already spent $20.2 million in the first 9 months of 2009— just $55,000 less than in all of 2008 — and rankedfourth among all organizations in spending on lobbying. BlueCross Blue Shield, including the national association and localcompanies, ranked fifth (spending $16.7 million during the first9 months of 2009, about $500,000 more than in all of 2008),and Pfizer, the pharmaceutical company, ranked sixth (spending$16.3 million, about $4.2 million more than last year). A spokeswomanfor Pfizer said the company “wanted to make sure our voice isheard in this conversation.”
The Center for Responsive Politics notes that “a special interest’slobbying activity may go up or down over time, depending onhow much attention the federal government is giving their issues.”Of course, the billions of dollars that health care interestsstand to gain or lose because of health care reform and otherfederal actions dwarf their lobbying expenditures. As the Obamaadministration has focused on health care, it has engaged indiscussions with drug and medical device companies, health insurers,physicians, hospitals, business groups, labor groups, and manyother parties. Dozens of contentious issues have kept interestgroups busy, including the role of comparative-effectivenessresearch in coverage decisions, government negotiation of Medicaredrug prices, the targeting of additional Medicare savings, andthe size of the program’s payments to doctors. There has alsobeen debate on many other topics, including mandates for obtaininghealth insurance, the creation of a national public health insuranceplan that would compete against private carriers, coverage ofabortion, other specifics of health insurance reform, the market-exclusivityperiod for biologic drug products, and new fees, taxes, andtax credits.
Many interest groups support some aspects of reform but notothers. The Obama administration has struck deals with the drugindustry and hospitals that it claims will save the federalgovernment and Medicare beneficiaries billions of dollars overthe next decade. It has pursued such strategies in order toappease critics and gain endorsements from key groups.1,2 AARP(formerly the American Association of Retired Persons), whichrepresents people 50 years of age or older, and the AmericanMedical Association endorsed the Affordable Health Care forAmerica Act (H.R. 3962), which was passed by the House of Representativeson November 7, 2009. America’s Health Insurance Plans (the healthinsurers’ lobbying organization), PhRMA, the Chamber of Commerce,and other employers’ groups opposed it. Lobbyists for Genentech,a subsidiary of Roche, and two Washington law firms ghostwroteat least part of the statements issued by more than a dozenlawmakers; an estimated 42 House members — 22 Republicansand 20 Democrats — used some of the talking points.3
The health sector has historically spent substantially moremoney lobbying Congress and federal agencies than it has oncampaign contributions.4 These expenditures complement eachother; whereas lobbying is directed at government officialsand often involves specific matters, campaign contributionsare for elections and may be sent to any candidate, not justincumbents. Nonetheless, as health care interests have increasedtheir lobbying expenditures, they have also reversed their long-standingpattern of favoring Republican candidates in federal elections.5 During the first 9 months of the 2-year 2010 election cycle,the health sector — as well as the insurance industry— contributed more money to Democrats than to Republicans(see Figure 2). In some races, this shift could make a difference.
Figure 2. Contributions from the Health Sector (Panel A) and Insurance Industry (Panel B) to Federal Elections, January 2004–October 2009.
The health sector consists of health care professionals, pharmaceutical and health care product companies, hospitals and nursing homes, and health services and health maintenance organizations. Election cycles represent 2-year periods; the 2010 election cycle runs from January 1, 2009, to December 31, 2010. PAC denotes political action committee. Data are from the Center for Responsive Politics and include all data made available by the Federal Election Commission through mid-November 2009.
Campaign contributions represent the combined total of individualcontributions and those from political action committees (PACs).The federal limit for an individual is $2,300 per candidateper election; primary and general elections are considered separateelections. The Center for Responsive Politics examines the campaignfinance data reported to the Federal Election Commission andcategorizes contributions of $200 or more from individual donorsor PACs into 13 sectors of the economy.
In the 2008 election cycle, the sector comprising the finance,insurance, and real estate industries ranked first in campaigncontributions, and the health sector ranked sixth. For all federalelections, the health sector donated more to Democrats (54%)than to Republicans (46%), and the insurance industry donatedmore to Republicans (55%) than to Democrats (45%). Before 2008,the last time that Democrats raised more than Republicans didfrom health care interests was 1992, when Bill Clinton was electedpresident, and the last time they raised more from the insuranceindustry was for the 1990 Congressional elections.
So far in the 2010 election cycle, the Democrats’ fund-raisingadvantage has increased. The health sector has sent 59% of itscontributions to Democrats and 41% to Republicans; the insuranceindustry has split its contributions 54% for Democrats and 46%for Republicans. The Democrats have a broad advantage; theyhave received 57% of the contributions from the pharmaceuticaland health care products industries, 71% of those from hospitalsand nursing homes, and 55% of those from health care professionals(including physicians and nurses).
The early data for 2010 primarily reflect donations from PACs,which account for about half of contributions from the healthsector and about two thirds of contributions from insurers.Notably, the health sector has contributed more than any othersector to House Speaker Nancy Pelosi (D-CA) and to House MajorityLeader Steny Hoyer (D-MD), most of which is from PACs. In theSenate, Majority Leader Harry Reid (D-NV) has been the top recipientof contributions from health care professionals as well as fromhospitals and nursing homes.
There are many possible explanations for the Democrats’ fund-raisingadvantage. They include Democratic control of the White Houseand Congress, the extent to which federal funding and regulationof health care and health insurance are in flux, the effortsof health care interests to maintain their access to and influencewith Congressional leaders and the White House, and the healthcare reforms that the Obama administration has — and thosethat it has not — pursued. Of course, donors often hedgetheir bets by contributing to both parties. And the 2010 Congressionalelections are a year away; more individual contributions arelikely, and the distribution between the parties could change.
Even with the House’s approval of its bill, we are still earlyin the health care reform process, with major battles ahead.There will be ample opportunities for the health sector andhealth insurers to continue spending large sums for lobbyingand campaign contributions. As Yogi Berra memorably observed,“It ain’t over till it’s over.”
Federal Chief Technology Officer Aneesh Chopra addresses the Medical Technology Summit via live-stream video, discussing the Obama Administrations health information technology agenda. After his remarks he takes a few questions submitted via Twitter. October 1, 2009
Senate Finance Committee Chairman Max Baucus (D-Mont.), Ranking Member Chuck Grassley (R-Iowa) and Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight Chairman Claire McCaskill (D-Mo.), along with House Energy and Commerce Chairman Henry A. Waxman (D-Calif.) and House Oversight and Government Reform Chairman Edolphus Towns (D-N.Y.) commented today following the release of new Government Accountability Office (GAO) findings that pervasive deficiencies in the Centers for Medicare & Medicaid Services' (CMS) contract management have put billions of taxpayer dollars at risk of being wasted. Additionally, GAO found CMS had largely failed to implement its recommendations following a 2007 report that found similar deficiencies.
"These problems are unacceptable, and CMS's failure to implement prior recommendations to correct the problems is even more troubling. Fraud, waste and abuse cost our system billions of dollars each year," said Baucus. "Health reform will take significant steps to crack down on fraud, waste and abuse, so we can use our limited resources more wisely and do more to invest in critical health care programs like Medicare, Medicaid and CHIP. It is vital CMS do its part to ensure that effort is successful and I fully expect the agency to implement GAO's recommendations. I will continue to work with my colleagues in both the Senate and the House and use the oversight authority of the Finance Committee to make sure taxpayer dollars are not wasted."
"CMS is relying on contractors more than ever," Grassley said. "By failing to do a good job of overseeing them, CMS is increasing the risk that taxpayer dollars will be lost to fraud. Fraud in Medicare and Medicaid already costs the taxpayers more than $60 billion every year. CMS doesn't have a choice other than keeping a better eye on contractors."
"It's been two years and, as this report released today shows us, we've made very little progress in fixing CMS's contract management and implementing past GAO recommendations. This is unacceptable performance and underscores the need to increase Congressional pressure on those who refuse to change the way they do business," McCaskill said.
"The Obama Administration faces a serious challenge. Years of neglect and inadequate oversight emboldened contractors and put taxpayer dollars at risk," said Chairman Waxman. "I am pleased that the new Administration has committed itself to be a good steward of taxpayers' interests and agrees with GAO's recommendations. I also hope that Congress ensures that CMS has the resources it needs to put needed internal controls in place."
"The GAO report reveals our worst fear that contracting abuses at CMS remain out of control, costing taxpayers precious dollars that could otherwise go to improving our health care system. Now, more urgently than ever, we must find ways to eliminate waste and fraud from our Medicare and Medicaid system. I call on CMS to take action immediately on past GAO recommendations to reform its contracting system," said Towns.
CMS relies heavily on contractors to carry out the agency's mission and was responsible for $3.6 billion under contracts in 2008. GAO found systemic problems with CMS's ability to implement internal control of its contracts -- the plans and procedures for meeting objectives which are critical to detecting and preventing fraud and waste.
Specifically, GAO found CMS failed to implement key controls in nearly 85 percent of all contract actions in 2008. GAO noted that a lack of agency-specific procedures along with poor strategic planning for staffing and resources and inadequate data collection contributed to the problem.
Following similar findings in 2007, GAO issued nine recommendations, seven of which CMS has yet to substantially address. Along with reaffirming the need to implement those seven previous recommendations, GAO issued 10 new recommendations. GAO noted that further failure to address the concerns associated with these findings will continue to put billions of taxpayer dollars at risk of being wasted.
The November Kaiser Health Tracking Poll shows little movement in measures of public opinion about health reform from recent months.
A New York Times piece quotes Drew Altman, president of the Kaiser Family Foundation:
"Support or opposition to the public option ultimately depends on whether it is framed as a voluntary option and alternative to commercial insurance for the public, or as creeping big government and an unfair advantage for a government-backed plan."
Among the new findings is a ranking of the public's top priorities from among a list of elements of the legislation. There were both similarities and differences in priorities across partisan groups: while assuring the availability of affordable plans ranked in the top three priorities for Democrats, Republicans and independents, deficit neutrality ranked in the top three priorities for Republicans and independents and providing enough government financial help so as many uninsured people as possible can get health insurance ranked in the top three for Democrats. Creating a public option ranked near the bottom of this list among all three groups. Even so, when asked if they favor or oppose having a public plan to compete with private insurers, a substantial a majority of Americans (59%) say they support the idea.
The poll asked supporters and opponents of reform to give their reasons in their own words and then tallied the results. When asked to explain their support for reform in their own words, backers were most likely to express concerns about access, followed by concerns about the cost of health care and a belief that we need to fix the health care system. Opponents also cited costs, fearing that they would go up as a result of reform, the belief that other national priorities were more important, and concerns about the government becoming too involved in health care, among other reasons for their opposition.
The poll also found that for the first time this year, more people report having seen anti-reform ads over the previous week than report seeing pro-reform ads.
The November poll, the eighth in a series designed and analyzed by the Foundation’s public opinion survey research team, examines voters’ specific health care issue interests and experiences and perceptions about health care reform.
“The Cost of Dying,” which aired Nov. 22 on CBS News’ 60 Minutes explores the incredible amount of money spent on healthcare at the very end of people’s lives. It was an extremely timely and valuable program. As end of life care is brought to the forefront of the health reform debate, it is worth taking some time to watch the video below.
In 2008, Medicare paid $50 billion for doctor and hospital bills during the last two months of patients' lives – with as much as 20 to 30 percent deemed to have had no meaningful impact, Steve Kroft reported.
Marcia Klish is either being saved by medical technology or being prevented from dying a natural death.
She is 71 years old and suffering from the complications of colon surgery and a hospital-acquired infection. She has been unconscious in the intensive care unit at Dartmouth-Hitchcock Medical Center in Lebanon, N.H., for the better part of a week.
One of her doctors, Dr. Ira Byock, who heads the palliative care program at Dartmouth-Hitchcock Medical Center (DHMC) in Lebanon, NH., told 60 Minutes correspondent Steve Kroft it costs up to $10,000 a day to maintain someone in the intensive care unit. Some patients remain here for weeks or even months; one has been in the ICU since May.
"This is the way so many Americans die. Something like 18 to 20 percent of Americans spend their last days in an ICU," Byock said. "And, you know, it's extremely expensive. It's uncomfortable. Many times they have to be sedated so that they don't reflexively pull out a tube, or sometimes their hands are restrained. This is not the way most people would want to spend their last days of life. And yet this has become almost the medical last rites for people as they die."
"Families cannot imagine there could be anything worse than their loved one dying," said Byock. "But in fact, there are things worse. Most generally, it's having someone you love die badly - dying, suffering, dying connected to machines."
A vast majority of Americans say they want to die at home, but 75 percent die in a hospital or a nursing home.
"How do so many people end up in the hospital?" Kroft asked Dr. Elliott Fisher, a researcher at the Dartmouth Institute for Health Policy.
"It's the path of least resistance," Fisher said.
"The way we set up the system right now, primary care physicians don't have time to spend an hour with you, see how you respond, if they wanted to adjust your medication," Fisher said. "So, the easiest thing for everybody up the stream is to admit you to the hospital. I think 30 percent of hospital stays in the United States are probably unnecessary given what our research looks like."
After we finished this story, we received word that Charlie Haggart, the patient who was hoping for a liver and kidney transplant, died this week at a hospital in Vermont.
His brother said Haggart's condition had deteriorated so much the family decided that no attempts would be made to resuscitate him.
Interactive: Click policy options on left to view.
Executive Summary below the Full Report:
U.S. health spending is projected to increase from 16 percent of GDP in 2006 to 20 percent in 2016—from $2 trillion to $4 trillion. Meanwhile, the number of uninsured Americans continues to rise. In this report prepared for The Commonwealth Fund Commission on a High Performance Health System, the authors examine 15 federal policy options that have the potential to lower health spending relative to projected trends. They include policies that would: produce and use better information for health care decision-making, promote health and enhance disease prevention, align financial incentives with quality and efficiency, and correct price signals in health care markets. Combining policies would capture the synergistic benefits of individual changes. If implemented along with universal health insurance, a combination of selected options could save $1.5 trillion in national health expenditures over 10 years, while also improving value in terms of access, quality, and health care outcomes.
Executive Summary
Health spending in the United States is projected to increase from 16 percent of gross domestic product (GDP) in 2006 to 20 percent in 2016—from $2 trillion to $4 trillion in 10 years. At the same time, the number of people who are uninsured is rising sharply, including a growing proportion of middle-income families. While rising costs are putting all sectors of the economy at risk, the nation lacks a concrete, realistic plan for adopting a different approach that could achieve savings and improve value.
To inform national discussions and spur progress toward such a plan, The Commonwealth Fund Commission on a High Performance Health System sponsored this report, which examines 15 federal policy options and their potential for lowering health spending over the next 10 years, relative to projected trends.
These options are not presented as the recommendations of the Commission, but they represent a range of approaches that have been proposed to address the various factors that contribute to high and rising costs and represent sources of inefficiency in the current health care delivery and financing systems. The report focuses on federal policies for three reasons: the federal government accounts for the largest portion of health spending; changes at the federal level would probably have the broadest immediate effects on national health spending; and federal policies, particularly those adopted by Medicare, frequently serve as a model for policies adopted at the state and local levels and by the private sector. Nonetheless, many of the policy options could be applied by states and private payers as well. Indeed, collaborative efforts across public and private sectors will be essential for achieving higher performance and greater value.
The report's findings illustrate that it would be possible to reduce national expenditures over the next decade while simultaneously improving access, quality, and population health. Achieving significant savings, however, will require a combination of policies that span strategic areas amenable to policy action at the federal level. These include policies that:
Produce and use better information for health care decision-making;
Promote health and enhance disease prevention efforts;
Align financial incentives with health quality and efficiency; and
Correct price signals in health care markets.
By applying these policies collectively, the nation would be able to capture the synergistic benefits of specific changes that, if implemented individually, would yield more modest reductions in projected spending trends. Further, policies aimed at achieving savings while also improving quality would be even more effective in improving overall health system performance if they were combined with a policy to extend affordable health insurance coverage to everyone in the United States. On a foundation of universal coverage, payment and other policies could apply to a larger share of the population. Well-designed insurance also has the potential to lower administrative costs while ensuring access—both improve value. Combining selected options with affordable health insurance for all could yield $1.5 trillion in national health expenditure savings over 10 years, and enable a more integrated, systemic approach to health care delivery and financing.
Modeling the future impact of complex policy changes is inherently challenging and risky. The technical challenges include the uncertainty of estimating dynamic effects over time. Further, the estimates assume effective design and implementation, and therefore do not reflect the difficulty of achieving agreement on what changes are necessary, designing the often complex policies necessary to achieve those changes, or making the organizational adjustments required to implement them successfully.
What is certain is that the stakes a re very high if we continue on our current path of escalating costs and eroding coverage.
Options and Results
This report contains analyses of a set of 15 federal policy options that could ease health care cost pressures while at the same time either enhancing or maintaining access, quality, efficiency, equity, and the health system's capacity to innovate and improve. These options include federal policies targeted to produce and use better information, promote health and prevent disease, align incentives with quality and efficiency, and correct price signals in the health care market. The Commonwealth Fund contracted with the Lewin Group to estimate the potential effects of each option, with a focus on total national health expenditures and the distribution of expenditures across payers—the federal government, state and local governments, private employers, and households. (The Lewin Group is one of the leading health care and human services consulting firms in the United States, with more than 35 years of experience serving organizations in the public, nonprofit, and private sectors.) The estimates include effects on incremental and cumulative spending over a 10-year period, from 2008 to 2017. A summary of the options modeled in this report, their objectives, and the estimated effects on spending are described below.
Producing and Using Better Information
These options are intended to address information barriers that contribute to the inefficiency of our health system and undermine care outcomes. The transparent availability of information and the incentives and ability to use it are critical prerequisites for effective, safe, coordinated care and the development of policies that encourage such care.
Promoting Health Information Technology. Accelerate provider adoption of health information technology (HIT) with the capacity for decision support and to share patient health information across sites of care, financed by an assessment of1 percent on insurance premiums and Medicare outlays. After initial investment costs, estimated net health system savings could reach $88 billion over 10 years as HIT capacity is improved. Net savings would accrue by year 10 to all except private payers, which would realize cumulative savings in following years.
Center for Medical Effectiveness and Health Care Decision-Making. Invest in the knowledge needed to improve decision-making and incorporate information about the relative clinical and cost-effectiveness of alternative treatment options into insurance benefit design. By generating the information and creating payment and cost-sharing incentives for providers and consumers to use it, this policy option could result in estimated health system savings of $368 billion over 10 years, shared by all payers.
Patient Shared Decision-Making. Help patients decide between alternative treatment options by requiring providers to educate Medicare beneficiaries about alternatives through use of patient decision aids (such as videos and other materials). This option could save an estimated $9 billion over 10 years, primarily for the Medicare program. System savings would be greater if this policy were extended to Medicaid and private insurance.
Promoting Health and Disease Prevention
These options focus on the substantial costs to the health system of the care and complications of chronic diseases, such as diabetes or heart disease. They seek to lower the incidence of disease through public health initiatives and improved care.
Public Health: Reducing Tobacco Use. Increase federal taxes on tobacco products by $2 per pack for cigarettes, with revenues going toward support of national and state tobacco control programs. If revenues were invested in effective programs, this option could yield $191 billion in health system savings over 10 years, shared by all payers. State savings would be largely offset by reduced state tobacco tax revenue, as consumption of tobacco products fell.
Public Health: Reducing Obesity. Establish a new nominal tax on sugar-sweetened soft drinks of 1 cent per 12-ounce drink to finance national and state obesity prevention programs. If successful in reducing rates of increases in obesity and associated costs, the option could yield an estimated $283 billion in savings over 10 years, shared by all payers.
Positive Incentives for Health. This option would use federal funds and incentives to encourage the federal government, state governments, and private employers to create positive incentives for individuals to engage in wellness programs and healthy behavior, and to cover preventive services. Such a focus on high value benefit designs could save an estimated $19 billion over 10 years, with a net investment by the federal government of $2 billion.
Aligning Incentives with Quality and Efficiency
These policy options are intended to address the misalignment of incentives in our fee-for-service payment system and the private insurance market. The options modeled include:
Hospital Pay-for-Performance. Establish a Medicare pay-for-performance program for all hospitals similar to the current Centers for Medicare and Medicaid Services (CMS)/Premier Hospital Quality Incentive Demonstration. This option could result in health system savings of $34 billion over 10 years, with the major share accruing to the federal government through reduced Medicare payments, primarily from decreased hospital readmissions. If all payers adopted similar policies, estimated savings would be greater.
Episode-of-Care Payment. Transform the current Medicare fee-for-service payment system to fixed prospective payments per episode of care (based on the current distribution of cumulative fee-for-service costs per episode). This policy would change Medicare payment methods to reward and encourage more efficient, coordinated care. When applied to hospital and ambulatory care, this could generate estimated net health system savings of $229 billion over 10 years. Other payers could avoid cost-shifting by emulating this payment approach.
Strengthening Primary Care and Care Coordination. Change reimbursement to primary care physician practices to support enhanced primary care services, such as care coordination, care management, and easy access to appropriate care. Under this option, Medicare fee-for-service beneficiaries would be enrolled in "medical homes" that have this enhanced capacity. Mandatory enrollment could result in net health system savings of $194 billion over 10 years, with savings accruing to all payers. Estimated savings would be larger if this approach were adopted by all payers.
Limit Federal Tax Exemptions for Premium Contributions. To provide incentives to enroll in high-value health insurance plans, cap the tax-deductibility of employer-sponsored insurance premiums. The option could reduce national spending by an estimated $131 billion over 10 years, with savings in federal tax expenditures exceeding that amount. However, to avoid putting sicker, older, and low- or modest-income families at increased health and financial risk, and to avoid potentially undermining current employer-sponsored pooled-risk group coverage, this change would have to be combined with universal coverage and changes in insurance market rules.
Correcting Price Signals in the Health Care Market
These options seek to address the tendencies of the current pricing mechanisms to send the wrong signals to participants in the market. These include signals for higher rather than lower costs and pricing mechanisms that support inefficient care and wide variation in costs without corresponding differences in quality and outcomes across geographic areas.
Reset Benchmark Rates for Medicare Advantage Plans. Modify the current Medicare Advantage payment methodology by setting the benchmark rate for plans in each county at a level equal to the county's projected per capita spending under traditional Medicare. The current mechanism for setting the benchmark rates, which results in payments to plans that are higher than what costs would have been in traditional Medicare, sends a price signal through the market that encourages higher rather than lower costs among those plans. By recalibrating benchmark rates, this option could result in an estimated health system savings of $50 billion over 10 years and reduce federal spending by $124 billion over the decade. However, spending by Medicare beneficiaries would increase by $74 billion, in the form of additional private premiums for those individuals who replace the additional benefits available under the current Medicare Advantage payment rates, as well as extra payments required for those who enroll in plans with bids that exceed the benchmark rate.
Competitive Bidding. Establish competitive bidding among Medicare plans and traditional Medicare. This option would replace the current administered pricing mechanism in Medicare Advantage with a system that would determine prices through increased competition on the basis of quality and efficiency. The option could result in estimated health system savings of $104 billion over 10 years and substantial reductions in federal spending over the same period. Spending by Medicare beneficiaries would increase by $178 billion, as they may choose to stay in more expensive plans (or remain in traditional Medicare where it is more expensive than the available alternatives), or may choose to pay to restore extra benefits they currently receive under Medicare Advantage. This option would have to be designed carefully to avoid drawing healthier beneficiaries away from Medicare and putting elderly and disabled beneficiaries, as well as those with modest incomes, at risk.
Negotiated Prescription Drug Prices. Give the U.S. Secretary of Health and Human Services the authority to negotiate or set price limits for Medicare prescription drug plans for their enrollees. This option could result in a net savings of $43 billion over 10 years, with a focus on dual eligibles and prescriptions within monopolized seller markets. Without provisions to prevent cost-shifting, all payers except the federal government could experience a net increase in spending. The potential impact of this option on innovation in the development of new effective drugs would have to be assessed.
All-Payer Provider Payment Methods and Rates. Require all payers to adopt Medicare payment rates and methods for hospitals and physicians. This option would provide higher payments for Medicaid patients and reduce the pressure on the prices paid by private insurers to offset Medicaid and other shortfalls. It would also address the fragmented system under which providers must deal with numerous payment mechanisms and reporting rules. The option could result in net system savings of $122 billion over 10 years, with the savings accruing to the private insurance industry. This estimate presumes the resolution of the payment cuts projected under the current sustainable growth rate mechanism for physician payments, and so does not reflect the projected cost of those changes. Moreover, to avoid undermining safety net providers, it would be necessary to redirect some of the savings to finance insurance expansion or uncompensated care pools.
Limit Payment Rate Updates in High-Cost Areas. Reduce Medicare spending growth by basing annual hospital and physician payment updates on cost per beneficiary in relation to a national benchmark. This option would focus more cost control pressure on high-cost regions and avoid across-the-board adjustments that otherwise would apply equally to low- and high-cost geographic areas. Limiting payment growth in high-cost regions could save $158 billion in health system spending over 10 years, with savings accruing to the federal government. Unless they followed Medicare's lead, other payers in the affected regions could see increased costs as a result of cost-shifting.
The estimated net effects of each of these options on national health spending, and on spending by payer group, are shown in exhibits ES-1 and ES-2, respectively.
Exhibit ES-1. Policy Options and Net Cumulative Impact onNational Health Expenditures over One, Five, and 10 Years
One-Year Impact on NHE (billions)
Cumulative Five-Year Impact on NHE (billions)
Cumulative 10-Year Impact on NHE (billions)
Producing and Using Better Information
1. Promoting Health Information Technology
$8
$14
-$88
2. Center for Medical Effectiveness and Health Care Decision-Making
-$18
-$125
-$368
3. Patient Shared Decision-Making
-$1
-$4
-$9
Promoting Health and Disease Prevention
4. Public Health: Reducing Tobacco Use
-$5
-$64
-$191
5. Public Health: Reducing Obesity
-$3
-$61
-$283
6. Positive Incentives for Health
$0
-$5
-$19
Aligning Incentives with Quality and Efficiency
7. Hospital Pay-for-Performance
-$2
-$14
-$34
8. Episode-of-Care Payment
-$17
-$96
-$229
9. Strengthening Primary Care and Care Coordination
-$5
-$60
-$194
10. Limit Federal Tax Exemptions for Premium Contributions
-$10
-$55
-$131
Correcting Price Signals in the Health Market
11. Reset Benchmark Rates for Medicare Advantage Plans
-$3
-$20
-$50
12. Competitive Bidding
-$7
-$42
-$104
13. Negotiated Prescription Drug Prices
-$3
-$16
-$43
14. All-Payer Provider Payment Methods and Rates
$2
-$23
-$122
15. Limit Payment Updates in High-Cost Areas
-$4
-$43
-$158
Note: A negative number indicates spending decreases compared with projected expenditures (i.e., savings); a positive indicates spending increases.
Exhibit ES-2. Policy Options and Distribution of 10-Year Impact onSpending Across Payer Groups (in billions)
Total NHE†
Federal Gov't
State/ Local Gov't
Private Payer
Households
Producing and Using Better Information
1. Promoting Health Information Technology
-$88
-$41
-$19
$0
-$27
2. Center for Medical Effectiveness and Health Care Decision-Making
-$368
-$144
-$49
-$98
-$107
3. Patient Shared Decision-Making
-$9
-$8
$0
$0
-$1
Promoting Health and Disease Prevention
4. Public Health: Reducing Tobacco Use
-$191
-$68
-$35
-$39
-$49
5. Public Health: Reducing Obesity
-$283
-$101
-$52
-$57
-$73
6. Positive Incentives for Health
-$19
$2
-$12
-$4
-$5
Aligning Incentives with Quality and Efficiency
7. Hospital Pay-for-Performance
-$34
-$27
-$1
-$2
-$4
8. Episode-of-Care Payment
-$229
-$377
$18
$90
$40
9. Strengthening Primary Care and Care Coordination
-$194
-$157
-$4
-$9
-$23
10. Limit Federal Tax Exemptions for Premium Contributions
-$131
-$186
-$19
-$55
$130
Correcting Price Signals in the Health Care Market
11. Reset Benchmark Rates for Medicare Advantage Plans
-$50
-$124
$0
$0
$74
12. Competitive Bidding
-$104
-$283
$0
$0
$178
13. Negotiated Prescription Drug Prices
-$43
-$72
$4
$17
$8
14. All-Payer Provider Payment Methods and Rates
-$122
$0
$0
-$105
-$18
15. Limit Payment Updates in High-Cost Areas
-$158
-$260
$13
$62
$27
Note: A negative number indicates spending decreases compared with projected expenditures (i.e., savings); a positive indicates spending increases. † In some cases, because of rounding, the sum of the payer group impact does not add up to the national health expenditures total.
Combining Individual Options with Affordable Coverage for All
In addition to the individual options described above, we modeled the effects of several of those options under a scenario intended to provide affordable health insurance coverage for all. The universal coverage scenario is based on a policy that would expand affordable coverage through a blend of private and public group health insurance. Similar to the savings options above, this scenario is presented as one of a range of potential approaches aimed at accomplishing this goal, rather than as the particular policy favored and recommended by the Commission. We refer to this scenario as the Insurance Connector approach.
The Insurance Connector approach builds on and connects current public and private group insurance through the creation of a new national entity that would offer a structured choice of private health plans as well as a Medicare option to individuals and small employers. Enrollment in some plan would be required. The availability of both publicly sponsored and private plans would help induce competition not only among private insurers, but also between private insurers and the public plan. This would put pressure on all plans to operate more effectively and efficiently. The expansion would achieve near-universal coverage.
With insurance changes alone, total health system costs would increase by an estimated $15 billion in the first year and $218 billion over 10 years, as a result of improved access for those who are currently uninsured or underinsured. (This scenario offers the option of selecting Medicare. The modeling estimates that lower administrative costs and other features would partially offset costs of coverage expansion.) As modeled, this scenario would increase spending by private employers and the federal government, because of financing provisions to make coverage affordable. State and local governments and households would experience net reductions in spending.
To illustrate the potential of policies focused on better information, public health, improved incentives, and price signals in the context of universal coverage, we modeled the Insurance Connector approach together with the following options that were described above: Promoting Health Information Technology; Center for Medical Effectiveness and Health Care Decision-Making; Public Health: Reducing Tobacco Use; Public Health: Reducing Obesity; Episode-of-Care Payment; Strengthening Primary Care and Care Coordination; Competitive Bidding; and Negotiated Prescription Drug Prices.
In the context of universal coverage with a national insurance connector as described above, several of the Medicare-focused policies that are combined in this option would apply to a larger number of people and therefore would have a larger estimated effect. Although not included in the modeling, in addition, the synergistic effects of implementing a combination of policies aimed at improving health system performance with universal coverage could be expected to lead to even greater savings. For example, the potential savings from electronic medical records (as well as the improvements in the quality and effectiveness of care) would be augmented if physicians also had expanded information on clinical effectiveness.
This combined approach could lower national health expenditures by 1 percent initially and 6 percent after a decade, compared with baseline projections. These annual savings add up to cumulative 10-year savings over the current system baseline of more than $1.5 trillion, as shown in exhibits ES-3 and ES-4. As illustrated, the cumulative effect of the combination of options grows rapidly over time: the estimated reduction in national health expenditures in the first year is $31 billion, while the reduction over 10 years is more than 50 times greater; similarly, the net costs to federal government diminish rapidly over time as savings offset federal costs of insurance expansion. Further, by the end of a decade, the net federal costs could be negligible if bundled with options that focus on improving both the effectiveness and efficiency of care.
Exhibit ES-3. Distribution of the Effect of Combination of Selected Individual Options with Insurance Connector Approach on Spending over One Year, Five Years, and 10 Years Across Payer Groups (in billions)
Total NHE†
Federal Gov't
State/ Local Gov't
Private Payer
Households
Combining selected individual options with Insurance Connector approach††
after 1 year
-$31
$31
-$14
$24
-$71
after 5 years
-$407
$111
-$119
$87
-$486
after 10 years
-$1,554
$158
-$380
$72
-$1,404
Note: A negative number indicates spending decreases compared with projected expenditures (i.e., savings); a positive indicates spending increases. † In some cases, because of rounding, the sum of the payer group effect does not add up to the national health expenditures total. †† Selected options include: Promoting Health Information Technology; Center for Medical Effectiveness and Health Care Decision-Making; Public Health: Reducing Tobacco Use; Public Health: Reducing Obesity; Episode-of-Care Payment; Strengthening Primary Care and Care Coordination; Competitive Bidding; and Negotiated Prescription Drug Prices.
As shown in Exhibit ES-5, these estimated savings succeed in "bending the curve" to about halfway between the currently projected trend and the amount that would maintain the current proportion of GDP devoted to health spending. A policy of guaranteeing health insurance for all combined with selected savings options yields savings in national health expenditures of $1.5 trillion over 10 years. This represents an extremely large amount of resources that could be available to address other societal needs or wants, either within the health system or elsewhere. Moreover, an environment in which affordable health care is available, markets operate with better information, and payment reform offers potential for even greater savings, can produce dynamic, synergistic gains over the longer term. The first-order estimates are thus likely conservative compared with the potential gain over time.
Toward a Higher-Value Health System: Cross-Cutting Themes and Conclusions
When one considers the results presented in this report, some key themes emerge:
Improvement is possible, and it is urgent to start now. The consequences of continuing the status quo, with respect to both human and economic costs, are very significant. The numbers of the uninsured are up sharply and moving up the economic ladder as middle-income families lose coverage. Costs are squeezing households, businesses, and the public sector. The option estimates illustrate that cost savings are achievable in the context of a high performance health system. They also demonstrate that early enactment of even modest changes has the potential for substantial cumulative benefits over several years. On a base of more than $2 trillion, even small percentage changes add up quickly.
Better information is a key to improved performance. It is difficult to improve the health system without information on current performance at the national, local, and individual provider levels. Transparency of information on quality and price is essential to the effectiveness of a number of policies that aim to achieve higher performance. A valid, publicly available database on provider performance, appropriately adjusted for patient conditions, is critical for focusing providers on improving both quality and efficiency, enabling payers to construct rewards and other mechanisms that encourage such behavior, and providing patients with the information they need to make appropriate choices. Data on the patterns and causes of variations in spending across geographic areas is essential for developing policies to narrow such variations and providing consistently effective and appropriate care, regardless of location.
Addressing total health system costs, not shifting costs among sources of financing, should be the focus of policy action. Many of the policies proposed in the past have simply shifted costs from one payer source to another—between government and employers, or from payers to beneficiaries and patients. Narrow policies that cut governmental budget outlays by simply displacing those costs onto Medicare beneficiaries, or by paying substandard rates to providers under Medicaid, are stopgap measures that do not fundamentally address underlying health care cost trends.
There are no magic bullets that by themselves fully address rising costs and key sources of inefficiency. Just as the steady increase in costs relative to incomes—which is projected to worsen over time—represents the cumulative effect of multiple and interacting factors, tackling cost levels and trends will require a coherent set of policies aimed at the misaligned incentives and structural flaws that plague our health system and produce the cost pressures we face. The design and effective implementation of policies matter. The solutions are not simple, and will require risk-taking and a willingness to invest, learn, and allow time for health systems and system capacity to improve through innovation.
A multifaceted approach that is combined with health insurance coverage for all can be designed to achieve substantial reductions in future spending growth. When combined with universal coverage, a bundled approach focused on system performance should be able to reduce the growth of spending significantly over the next decade while maintaining and enhancing the value of our health care dollar. But we need to start now, with a strategic, coherent set of goals, policies, and incentives designed to address the underlying factors that add to costs without adding commensurate value.
Value means more than savings in national health expenditures. Higher value includes improved performance on quality, equity, access, and healthy lives, in addition to savings. A policy proposal that generates a modest savings but achieves substantial improvement in access or health outcomes may be as valuable, or more so, than one that generates larger savings but makes minimal progress toward other health system goals. Options that extend health insurance to all, promote the public health, improve information and lead to more informed patient decisions, enhance quality and care coordination, and eliminate waste, duplication, and unnecessary care all contribute to value and performance.
Reaching consensus will require a focus on the potential gain for the nation. The Commission has sought to identify options that are win-win—that is, that both achieve savings and contribute to improving key dimensions of health system performance. Yet, approaches that substantially reduce projected expenditures over time will by definition decrease revenues for some segments of the health care sector.
Achieving high performance will require that every stakeholder take part in finding solutions. Across the individual options, the estimated distribution of savings or net new cost varies among major payers—the federal government, state and local governments, employers, and households. Achieving national health system savings may require a shift in payment sources and an increase in federal outlays. Doing so will also require that providers be willing to address payment inequities where providers that care for the uninsured and the poor receive lower compensation that those with privately insured patients. Narrow self-interest is a major barrier to changes that have the potential to benefit all. Constructive approaches will also require political compromises, and a willingness to forsake ideological purity. As a nation, we will need to move beyond the point where everyone's second choice is the status quo.
Leadership is critical. Building consensus will require leadership and public/private collaboration, and a coherent set of goals, policies, incentives, and tools. Options will work better if public and private policies align toward a common aim of achieving a high performance health system. Consensus will also require a whole-system view: aiming for improved cost trends while improving population health and achieving continuous improvement over time.
The range of options considered in this report illustrates strategic approaches that could, in combination, ease cost pressures and create a path toward a higher performing, high-value health system. The goal of the analysis is to spark discussion and development of constructive national policies that could reduce costs and enable a more efficient, effective, and equitable health system.
With cost pressures mounting and coverage eroding, the stakes are high. As a nation, we will all gain if we focus on improving the value we obtain for the $2 trillion we are now spending on health care—a sum that will continue to consume a greater and greater share of our nation's economic resources, without yielding proportional gains to society, if we fail to act.
C. Schoen, S. Guterman, A. Shih, J. Lau, S. Kasimow, A. Gauthier, and K. Davis, Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending, The Commonwealth Fund, December 2007
Below is the report "Hospital computing and the costs and quality of care: a national study," by David U. Himmelstein, M.D., Adam Wright, Ph.D., and Steffie Woolhandler, M.D., M.P.H., published in The American Journal of Medicine.
At the Web 2.0 Expo 2009 in New York City Tim O’Reilly had an amazing conversation with Beth Noveck, United States Deputy Chief Technology Officer for Open Government. She is on leave as a professor law and director of the Institute for Information Law and Policy at New York Law School and McClatchy visiting professor of communication at Stanford University. Dr. Noveck taught in the areas of intellectual property, technology and first amendment law and founded the law school’s "Do Tank," a legal and software R&D lab focused on developing technologies and policies to promote open government.
National survey of US hospitals shows information technology has yielded neither administrative efficiencies nor cost savings
The increased computerization in U.S. hospitals hasn't made them cheaper or more efficient, Harvard researchers say, although it may have modestly improved the quality of care for heart attacks.
The findings, published in today's [Friday's] online edition of the American Journal of Medicine, contradict claims by President Obama and many lawmakers that health information technology (health IT), including electronic medical records, will save billions and help make reform affordable.
"Our study finds that hospital computerization hasn't saved a dime, nor has it improved administrative efficiency," said lead author Dr. David Himmelstein, associate professor at Harvard Medical School and former director of clinical computing at Cambridge Hospital in Massachusetts. "Claims that health IT will slash costs and help pay for the reforms being debated in Congress are wishful thinking."
The study uses data from the most extensive survey ever undertaken of hospital computerization. Data from approximately 4,000 hospitals for the years 2003 to 2007, including those on a list of the "100 Most Wired," were analyzed for evidence of increased quality, cost savings or improvements in administrative efficiency.
The data came from the authoritative Healthcare Information and Management Systems Society (HIMSS) Analytics annual survey of hospital computerization; Medicare Cost Reports that virtually all hospitals submit annually to the Centers for Medicare and Medicaid Services (CMS); and the 2008 Dartmouth Health Atlas, which compiles CMS data on costs and quality of care.
Although the researchers found that U.S. hospitals increased their computerization between 2003 and 2007, they found no indication that health IT lowered costs or streamlined administration, even in the "most wired" institutions. While U.S. hospital administrative costs increased slightly, from 24.4 percent in 2003 to 24.9 percent in 2007, hospitals that computerized most rapidly actually had the largest increases in administrative costs. (By way of comparison, older studies have estimated administrative costs in Canadian hospitals at 12.9 percent).
The study found no evidence of lagged effects, e.g. lower costs in 2007 resulting from information technology introduced in 2003.
Modest quality gains were noted in the treatment of heart attacks (acute myocardial infarction) in more-computerized hospitals, but even these small improvements may merely represent better documentation rather than actual gains to patients.
Himmelstein said a report from the Congressional Budget Office in 2008 signed by Peter Orszag, now Obama's budget director, expressed skepticism about claims by the RAND Corp. and others that health IT could generate $80 billion annually in savings.
"Part of the CBO's skepticism was based on the limited information available to the RAND study and similar studies," Himmelstein said. "But this new, detailed, national survey of diverse hospitals shows such doubts are well-founded. Information technology can't rescue us from our national health care crisis."
Dr. Steffie Woolhandler, professor of medicine at Harvard and study co-author, said several factors may explain why health IT has failed to reduce administrative costs.
"Any savings may have been offset by the costs of purchasing and running new computer systems," she said. "In addition, most software is designed around the accounting and billing needs of hospitals, not the clinical side."
She noted that a computer success story in recent years has been at the Veterans Administration, where global budgets eliminate most billing and internal cost accounting, allowing physicians to focus instead on delivering care.
"The VA system now has our nation's highest quality and patient approval ratings," Woolhandler said. "Congress should take note: to get the most benefit from our health care dollars and from health IT, we should adopt a single-payer, Medicare-for-all program. Nothing short of that will allow us to reap the full potential of computerization or to provide comprehensive, quality and affordable care to all."
"Hospital computing and the costs and quality of care: a national study," David U. Himmelstein, M.D., Adam Wright, Ph.D., and Steffie Woolhandler, M.D., M.P.H., The American Journal of Medicine, Nov. 20, 2009 (online).
