Apr 292008

Some comments on Obama’s health care platform.

Lower Costs by Modernizing The U.S. Health Care System

* Reducing Costs of Catastrophic Illnesses for Employers and Their Employees: Catastrophic health expenditures account for a high percentage of medical expenses for private insurers. The Obama plan would reimburse employer health plans for a portion of the catastrophic costs they incur above a threshold if they guarantee such savings are used to reduce the cost of workers’ premiums.

So on the one hand he’s going to modernize. And on the other he’s going to introduce a reimbursement plan that is going to be fraught with ambiguity and corruption.

* Helping Patients:
1. Support disease management programs. Seventy five percent of total health care dollars are spent on patients with one or more chronic conditions, such as diabetes, heart disease and high blood pressure. Obama will require that providers that participate in the new public plan, Medicare or the Federal Employee Health Benefits Program (FEHBP) utilize proven disease management programs. This will improve quality of care, give doctors better information and lower costs.

“Disease management” is the sort of thing that gave us HMOs. Look how that turned out. And now Obama is going to give us a HMO on a grander scale.

2. Coordinate and integrate care. Over 133 million Americans have at least one chronic disease and these chronic conditions cost a staggering $1.7 trillion yearly. Obama will support implementation of programs and encourage team care that will improve coordination and integration of care of those with chronic conditions.

Pre-paid health care systems such as we have encourage the un-integration of care, by requiring all diseases and treatments to be coded into strictly defined categories. It’s not enough to say Obama will try to break down the barriers between these categories, because that’s something that’s inherently against the nature of government to do. Free markets can sometimes break down existing categories. Obama has a lot of explaining to do if he thinks he can get government to do that.

3. Require full transparency about quality and costs. Obama will require hospitals and providers to collect and publicly report measures of health care costs and quality, including data on preventable medical errors, nurse staffing ratios, hospital-acquired infections, and disparities in care. Health plans will also be required to disclose the percentage of premiums that go to patient care as opposed to administrative costs.

There is probably a proper role here for government, in requiring vendors to tell us just what it is they’re selling us. I wish government could be provided to do the same.

* Ensuring Providers Deliver Quality Care:
1. Promote patient safety. Obama will require providers to report preventable medical errors and support hospital and physician practice improvement to prevent future occurrences.

Defining what “preventable” is going to provide a great opportunity for ambiguity and corruption.

2. Align incentives for excellence. Both public and private insurers tend to pay providers based on the volume of services provided, rather than the quality or effectiveness of care. Providers who see patients enrolled in the new public plan, the National Health Insurance Exchange, Medicare and FEHBP will be rewarded for achieving performance thresholds on outcome measures.

This is more of the mindset that got us HMOs.

3. Comparative effectiveness research. Obama will establish an independent institute to guide reviews and research on comparative effectiveness, so that Americans and their doctors will have the accurate and objective information they need to make the best decisions for their health and well-being.

Ah, the politicization of science. I guess the only time that’s bad is when George Bush does it.

4. Tackle disparities in health care. Obama will tackle the root causes of health disparities by addressing differences in access to health coverage and promoting prevention and public health, both of which play a major role in addressing disparities. He will also challenge the medical system to eliminate inequities in health care through quality measurement and reporting, implementation of effective interventions such as patient navigation programs, and diversification of the health workforce.

So some people don’t get good health care because “people like us” aren’t the ones in the health workforce? And that problem is going to be solved by paperwork and bureaucratization?

5. Insurance reform. Obama will strengthen antitrust laws to prevent insurers from overcharging physicians for their malpractice insurance and will promote new models for addressing errors that improve patient safety, strengthen the doctor-patient relationship and reduce the need for malpractice suits.

Right. “Overcharging.” First the government drives malpractice insurers out of the business, then complains that there aren’t enough of them, so it’s going to control the monopolistic prices they can charge. I can see investors lining up now to put their money into insurance providers regulated by Obama.

And there is so much more in this one that deserves to be mocked, but so little time…

* Lowering Costs Through Investment in Electronic Health Information Technology Systems: Most medical records are still stored on paper, which makes it hard to coordinate care, measure quality or reduce medical errors and which costs twice as much as electronic claims. Obama will invest $10 billion a year over the next five years to move the U.S. health care system to broad adoption of standards-based electronic health information systems, including electronic health records, and will phase in requirements for full implementation of health IT. Obama will ensure that patients’ privacy is protected.

Yup. More of the sort of thing that discourages ïntegration” of health care. We complain all the time about how insurers are interested only in the bottom line. If this sort of thing was really where cost-savings are going to be realized, wouldn’t insurers do it on their own without the gentle, guiding hand of Obama?

* Lowering Costs by Increasing Competition in the Insurance and Drug Markets: The insurance business today is dominated by a small group of large companies that has been gobbling up their rivals. There have been over 400 health care mergers in the last 10 years, and just two companies dominate a full third of the national market. These changes were supposed to make the industry more efficient, but instead premiums have skyrocketed by over 87 percent.

Pharmaceutical companies have consolidated over the years, with the winners being not the ones who do the best work in developing new drugs, but the ones who can best schmooze the regulators. With more Obama-regulation, such consolidation will only continue until there is only one insurer — the government. Then we’ll have all the worst aspects of our current system, only on a grander scale.

1. Barack Obama will prevent companies from abusing their monopoly power through unjustified price increases. His plan will force insurers to pay out a reasonable share of their premiums for patient care instead of keeping exorbitant amounts for profits and administration. His new National Health Exchange will help increase competition by insurers.

This is going to be great, allowing bureaucrats to decide what’s “unjustified” and what’s “exorbitant”. More corruption.

2. Lower prescription drug costs. The second-fastest growing type of health expenses is prescription drugs. Pharmaceutical companies are selling the exact same drugs in Europe and Canada but charging Americans more than double the price. Obama will allow Americans to buy their medicines from other developed countries if the drugs are safe and prices are lower outside the U.S. Obama will also repeal the ban that prevents the government from negotiating with drug companies, which could result in savings as high as $30 billion. Finally, Obama will work to increase the use of generic drugs in Medicare, Medicaid, and FEHBP and prohibit big name drug companies from keeping generics out of markets.

I’ve seen how these big buyer cooperatives work on smaller scale. What it usually means is buyer and vendor work out a deal, and the customer is screwed if s/he is required to purchase through that system.