Category Archives: Health Care Costs

U.S. Near Bottom, Hong Kong and Singapore at Top of Health Havens – Bloomberg

Want medical care without quickly draining your fortune? Try Singapore or Hong Kong as your healthy havens.

Source: U.S. Near Bottom, Hong Kong and Singapore at Top of Health Havens – Bloomberg

Advertisements

Single Payer A Bargain

Another shout out to Don McCanne for the following.

On Friday, the Nation published an article by Steffie Woolhandler, David Himmelstein, and Adam Gaffney.

You may recall these folks from my book review, “Health Care Under the Knife,” and it’s conclusion, “Some Final Thoughts on ‘Health Care Under the Knife.'”

Rather than regurgitate it for you, I am letting you read it in its entirety. But before I do, let me bring to your attention, an issue that is flying under the radar and has serious consequences for the country, our rights, and for the future of health care and other social programs.

Those lovable brothers from the Midwest, Charles and David Koch, are funding a group called ALEC, the American Legislative Exchange Council. One of the goals of ALEC is to call an Article V (of the Constitution, for those of you not familiar with the document) that allows for the creation of a convention in the event the government gets too much power.

I recommend you read up on it because it will radically alter our system of government for the benefit of the corporations and wealthy. Say goodbye to Social Security, Medicare, Medicaid, and direct election of Senators, to name a few goals.

That brings me to a quote I must let you read from a man who has no clue what he is talking about, and is emblematic of the dysfunction of his party. That man is former Oklahoma Sen. Tom Coburn, himself a physician who said the following regarding a convention and why he and others feel it is necessary.

“We’re in a battle for the future of our country…We’re either going to become a socialist, Marxist country like western Europe, or we’re going to be free. As far as me and my family and my guns, I’m going to be free.”

In case you missed that, let me repeat it:

“We’re in a battle for the future of our country…We’re either going to become a socialist, Marxist country like western Europe, or we’re going to be free. As far as me and my family and my guns, I’m going to be free.” Violent, ain’t he?

Pray tell, what country in western Europe is Marxist? Last I heard, none. Folks, these guys not only want to take away health care, they are still fighting the Cold War and godless, Marxist Communism.  No, what they are really about is defending a system, both economic and health care-wise, that cannot be sustained.

Here is the article in full:

Last week, Charles Blahous at the Koch-funded Mercatus Center at George Mason University published a study suggesting that Bernie Sanders’s single-payer health-care plan would break the bank. But almost immediately, various observers—including Sanders himself—noted that according to Blahous’s own estimates, single payer would actually save Americans more than $2 trillion over a decade. Blahous doubled down on his argument in The Wall Street Journal, and on Tuesday, The Washington Post’s fact-checker accused Democrats of seizing “on one cherry-picked fact” in Blahous’s report to make it seem like a bargain.
The Post is wrong to call this a “cherry-picked fact”—it’s a central finding of the analysis—but it is probably right that single-payer supporters shouldn’t make too much of Blahous’s findings. After all, his analysis is riddled with errors that actually inflate the cost of single payer for taxpayers.
First, Blahous grossly underestimates the main source of savings from single payer: administrative efficiency. Health economist Austin Frakt aptly demonstrated the “bewildering complexity of health care financing in the United States” in The New York Times last month, citing evidence that billing costs primary-care doctors $100,000 apiece and consumes 25 percent of emergency-room revenues; that billing and administration accounts for one-quarter of US hospital expenditures, twice the level in single-payer nations; and that nearly one-third of all US health spending is eaten up by bureaucracy.
Overall, as two of us documented recently in the Annals of Internal Medicine, a single-payer system could cut administration by $500 billion annually, and redirect that money to care. Blahous, in contrast, credits single payer with a measly fraction of that—or $70 billion—in administrative savings.
Our profit-driven multi-payer system is the source for this outlandish administrative sprawl. Doctors and hospitals have to negotiate contracts and fight over bills with hundreds of insurance plans with differing payment rates, rules, and requirements. Simplifying the payment system would free up far more money than Blahous estimates to expand and improve coverage.
Next, Blahous lowballs the potential for savings on prescription drugs. He assumes that a single-payer system couldn’t use its negotiating clout to push down drug prices, ignoring the fact that European nations and the US Veterans Affairs system achieve roughly 50 percent discounts relative to the US private sector. (Single payer’s only drug savings, he argues, will come from shifting 15 percent of brand-name prescriptions to generics.) Hence Blahous foresees only $61 billion in drug savings in 2022, even though tough price negotiations would likely achieve threefold higher savings.
Third, Blahous underestimates how much the government is already spending on health care. For instance, he omits the $724 billion that federal agencies are expected to pay for employees’ health benefits over the 10 years covered by his analysis, which would simply be redirected to Medicare for All. He also leaves out the massive savings to state and local governments, which would save nearly $3.6 trillion on employee benefits and another $5.3 trillion on Medicaid and other health programs. Hence, much of the “new money” needed to fund Sanders’s reform is already being collected as taxes.
Yes, there will need to be some new taxes—albeit much less than Blahous estimates. But those new taxes would just replace—not add to—current spending on premiums, co-pays, and deductibles. Additionally, at least some of the new taxes would be virtually invisible. For instance, the $10 trillion that employers would otherwise pay for premiums could instead be collected as payroll taxes. Similarly, Medicare for All would relieve households of the $7.7 trillion they’d pay for premiums and $6.3 trillion in out-of-pocket costs under the current system.
It’s easy to get lost in the weeds here. But at the end of the day, even according to Blahous’s errant projections, Medicare for All would save the average American about $6,000 over a decade. Single payer, in other words, shifts how we pay for health care, but it doesn’t actually increase overall costs—even while providing first-dollar comprehensive coverage to everyone in the nation. The Post’s fact-checker is wrong: Single-payer supporters can and should trumpet this important fact.
Of course, the most important benefits of single payer are altogether invisible in economic analyses like the one performed by Blahous. No matter what injury or illness we faced, we would be forever freed from one great worry: the cost of our care. It’s hard to put a price tag on that kind of freedom. Yet, paradoxically, even the slanted analysis of a libertarian economist provides evidence that it would be fiscally responsible.

Immigrants and Health – Two Studies

The following two articles come from Dr. Don McCanne’s Quote of the Day blog.

International Journal of Health Services
August 8, 2018
Medical Expenditures on and by Immigrant Populations in the United States: A Systematic Review
By Lila Flavin, Leah Zallman, Danny McCormick, and J. Wesley Boyd

Abstract

In health care policy debates, discussion centers around the often-misperceived costs of providing medical care to immigrants. This review seeks to compare health care expenditures of U.S. immigrants to those of U.S.-born individuals and evaluate the role which immigrants play in the rising cost of health care. We systematically examined all post-2000, peer-reviewed studies in PubMed related to health care expenditures by immigrants written in English in the United States. The reviewers extracted data independently using a standardized approach. Immigrants’ overall expenditures were one-half to two-thirds those of U.S.-born individuals, across all assessed age groups, regardless of immigration status. Per capita expenditures from private and public insurance sources were lower for immigrants, particularly expenditures for undocumented immigrants. Immigrant individuals made larger out-of-pocket health care payments compared to U.S.-born individuals. Overall, immigrants almost certainly paid more toward medical expenses than they withdrew, providing a low-risk pool that subsidized the public and private health insurance markets. We conclude that insurance and medical
care should be made more available to immigrants rather than less so.

From the Discussion

Many Americans, including some in the health care sector, mistakenly believe that immigrants are a financial drain on the U.S. health care system, costing society disproportionately more than the U.S.-born population, i.e., themselves. Our review of the literature overwhelmingly showed that immigrants spend less on health care, including publicly funded health care, compared to their U.S.-born counterparts. Moreover, immigrants contributed more towards Medicare than they withdrew; they are net contributors to Medicare’s trust fund.

Our research categorized immigrants into different groups, but in all categories, these studies found that immigrants accrued fewer health care expenditures than U.S.-born individuals. Among the different payment sources – public, private, or out-of-pocket – public and private expenditures were lower for immigrants, with immigrants spending more out-of-pocket. Differences decreased the longer immigrants resided in the United States.

While annual U.S. medical spending in 2016 was a staggering $3.3 trillion, immigrants accounted for less than 10% of the overall spending – and recent immigrants were responsible for only 1% of total spending. Given these figures, it is unlikely that restrictions on immigration into the United States would result in a meaningful decrease in health care spending. To the contrary, restricting immigration would financially destabilize some parts of the health care economy, as suggested by Zallman and colleagues, who found that immigrants contributed $14 billion more to the Medicare trust fund than they withdrew.

Fiscal responsibility is an important reason for the United States to provide insurance for newly arrived immigrants, as they could continue to enlarge the low-risk pool of healthy individuals that helps offset the cost of insuring high-risk individuals. Currently, under the ACA, undocumented immigrants cannot enroll in the state health care exchanges. If we are seeking to minimize costs, which would seem a major factor in the reasoning of policymakers who would deny immigrants care, then it makes financial sense to enroll individuals who will (on average) contribute more to the health care system than they withdraw. Healthy, young immigrants are precisely whom we should target for Medicaid enrollment, state exchanges, or private health insurance.

http://journals.sagepub.com/doi/full/10.1177/0020731418791963

===

The New England Journal of Medicine
August 1, 2018
A New Threat to Immigrants’ Health — The Public-Charge Rule
By Krista M. Perreira, Ph.D., Hirokazu Yoshikawa, Ph.D., and Jonathan Oberlander, Ph.D.

The United States is making major changes to its immigration policies that are spilling over into health policy. In one such change, the Trump administration is drafting a rule on “public charges” that could have important consequences for access to medical care and the health of millions of immigrants and their families. The concept of a public charge dates back to 19th-century immigration law. Under current guidelines, persons labeled as potential public charges can be denied legal entry to the United States. They can also be prevented from adjusting their status from a nonimmigrant visa category (e.g., a student or work visa) to legal permanent resident status. In addition, if they become public charges within the first 5 years after their admission to the United States, for reasons that existed before they came to the country, in rare cases they can be arrested and deported. Immigrants and their families consequently have strong incentives to avoid being deemed public charges.

In evaluating whether a person is likely to become a public charge, immigration officials take account of factors such as age, health, financial status, education, and skills. The use of cash assistance for income maintenance (e.g., Supplemental Security Income or Temporary Assistance for Needy Families) and government-funded long-term care are considered in making these determinations. Other noncash benefits such as health and nutrition programs are specifically excluded from consideration, and use of cash-assistance benefits by the immigrant’s dependents is not currently factored in.

The Trump administration is proposing sweeping changes to these guidelines. A draft rule from the Department of Homeland Security (DHS) would substantially expand the definition of a public charge to include any immigrant who “uses or receives one or more public benefits.” Not just cash assistance but nearly all public benefits from federal, state, or local governments would be considered in public-charge determinations, including nonemergency Medicaid, the Children’s Health Insurance Program (CHIP), and subsidized health insurance through the marketplaces created by the Affordable Care Act (ACA); Medicare would be excluded. The DHS draft notes that in making these determinations, “having subsidized insurance will generally be considered a heavily weighted negative factor.” The broadened definition of public charge would also encompass food assistance (the Supplemental Nutrition Assistance Program [SNAP] and the Women, Infants, and Children Program [WIC]), programs designed to assist low-income workers (e.g., the Earned Income Tax Credit [EITC]), housing assistance (Section 8 vouchers), and the Low Income Home Energy Assistance Program. Moreover, not only immigrants’ use of public assistance but use of these programs by any dependents, including U.S.-born citizen spouses and children, would also be considered.

The potential impact of these changes is enormous. In 2016, about 43.7 million immigrants lived in the United States. If enacted, the new regulations would affect people seeking to move to the United States to be reunified with family members and to work, as well as lawfully present immigrants who hope to become legal permanent residents (green-card holders). One estimate suggests that nearly one third of U.S.-born persons could have their use of public benefits considered in the public-charge determination of a family member. This includes “10.4 million citizen children with at least one noncitizen parent.” Notably, unauthorized immigrants are not the primary target of the draft rule, since they are already ineligible for most federally funded public assistance. Instead, lawfully present immigrants would bear the brunt, as well as persons living in “mixed-status” families (those in which some members are citizens and others are not) and persons living abroad who wish to immigrate to the United States.

We believe that the draft public-charge regulation represents a substantial threat to lawfully present immigrants’ access to public programs and health care services. What modifications may be made is uncertain — after the rule is formally proposed, there will be a public comment period, and revisions could be made before it is finalized. But if this rule takes effect, it will most likely harm the health of millions of people and undo decades of work by providers nationwide to increase access to medical care for immigrants and their families.

https://www.nejm.org/doi/full/10.1056/NEJMp1808020?query=featured_secondary

Cayman Islands Hospital Delivers Lower Cost Care

This morning’s post by fellow blogger, Joe Paduda, contained a small paragraph that linked to an article in the Harvard Business Review (HBR) about a hospital in the Cayman Islands that is delivering excellent care at a fraction of the cost.

Joe’s blog generally focuses on health care and workers’ comp issues, and has never crossed over into my territory. Not that I mind that.

In fact, this post is a shoutout to Joe for understanding what many in health care and workers’ comp have failed to realize — the US health care system, which includes workers’ comp medical care, has failed and failed miserably to keep costs down and to provide excellent care at lower cost.

That the medical-industrial complex and their political lackeys refuse to see this is a crime against the rights of Americans to get the best care possible at the lowest cost.

As I have pointed out in previous posts, the average medical cost for lost-time claims in workers’ comp has been rising for more than twenty years, even if from year to year there has been a modest decrease, the trend line has always been on the upward slope, as seen in this chart from this year’s NCCI State of the Line Report.

The authors of the HBR article asked this question: What if you could provide excellent care at ultra-low prices at a location close to the US?

Narayana Health (NH) did exactly that in 2014 when they opened a hospital in the Cayman Islands — Health City Cayman Islands (HCCI). It was close to the US, but outside its regulatory ambit.

The founder of Narayana Health, Dr. Devi Shetty, wanted to disrupt the US health care system with this venture, and established a partnership with the largest American not-for-profit hospital network, Ascension.

According to Dr. Shetty, “For the world to change, American has to change…So it is important that American policy makers and American think-tanks can look at a model that costs a fraction of what they pay and see that it has similarly good outcomes.”

Narayana Health imported innovative practices they honed in India to offer first-rate care for 25-40% of US prices. Prices in India, the authors state, were 2-5% of US prices, but are still 60-75% cheaper than US prices, and at those prices can be extremely profitable as patient volume picked up.

In 2017, HCCI had seen about 30,000 outpatients and over 3,500 inpatients. They performed almost 2,000 procedures, including 759 cath-lab procedures.

HCCI’s outcomes were excellent with a mortality rate of zero — true value-based care. [Emphasis mine]

HCCI is accredited by the JCI, Joint Commission International.

Patient testimonials were glowing, especially from a vascular surgeon from Massachusetts vacationing in the Caymans who underwent open-heart surgery at HCCI following a heart attack. “I see plenty of patients post cardiac surgery. My care and recovery (at HCCI) is as good or better than what I have seen. The model here is what the US health-care system is striving to get to.

A ringing endorsement from a practicing US physician about a medical travel facility and the level of care they provide.

HCCI achieved these ultra-low prices by adopting many of the frugal practices from India:

  • Hospital was built at a cost of $700,00 per bed, versus $2 million per bed in the US. Building has large windows to take advantage of natural light, cutting down on air-conditioning costs. Has open-bay intensive care unit to optimize physical space and required fewer nurses on duty.
  • NH leverage relations with its suppliers in India to get similar discounts at HCCI. All FDA approved medicines were purchased at one-tenth the cost for the same medicines in the US. They bought equipment for one-third or half as much it would cost in the US.
  • They outsourced back-office operations to low-cost but high skilled employees in India.
  • High-performing physicians were transferred from India to HCCI. They were full-time employees on fixed salary with no perverse incentives to perform unnecessary tests or procedures. Physicians at HCCI received about 70% of US salary levels.
  • HCCI saved on costs through intelligent make-versus-buy decisions. Ex., making their own medical oxygen rather than importing it from the US. HCCI saved 40% on energy by building its own 1.2 megawatt solar farm.

And here is the key takeaway:

The HCCI model is potentially very disruptive to US health care. Even with zero copays and deductibles and free travel for the patient and a chaperone for 1-2 weeks, insurers would save a lot of money. [Emphasis mine]

US insurers have watched HCCI with interest, but so far has not offered it as an option to their patients. A team of US doctors came away with this warning: “The Cayman Health City might be one of the disruptors that finally pushes the overly expensive US system to innovate.”

The authors conclude by stating that US health care providers can afford to ignore experiments like HCCI at their own peril.

The attitude towards medical travel among Americans can be summed up by the following from Robert Pearl, CEO of Permanante Medical Group and a clinical professor of surgery at Stanford: “Ask most Americans about obtaining their health care outside the United States, and they respond with disdain and negativity. In their mind, the quality and medical expertise available elsewhere is second-rate, Of course, that’s exactly what Yellow Cab thought about Uber. Kodak thought about digital photography, General Motors thought about Toyota, and Borders thought about Amazon.”

Until this attitude changes, and Americans drop their jingoistic American Exceptionalism, they will continue to pay higher costs for less excellent care in US hospitals. More facilities like HCCI in places like Mexico, Costa Rica, the Caymans, and elsewhere in the region need to step up like HCCI and Narayana Health have. Then the medical-industrial complex will have to change.

Typical Family of Four Now Paying Over $28,000 for Health Care

A report issued Monday by Milliman indicated that the cost of health care for a typical American family covered by the average employer-sponsored preferred provider organization (PPO) plan in 2018 is $28,166, as per the Milliman Medical Index (MMI).

Broken down into component parts, this represents the following costs:

2018 MMI Components of Spending
31% ($8,631) – Inpatient
19% ($5,395) – Outpatient
29% ($8,275) – Professional services
17% ($4,888) – Pharmacy
4% ($995) – Other (Home health, ambulance, DME, prosthetics)

The key takeaway from the report is that employers are paying more; but employees are paying a lot more.

The health care expenditures are funded by employer contributions to health plans and by employees through their payroll deductions and out-of-pocket expenses incurred when care is received, according to the report.

The report continues that they are seeing over the long-term, and that employees are paying a higher percentage of the total, with employee expenses increasing 5.9%, and employer expenses increasing 3.5% in 2018.

The total cost of health care is shared by both the employer and employee for a family of four, the MMI stated, which breaks down to three categories:

1. Employer subsidy. Employers that sponsor health plans subsidize the cost of healthcare for their employees by allocating compensation dollars to pay a large share of the cost.
2. Employee contribution. Employees who choose to participate in the employer’s health benefit plan typically also pay a substantial portion of costs, usually through payroll deduction.
3. Employee out-of-pocket cost at time of service. When employees receive care, they also often pay for a portion of these services via health plan deductibles and/or point-of-service copays.

The relative proportions of medical costs for 2018 are:

56% ($15,788) – Employer contribution
27% ($7,674) – Employee contribution
17% ($4,704) – Employee out-of-pocket

Looking at this another way, employees are paying a total of 44% as either a contribution or out-of-pocket, which adds up to $12,378, compared to the employers’ 56% and $15,788, respectively.

As health care gets more expensive, it will naturally lead to higher costs for employers, but also higher costs for employees. And as has been happening more commonly, employers are shifting more of the costs onto the employees. With stagnant wages, as reported daily in the news, this is going to be a problem for those families caught in the squeeze between rising costs for medical care and stagnant wages.

This would be resolved by creating a single payer health care system that will save both employers and employees money,

 

Vermont becomes first state to permit drug imports from Canada – POLITICO

In a rebuff to the current neo-liberal regime and its recent plan to tackle drug prices, the State of Vermont became the first in the nation to allow cross-border purchasing of drugs from Canada. Makes sense because the border is not that far away.

Years ago, my late mother worked for a company here in Florida that facilitated drugs to come to patients from Canada, the UK and Israel.

But thanks to successful lobbying by a former Democratic Congressman from Louisiana who after leaving Congress became a lobbyist for the pharmaceutical industry, the government forbade the importation of Canadian drugs.

The measure is one of the most aggressive attempts by a state to tackle rising drug prices that critics say are crippling state finances.

Source: Vermont becomes first state to permit drug imports from Canada – POLITICO

The Disruptors are Coming: The New Health Economy and the Medical-Industrial Complex

A big shout out to Dr. Don MCanne for his Quote of the Day post Friday for today’s topic, and a belated shout out to him for his post last Tuesday about the gains from the ACA being reversed. See my post, ACA Gains Reversing.

This time, Don alerts us to the impact the new health economy disruptors will have and what it might mean for the push towards single payer health care.

Last month, the PwC Health Research Institute (HRI) released a report analyzing the new health economy landscape as more and more companies pursue acquisitions of companies in the insurance, pharmacy benefit management, health care services and retail spaces.
In the last six months, the report states, there has been an explosion of unusual deals between companies such as CVS Health buying Aetna, Cigna buying Express Scripts, UnitedHealth’s Optum buying DaVita Medical Group (Kidney disease and dialysis), Albertsons agreeing to merge with Rite Aid, as well as the much highly publicized partnership between Amazon, JP Morgan, and Berkshire Hathaway.

Naturally, these aren’t the only deals that have occurred. Last year, 67 deals occurred in the US health services market, including payers and providers, the report adds.

The value of these deals increased 146% over those in 2016. The US health care industry, the report states, is undergoing seismic changes generated by a collision of forces: the shift from volume to value, rising consumerism, and the decentralization of care.
The HRI identified four new archetypes of companies engaged in this new health care economy:

• Vertical integrators — CVS & Aetna, Optum & DaVita, Cigna & Express Scripts
• Employer activists — February 2016, 20 US companies form Health Transformation Alliance (HTA) and developed tools to help its members cut employee healthcare costs. In January, Amazon, JP Morgan and Berkshire Hathaway partnered to lower costs and improve employee satisfaction
• Technology invaders — Amazon selling over-the-counter medical products, offering discounted access to Prime service, Apple’s newest operating system allows users to access parts of their EHRs on their phones
• Health retailers — CVS, Walgreens, Walmart, Albertsons and others using their network of store locations, consumer insights, national and global supply chains, and national (and sometimes global) branding to attract consumers looking for affordable, convenient care and goods

The HRI report recommends that all healthcare companies should make the following moves:

• Invest in customer experience
• Plan for a broader workforce
• Focus on price

This is how Don McCanne commented on this report. He wrote that Arnold Relman, like Dwight Eisenhower did about the military-industrial complex, warned us about the medical-industrial complex, but did not realize how intense the disruption would be in health care that the HRI report discusses.

According to Don, we are about to see a takeover by the disruptors who “have a leg up on many established health players in understanding consumers and tailoring experiences for them.”
The disruptors are “positioned to address price through greater scale, ownership of middlemen and a wider grip on the US health system value chain.”

If you don’t believe Don, then read what Jamie Dimon, the CEO of JP Morgan said, “To attack these issues, we will be using top management, big data, virtual technology, better customer engagement and the improved creation of customer choice (high deductibles have barely worked). This effort is just beginning.”

This is exactly what the Waitzkin et al. book describes when explaining the methods used by the medical-industrial complex to control and direct the American health care system for power and profit of the members of the complex.

Dr. McCanne observes that it is almost as if the physicians, nurses and other health care professionals and the hospitals and clinics in which they provide their services have become a peripheral, albeit necessary, appendage to their wellness-industrial complex that is displacing our traditional health care delivery system and its more recent iteration of the medical-industrial complex.

In other words, the physicians and nurses and other professionals have become proletarianized, and the hospitals and clinics merely the places where the medical-industrial complex derives its power and profit from.

Dr. McCanne posits the following questions as to what the health care system would look like once the transformation is well along:

• Once the silos of the health care system are flattened, how will health care be financed?
• Will there still be networks?
• Cost sharing barriers such as high deductibles?
• Will it be possible to fund this expansive model of the wellness-industrial complex through anything remotely resembling an insurance product, especially when the insurers are being amalgamated into what was formerly the health care delivery system?
• And now that the plutocracy is in control, how could we ever remove the passive investors that extract humongous rents through the wellness-industrial complex?
• And what about the patients? Did we forget about them?

It is obvious from his comments that this new health economy is going to be more problematic for providing universal health care to all Americans and will only make things worse. His Rx is to begin now to move to a single payer, Medicare for All program, and not worry about what has passed.

Smart diagnosis and prescription.