Bioethicists jumped into the healthcare reform fray this week by issuing three points that counteract three "myths" about healthcare reform. They said "the real bottom line" is that "the current state of healthcare is unethical."
They added that the current proposals debated in Congress "all go a long way towards making healthcare in America more just." Specifically, at the current time, nothing in the current proposals "threatens a patient’s right to choose--a critical feature of an ethically acceptable health care system."
"I think for the first time the field of bioethics has matured enough to the point where not only do we think that we have some interesting thoughts, but we actually feel that there's a responsibility to say what we think," says Eric Meslin, PhD, a member of the Association of Bioethics Program Directors, which represents the leadership of 60 academic bioethics programs across North America.
"When there are obvious errors of fact that are used as sort of instruments of policy deconstruction--instruments of trying to get the public to think something when they're not--that in and of itself is unethical," says Meslin, who is director of the Indiana University Center for Bioethics. "If 60 bioethic center directors can't call that unethical, I don't know what they can call unethical."
The ABPD represents the leadership of 60 academic bioethics programs across North America. The three "myths about the ethics of healthcare reform" they challenged are:
Myth #1: "Health care reform will mean giving up control of my own health care decisions."
They said that the field of bioethics has "long championed the rights of individual patients" to make their own healthcare decisions in consultation with their physicians.
"If we thought the major proposals being considered posed a serious threat to these rights, we would be the first to speak out.” They added, "The right of individuals to make decisions about their healthcare is engrained in the ethics of American medical practice" and that wouldn't change under current reforms under discussion.
Myth #2: "Healthcare reform will control healthcare costs by depriving patients of important but costly medical treatments."
The group said this was "untrue" because the provisions in current healthcare proposals "will increase the likelihood that patients will get quality medical care and decrease the likelihood of medical errors that kill thousands of patients every year."
They said that unethical ways to control costs include "refusing to treat the uninsured or those who have insurance but cannot afford the out-of-pocket costs of expensive treatments that is the status quo."
Myth #3: "Health care reform will deny older Americans medical treatments at the end of life."
They called this "the most pernicious myth of all." They added that "in proposed approaches to reform....a provision [exists] that supports the rights of individuals and their families to make decisions at the end of life by institutionalizing a process for patients and families to express their desires to their physicians and other health care professionals."
This right is "part of the culture of American medicine, defended since the beginnings of the field of bioethics, and supported by case law going back over 50 years," they said. They added that while some opponents of healthcare reform have "twisted both the intent and effect of this provision" and made unsupported claims about how it will push older Americans into hospice against their will and even euthanasia, "nothing could be further from the truth."
Now that healthcare reform seems in serious danger of a crash upon the shores of political reality, the Obama administration is pulling out as many stops as it can to achieve its vision of healthcare reform.
Forget shared sacrifice. Forget the kum-ba-yah meetings of industry stakeholders at the White House that marked the beginning of the year and the beginning of a new administration. Several months later, the mood has changed. A president sees his popularity slipping and his chance to declare a marquee victory slipping away.
In the face of strong opposition seen by members of Congress as they visit their home areas, the president and his team seem to have decided that the political winds are blowing back toward the status quo. In order to salvage the reform initiative, there is one villain left that may help the president get his initiative back on track and give Congress some political cover: health insurers.
It's a potentially brilliant tactical move to identify a villain, tapping into that reservoir of hate much of the electorate has for health plans. It's also convenient. Just two days ago, the Department of Health and Human Services published a vicious critique of private insurers in the hope of tarring that group sufficiently that support swings back in favor of a public health plan option.
So this is what it's come to: strong-arming.
I suppose the lesson is shame on health plans, as an industry, for not making a deal with the Obama administration, as the drug industry did. According to spokesman Billy Tauzin, the Pharmaceutical Manufacturers Association of America has a deal with the administration that it won't be asked to save any more than $80 billion over 10 years in any healthcare reform package.
This is how any progress is made against an entrenched industry, especially a domestic industry as large and important as healthcare—an industry that the voters only seem to want more of—as long as they don't have to pay for it. Lobbyists get involved. They strike backroom deals with lawmakers and other politicians in return for agreeing not to oppose legislation. Often, one segment gets left out in the cold. This time, it appears to be health insurers, who are the public face of heretofore halfhearted attempts to control healthcare's spiraling costs. Divide and conquer. It's like musical chairs, and health insurers didn't get a seat. The whole effort smacks of heavy-handedness and bullying, but it has a good chance of success.
I'm not defending health insurers. To a large extent, they are sleeping in a bed that they've made. Retrospective denials of coverage, dropping patients when they become too expensive, and other high-profile, borderline unethical activities that seem to put profit well ahead of patient welfare haven't helped. Not to mention that insurance company chief executives have enriched themselves grossly, to the apparent detriment of some patients. These activities have left health insurers more hated than just about any group besides perhaps lawyers. Did I mention most members of Congress are lawyers? But I digress.
In tarring one industry though, often the nuances get lost. Health insurers for years have only been responding to demands by employers—the ultimate payers in healthcare—to cut costs. Many hospitals and health systems, until recently, haven't done much to demonstrate that they're providing value in the equation either.
But this is what happens when you start playing to the lowest common denominator in the face of complicated problems. Health insurers = bad. Other segments appear to have gotten lucky—this time.
I'm simply suggesting that demonizing one segment of an industry and smacking it down with a public option isn't going to solve the problem. Drug companies got a cheap way out this time.
But watch out hospitals. You might be next. The opening bid, apparently, is $155 billion over 10 years.
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An interview with Anne Wilkins, executive VP of marketing and strategy with Healthways, which works with employers to enhance well-being, improve business performance, and reduce healthcare costs.
A little-noticed provision in the House Committee on Energy and Commerce's package on health reform would pave several ways for medical malpractice reform, as long as they do not limit attorney fees or impose caps on damages.
If the provision, contained in four pages of an amendment, ends up in the final version that becomes law, each state would be eligible for a federal incentive payment if it produces an alternative medical liability law that meets the secretary of Health and Human Services' approval.
Clearly, each state may have to pass legislation to make this happen.
To get administration approval, each state's tort reform program would have to:
Make the medical liability system more reliable through prevention of prompt and fair resolution of disputes
Encourage the disclosure of healthcare errors
Maintain access to affordable liability insurance
State programs could also get additional consideration if they provide mechanisms by which cases involving potential malpractice would first receive a "certificate of merit" on whether the damage sustained was significant enough and wrongful enough to go forward.
Another way a state program could get consideration, or extra credit, for qualifying for federal awards would be if it included a system by which health providers recognized errors resulting in harm to patients and made "early offers" of restitution. Presumably, these early offers would not proceed to litigation.
The amendment's intent is to help patients and other would-be plaintiffs receive compensation for avoidable harm caused by medical procedures, hospitals or physicians and shorten that process from the five years or so it takes now. The amendment also intends to keep spurious litigation from going forward.
Also, the amendment seeks to "ensure quality healthcare is readily available by providing an alternative framework to reduce the costs of defensive medicine and allow victims of malpractice to be fairly compensated." Reducing the costs of defensive medicine, or the ordering of unnecessary tests and unnecessary procedures simply as a backup in case one gets sued, are a major part of what is said to be billions in unnecessary health expenses that taxpayers and private insurers pay for today.
However several other parts of the amendment were struck. A previous version of the amendment would have prohibited plaintiffs from using the fact that a physician or hospital expressed the words "I'm sorry" to the wronged patient or patient's survivor as part of the plaintiff's case. That provision was voided.
Another idea to allow programs that offer liability protections for providers who could prove that their care was performed with strict use of evidence based medicine—the definition of which is still under development for many types of specialty care—was also struck.
The amount of the incentive payments would be at the discretion of the secretary of Health and Human Services, and the state would have to stipulate that the funds would be used to improve health care in that state.
J. James Rohack, MD, president of the American Medical Association whose members booed President Obama in June for saying he would not support caps on medical malpractice court judgments, says his organization was "encouraged" by the amendment.
"Medical liability reform . . . is needed to reduce unnecessary costs to the health system. The bill encourages the states to explore alternatives to the costly liability system through reforms that ensure court cases have merit and that allow providers to quickly compensate patients without litigation," he says.
"This is an important step in the right direction toward reforming our broken liability system, and AMA will continue to work for much-needed liability reform," he adds.
The bipartisan amendment was offered by Reps. Bart Gordon of Tennessee, Nathan Deal of Georgia, and Jim Matheson of Utah, and was passed by a voice vote on July 31, the last day of the bill's markup.
Blue Cross and Blue Shield's attempt at a healthcare bank appears to be coming to an end with the company's announcement that it is looking to sell Blue Healthcare Bank.
The bank, which offers healthcare banking through health savings accounts (HSAs), organized in 2006 and received a Federal Savings Bank charter in 2007.
The bank offers HSAs to Blue Cross and/or Blue Shield members that are in qualifying health plans.
According to its Web site, the bank "combines healthcare experience with banking expertise in collaboration with the trusted Blue Cross and/or Blue Shield Plans. The bank delivers excellence in healthcare financial products and services for the growing consumer-driven healthcare (CDH) market."
When the Office of Thrift Supervision approved the bank's application for a Federal Savings Bank charter in 2007, Scott P. Serota, BCBSA president and CEO, said, "More and more Americans are taking greater control of their healthcare choices by enrolling in consumer-directed health plans (CDHPs), such as health savings accounts (HSAs). As this trend continues, consumers will be in greater need of reliable financial services. The Blue Healthcare Bank responds by providing consumers with access to a trusted and secure financial resource to help them efficiently manage their healthcare dollars."
Now, just two years later, Blue Cross has decided to seek a seller for the bank. But company officials say this doesn't mean the plans are stepping away from consumer-driven healthcare.
Nevertheless, the news is still a negative for the consumerism movement. Trumpeted by Republicans and the Bush administration as a way to bring down costs because members would have more "skin in the game," HSAs have fallen out of favor in Washington with Democrats in control of the White House and Congress.
Though the future of HSAs and consumer-directed health plans are "somewhat unclear," Martin Trussell, senior vice president at First Horizon Msaver, an HSA provider, says he believes CDHPs will remain—even after healthcare reform—because President Barack Obama and Congress have promised that Americans will be able to keep their current health insurance.
"Uncertainty about healthcare reform may have factored into the decision to sell the Blue Bank assets," he says. "But added to that is an economy that has reduced health plan enrollments and thus revenues and the fact that the bank was a latecomer to an industry where referral patterns have been pretty well established. The Blues plans apparently had no appetite for making the further investments necessary for the bank to reach the critical mass of accounts it would need to be self-sustainable."
Private health plans' administrative costs averaged 9% of premiums across all policies sold and are well below "vastly overstated" estimates offered by proponents of a government-run public plan, according to a new study paid for by the Blue Cross Blue Shield Association.
A consumers' rights group disputes the findings.
The report, written by Sherlock Company, states that previous studies showing that private health plans' administrative costs are two to three times higher than actual costs are based on old estimates that don't reflect changes in industry practices, including advances in electronic processing.
"Prior reports rely on outdated, decades-old estimates from when claims were paper-based and today's electronic processes were in their infancy," says Douglas B. Sherlock, president of the Sherlock Company. "This report demonstrates that health plan administrative costs have been vastly overstated." The study reviewed 36 health plans–mostly Blues–participating in benchmarking studies in 2008.
Advocates for a public plan maintain that the higher administrative expenses for private plans are one reason why a public plan is needed. Health insurance industry officials say the Sherlock study undermines that claim.
"Some elements of healthcare reform can help reduce administrative costs, if done right. For example, state-based health insurance exchanges can make it easier for people to purchase health insurance and simplify administrative functions," says Scott P. Serota, president/CEO of the Blue Cross and Blue Shield Association.
The Sherlock report also claims that private plans perform the administrative functions that Medicare performs for $12.51 per member per month, compared to $13.19 per month for Medicare, and that private plans perform more administrative functions than traditional Medicare, including care coordination and wellness programs.
However, Cathy Schoen, senior vice president The Commonwealth Fund, says the Sherlock study is narrowly drawn. "It focused more on the Blues than the whole industry and it is focusing just on what it narrowly calls the administrative costs, not profit margins," Schoen says. "When you talk about the share of the premium that is not being paid out in benefits, it's both administrative and profits."
She says corporate reports from larger companies like Aetna and UnitedHealthcare show pretax profits in the 6% range in 2008, and administrative costs as a share of operating revenue running in the 15%-16% range. "UnitedHealth, out of all the revenue it took in, the amount it paid out was only 82%. So 18% was not paid out in medical benefits. In 2007, it was 19%," Schoen says.
She says the Blues also don't count the average 5% commission that businesses usually pay the agents who write the insurance contract as administrative costs. "That is on top of the Blues' marketing costs. From the employer's perspective, that agent fee is part of it. But the Blues' don't count it because they don't pay the agent. The customer pays it though," she says.
Schoen says public and private health plans in the United States average about $600 per person a year for insurance administrative costs, compared with an average of about $200 for many countries in Europe. "Nine percent would be considered high in every country outside the United States. Fifteen percent would be considered unbelievable," she says.
A recent Commonwealth Fund study claims the cost of administering the U.S. healthcare system totaled nearly $156 billion in 2007, and that figure is expected to double—reaching $315 billion—by 2018. In addition, the study claims that costs incurred by physicians in their transactions with health plans are estimated to be as high as $31 billion a year.
About 12.4%—or $96 billion—of the $775 billion in privately insured healthcare spending went for administrative costs in 2007. That $96 billion—representing what insurance companies received in premiums, minus what was paid in medical claims—included claims processing, advertising, sales commissions, underwriting, and other administrative functions; net additions to reserves; rate credits and dividends; premium taxes; and profits, the Commonwealth study claims.
By contrast, about 6.1%—or $60 billion—of the $974 billion in public program healthcare spending went for administrative costs in 2007, the Commonwealth report claimed. That includes federal, state, and local governments' administrative costs for public health programs, such as Medicare, Medicaid, and the State Children's Health Insurance Program. Medicare prescription drug coverage, provided by private plans, has high administrative costs, but is included in public program administration figures. Private Medicare Part D plans averaged 11.3% in administrative costs as a share of total drug spending, the Commonwealth study added.
At least three large physicians' groups, and many physician bloggers yesterday blasted President Obama for saying that a surgeon makes $30,000 to $50,000 to amputate the foot of a diabetic, while receiving a pittance to prevent the diabetes that necessitated the procedure in the first place.
That is wrong, said members of the American Academy of Orthopaedic Surgeons, the American College of Surgeons, and the California Medical Association. Numerous bloggers and pundits promptly pounced on his statements, some calling him "idiot-in-chief."
"The CMA wholeheartedly agrees with the President on the importance of prevention, but the examples he used were inaccurate and offensive and could undermine the trust central to the physician-patient relationship," said the California group, which represents about one-fourth of the state's 125,000 licensed doctors.
"President Obama got his facts completely wrong," according to a statement from the ACS, whose 74,000 members make it the largest organization of surgeons in the world.
"In fact, Medicare pays a surgeon between $740 and $1,140 for a leg amputation," sais ACS, which is care that includes evaluation of the patient the day of the operation and follow-up care that is provided for 90 days after the operation.
Private insurers pay a variation of the same amount, said the group, adding that it is "deeply disturbed" over the President's "uninformed public comments."
In fact, the cost of a foot amputation includes payment to the hospital for several days' stay, to an anesthesiologist and rehabilitation specialists, and for wound care after the surgery is over. But the surgeon doesn't charge those amounts. A 2007 article in the Journal of the American Podiatric Medical Association estimates the cost of a lower extremity amputation at $30,000 to $60,000, with an additional $43,000 to $60,000 for subsequent care for 3 years.
At a Town Hall meeting, in Portsmouth, N.H., on Wednesday, Obama said: "Let's take the example of something like diabetes . . . a disease that's skyrocketing, partly because of obesity, partly because it's not treated as effectively as it could be.
"Right now . . . if a family care physician works with his or her patient to help them lose weight, modify diet, monitors whether they're taking their medications in a timely fashion, they might get reimbursed a pittance. But if that same diabetic ends up getting their foot amputated, that's 30,000, 40, 50,000 dollars immediately the surgeon is reimbursed.
"Well, why not make sure that we're also reimbursing the care that prevents the amputation. Right? That will save us money," said Obama.
Orthopedic physicians said they are "profoundly disappointed" with his comments, which had the effect of "blurring the realities of physician reimbursements."
"Surgeons are neither reimbursed by Medicare, nor any provider for that matter, for foot amputations at rates anywhere close to $50,000, $40,000 or even $30,000. Medicare reimbursements to physicians for foot amputations range from approximately $700 to $1,200."
The group said Obama mischaracterized the reimbursement system by saying physicians get paid "immediately," when Medicare payment delays are common.
"As President Obama continues to pursue the healthcare reform agenda, we implore him to disengage from hyperbole and acknowledge that healthcare delivery can only be improved by recognizing that healthcare is a system in which orthopedic surgeons play a crucial role. With $849 billion of our national economy impacted by musculoskeletal conditions, orthopaedic surgeons provide care that improves lives and puts people back to work."
The CMA added in its statement that it is "committed to reforming our health system to increase access to quality care and reduce rising healthcare costs." But, it continued, "The American people must be able to trust our elected officials and the statements they make regarding healthcare.
"We urge the President to stick to the facts and avoid the kind of misleading and inflammatory rhetoric that would erode the trust and derail our efforts to increase access to quality care and control rising healthcare costs."
The comments were particularly irritating to physicians who are still reeling from the President's recent suggestion that doctors perform many unnecessary tonsillectomies because they get paid more for doing those than for prescribing medications for what might really be wrong with the patient, such as an allergy.
In July, Obama made this statement at an address to the nation:
"Right now, doctors a lot of times are forced to make decisions based on the fee payment schedule that's out there. So if you come in and you've got a bad sore throat or your child has a bad sore throat or has repeated sore throats, the doctor may look at the reimbursement system, and say to himself, 'You know what? I make a lot more money if I take this kid's tonsils out.'
"Now that may be the right thing to do, but I'd rather have that doctor making those decisions just based on whether you really need your kid's tonsils out, or whether it might make more sense to change, maybe they have allergies or maybe they have something else that would make a difference."
One physician who was particularly annoyed with both Obama statements is Ted Mazer, MD, a San Diego ear, nose, and throat specialist.
"His inflammatory and inaccurate comments about physician payments serve the debate on health reform poorly," Mazer says. "He needs to lead the nation with facts, not attacks and misinformation."
President Obama is embarking on a public relations push on healthcare as he heads to Montana and Colorado for town hall meetings. His allies are stepping up their efforts to rebut what they describe as "myths" about healthcare reform. Obama supporters are being urged to turn out for the president to counter what they anticipate could be the kind of vocal criticism that has recently dominated the news.
Policy wonks idealizing the idea of health reform through the creation of a national insurance exchange should see a cautionary tale in California, where just such an ambitious effort in that state crashed and burned in 2006.
Launched in 1993, the Health Insurance Plan of California (HIPC) offered small employers several standardized insurance products sold by a variety of plans. Initially a government agency, it was turned over to the Pacific Business Group on Health in 1999, which named it PacAdvantage, and eventually enrolled 150,000 people, according to a recently released report by Elliot K. Wicks of Health Management Associates.
However, a variety of problems, including the fact that the exchange attracted higher-risk enrollees, contributed to its failure and it was terminated in 2006.
"Over the past 15 years, California gained extensive experience in designing and operating just such an exchange, an effort that ultimately proved unsustainable," according to the report, "Building a National Insurance Exchange: Lessons from California." The report drew upon interviews with eight officials involved in the creation and management of the exchange.
The effort used the "active" purchaser model, in which large employers negotiated and selectively contracted with insurers in exchange for large numbers of enrollees. A market both within and outside the exchange sought to attract the same customers.
It tried to provide an easy-to-navigate single point of entry where insurance plan seekers could go to select among several plans. It would also provide objective information about price, benefits, and plan performance.
It also sought to reduce the cost of coverage by centralizing market functions, enroll employees, and collect and distribute premiums to insurers. And it tried to command lower prices and foster market competition. Participating insurers were required to offer standardized plans, but compete with each other on price, quality, and service.
However, the report explained, "the actual experience of the California exchange taught some hard lessons. It showed that none of these objectives is easily achieved."
"If there is competition for the same customers inside and outside the exchange," the report warned, "the exchange will be unable to offer lower prices on a sustained basis for at least four reasons:
Some health plans may refuse to participate.
Economies of scale in administration are hard to achieve.
Participating health plans will not give the exchange a lower price.
The exchange is likely to attract higher-risk enrollees.
"Insurers do not particularly like the head-to-head competition that is the feature of the exchange concept, in part because they could lose any given enrollee to a competitor in any given year," the report said. The people most likely to switch are the healthiest enrollees who are less costly, less attached to particular providers and have fewer qualms about switching to another health plan to save a few dollars."
Another important problem for the California plan was its size. At the program's peak, the 150,000 individuals enrolled was a tiny percentage of the small group market, the report said.
The plans did not see any administrative savings, which meant they couldn't offer lower premiums. "The cost of serving small employers and individuals will always be more expensive on a per-capita basis," the report said.
Without the inclusion of most large plans, the exchange will have trouble attracting enough enrollees to command a large market share. As one former director of the California exchange noted, "An exchange is often just one health plan loss away from failure."
The California plan also had difficulty negotiating lower prices, and lacked a captive supply of customers.
But the greatest problem it experienced was adverse selection, the report said.
"People involved in the operations of the California exchange agreed that when there is competition for the same customers within and outside the exchange, the exchange is in 'extreme peril' of becoming a victim of adverse selection."
In the case of PacAdvantage, the exchange attracted a disproportionate number of higher-risk individuals and groups, which meant higher medical claims and higher premium costs.
"People will not buy health insurance through the exchange or stay within it if they can get the same coverage less expensively elsewhere. Eventually the exchange will fail."
The report warned that to protect against adverse selection, the program must not be more lenient in accepting risk in its enrollees than plans outside the exchange. "And it must employ whatever medical underwriting and risk rating practices are allowed in the regular market to avoid becoming a magnet for the unhealthy."
The California exchange also made the mistake of not varying rates based on health status.
The report offered four tips to avoid such pitfalls in the creation of an exchange that might be applied across the nation.
1. An active purchaser exchange will have a difficult time if insurers are able to compete for the same customers outside the market and will have trouble getting and keeping health plan participants and bargaining for lower prices. And it faces the constant threat of adverse selection.
2. An active exchange needs to be the exclusive source of coverage for defined population groups.
3. If the exchange is to compete with insurers selling coverage to the same customers, it should be structured on the "clearinghouse" model. It may be necessary to require health plans to participate and to require them to charge the same price both inside and outside the exchange.
4. The exchange should require insurers to offer a limited number of standardized benefit packages and include a risk-adjustment mechanism.
President Obama's proposal to transform the Medicare Payment Advisory Commission is meeting resistance from lawmakers, doctors, hospitals, and some advocates for older Americans. Obama's proposal would transform the agency, known as Medpac, which has just 36 employees and a budget of $10.5 million, and typically holds seven meetings a year. In annual reports to Congress, the existing commission recommends Medicare payment rates for hospitals, doctors, nursing homes, and other healthcare providers. Recommendations of the proposed new entity could take effect unless blocked by Congress.
