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PHYSICIANS FOR A NATIONAL HEALTH PROGRAM
29 EAST MADISON
SUITE 602
CHICAGO, IL 60602
TEL: (312) 782-6006
WWW.PNHP.ORG
The Uninsured
Hannum thought he had a stomach flu or food
poisoning from bad chicken. On Monday, his brother
saw him looking ashen and urged him to go to the
hospital. "He had a little girl on the way," his older
brother Curtis Hannum said. "He didn't want the
added burden of an ER visit to hang on their
finances. He thought 'I'll just wait,' and he got worse
and worse."
By the time Hannum got to the hospital and was
admitted to surgery, it was too late.
Paul Hannum, 45, died on Thursday, August 3, 2006,
from a ruptured appendix. His daughter, Cameron
was born two months later.
Financial Suffering
Among the
INSURED
Rising Economic
Inequality
Persistent Racial
Inequalities
Racial Disparity in Access to
Kidney Transplants
Rationing Amidst
a Surplus of Care
Unnecessary Procedures
Variation in Medicare Spending:
Some Regions Already Spend at Canadian Level
Half of Americans Live Where
Population Is Too Low for Competition
A town’s only hospital will not compete with itself
Source: NEJM 1993;328:148
ACOs:
A Rerun of the HMO Experience?
Why the ACO/HMO
Concept Resonates
• Proliferation of redundant high tech facilities
and useless, even harmful interventions
• Neglect of primary care, public health,
prevention, mental health
• Lack of teamwork
• Widespread quality problems need system
solutions
• Inadequate public accountability
HMO and ACO:
Similar Definition, Purpose, and History
• Diagnosis: FFS and “fragmentation”
• Rx: Invert FFS incentives, shift insurance risk to
doctors; “protect” patients with report cards;
consolidate providers into larger entities
• Same vague definition: network of providers “held
accountable” for cost (via capitation) and quality (via
report cards)
• Shared poster child: Kaiser Permanente
• Both initiated by politicians advised by key policy
entrepreneurs (HMO: Paul Ellwood; ACO: Elliot
Fisher)
HMO-ACO Logic
• FFS is the problem; capitation (shifting
insurance risk) the solution.
• But . . . small clinics and hospitals can’t
bear risk, so consolidation is necessary.
• Shifting risk creates incentive to deny care,
so report cards are necessary.
Predicting the Impact of ACOs
• Track record of HMOs
• Results of Medicare’s Physician Group
Practice Demonstration, 2005-2010
• Evidence on tools ACOs likely to use:




prevention and disease management
“care coordination”
report cards and P4P schemes
electronic medical records
Prospect of ACOs is Already
Causing Consolidation
“When Congress passed the health care law, it
envisioned doctors and hospitals joining forces,
coordinating care and holding down costs….
Now, eight months into the new law there is a
growing frenzy of mergers involving hospitals,
clinics and doctor groups....If ACOs end up
stifling rather than unleashing competition,’ said
Jon Leibowitz, the chairman of the [FTC], ‘we
will have let one of the great opportunities for
health care reform slip away.’”
New York Times, November 21, 2010, A1.
Medicare’s PGP Demonstration:
An ACO Prototype
“The ACO model builds on similar
initiatives that Medicare has implemented in
the past several years. Starting in 2005, the
Physician Group Practice Demonstration
engaged ten provider organizations and
physician networks, ranging from
freestanding physician group practices to
integrated delivery systems, in a ‘shared
savings’ reform.”
McClellan, McKethan, Lewis and Fisher. Health Affairs 2010;29:982-990
Medicare’s PGP/ACO Demo. Project :
Gaming, But No Savings
“The model for the ACO program . . . has
been tested in the PGP Demonstration
Project . . . diagnosis coding changes the
PGP sites initiated . . . produced apparent
savings that resulted in shared savings
payments to some of the demonstration
sites, but not actually fewer dollars
spent”
Berenson RA. Am J. Managed Care, 2010; 16:721-726.
CBO: ACOs Would Cut Medicare
Spending by Less Than 0.1%
The Congressional Budget Office estimated
that enrolling 20% to 40% of Medicare
patients in an ACO-like payment system
would cut Medicare spending by $5.3 billion
over the 2010-2019 period, when total
Medicare spending will be $6.8 trillion. CBO
estimated that paying PCPs under a partial
capitation system would save even less - $5.2
billion
Source: Congressional Budget Office, Budget Options: Volume 1, Health Care, December 2008,
http://www.cbo.gov/doc.cfm?index=9925. Options 37 and 38
ACO Cost Cutting Armamentarium
• Prevention
• Disease management
• “Care Coordination” (consolidation, gatekeeping, utilization review)
• Electronic medical records
• Report cards and P-4-P
Prevention Saves Lives,
But Not Money
“Although some preventive services do save
money, the vast majority reviewed in the
health economics literature do not.”
Cohen JT et al., New England Journal of Medicine 2008;358:661-663.
“It’s a nice thing to think, and it seems like it
should be true, but I don’t know of any
evidence that preventive care actually saves
money.”
Gruber J,quoted in “Free lunch on health? Think again,” NY Times, August 8, 2007: C 2.
Medical Homes and Enhanced Primary
Care Don’t Require ACOs
• “Medical Homes” that integrate more nurses,
social workers etc. into primary care and cut
physicians’ panel size may improve care and
reduce ED and inpatient utilization, possibly
enough to offset the additional personnel costs
• But this intervention does not require recycling
the HMO experiment.
More Computerized Hospitals:
• Higher cost bivariate, no difference
multivariate
• No administrative savings, possibly
raised administrative costs
• Slight improvement in quality scores
(Due to better documentation?)
• 100 “Most Wired” no better for cost or
quality
Source: Himmelstein, Wright & Woolhandler, AJM
1/2010. Analysis of 4000 U.S. hospitals
Pay for Performance
“I do not think its true that the way to get
better doctoring and better nursing is to put
money on the table in front of doctors and nurses.
I think that's a fundamental misunderstanding of
human motivation. I think people respond to joy
and work and love and achievement and learning and
appreciation and gratitude - and a sense of a job
well done. I think that it feels good to be a
doctor and better to be a better doctor. When we
begin to attach dollar amounts to throughputs and
to individual pay we are playing with fire. The
first and most important effect of that may be to
begin to dissociate people from their work.”
Don Berwick, M.D,
Source: Health Affairs 1/12/2005
P4P – Scores on Whatever
You Pay for Improve, But . . .
“The [British P4P] scheme accelerated
improvements in quality for 2 of 3 chronic
conditions in the short term. However, once
targets were reached, the improvement . . .
slowed, and the quality of care declined for 2
conditions that had not been linked to
incentives.”
Source: NEJM 7/23/2009:368
High Cost Providers Inflate Both
Reimbursement and Quality Scores by
Making Patients Look Sicker on Paper
Regions Where Patients Get More Diagnoses Have
Similar Overall Death Rates, But Risk Adjustment
Makes them Look Better
Welch, H. G. et al. JAMA 2011;305:1113-1118
ACOs and HMOs:
Faith-Based Solutions
• Capitation as magic bullet
• Consolidation among providers cuts costs
• Prevention, care management & EMR/
computers save money
• P-4-P encourages global quality
• Risk adjustment can overcome gaming
(upcoding of diagnoses)
Truly Accountable Care
• Non-profit
• All capitation payments used for patient care, not for
capital investments, profits, bonuses or exorbitant salaries.
• Separate capital funding based on regional health planning
• Eliminate insurance middle-men
• Rich and poor in same plan
• Quality data used for improvement, not financial reward
Investor-Owned Care:
Inflated Costs, Inferior Quality
For-Profit Hospitals’ Death Rates are 2% Higher
Source: CMAJ 2002;166:1399
For-Profit Hospitals Cost 19% More
Source: CMAJ 2004;170:1817
For-Profit Dialysis Clinics’ Death Rates are 9% Higher
Source: JAMA 2002;288:2449
Drug Companies’ Cost Structure
Drug Firms’ Fraud:
Pay the Ticket and Keep on Speeding
“In April [2010], AstraZeneca became the fourth major
drug company in three years to settle a government
investigation with a hefty payment -- in its case, $520
million for what federal officials described as an array
of illegal promotions of antipsychotics for children, the
elderly, veterans and prisoners. Still, the payment
amounted to just 2.4 percent of the $21.6 billion
AstraZeneca made on Seroquel sales from 1997 to
2009.”
New York Times – 10/3/10
High Deductible Insurance:
Except for the Healthy and
Wealthy, It’s Unwise
Mandate Model Reform:
Keeping Private Insurers
In Charge
“Mandate” Model for Reform
• Proposed by Richard Nixon in
1971 to block Edward
Kennedy’s NHI proposal
“Mandate” Model for Reform
• Government uses its coercive
power to make people buy
private insurance.
“Mandate” Model for Reform
1. Expanded Medicaid-like program
 Free for poor
 Subsidies for low income
 Buy-in without subsidy for others
2. Employer Mandate +/- Individuals
3. Managed Care / Care Management
“Mandate” Model - Problems
•
•
•
•
Absent cost controls, expanded coverage
unaffordable
Computers, care management, prevention not
shown to cut costs
Adds administrative complexity and cost; retains
wasteful private insurers
Impeccable political logic, economic nonsense
Massachusetts’ Model Reform:
Massive Federal Subsidies,
Skimpy Coverage, Persistent
Access Problems
Massachusetts Health Reform
New Coverage
<
150% Poverty - Medicaid HMO
 150% - 300% poverty - Partial subsidy
 > 300% poverty – Buy Your Own
Massachusetts: Required Coverage
(Income > 300% of Poverty)



Premium: $5,600 Annually (56 year
old)
$2000 deductible
20% co-insurance AFTER deductible is
reached
Crimes and Punishments in
Massachusetts
The Crime
The Fine
Violation of Child Labor Laws
$50
Employers Failing to Partially Subsidize a
Poor Health Plan for Workers
Illegal Sale of Firearms, First Offense
$295
Driving Under the Influence, First Offense
$500 min.
Domestic Assault
$1000 max.
Cruelty to or Malicious Killing of Animals
$1000 max.
Communication of a Terrorist Threat
$1000 min.
Being Uninsured In Massachusetts
$500 max.
$1212
Just Because the Democrats Got it
Wrong Doesn’t Mean the
Republicans Have a Better Idea
McCain on Health Reform
“Opening up the health insurance market to
more vigorous nationwide competition, as we
have done over the last decade in banking,
would provide more choices of innovative
products less burdened by the worst excesses
of state-based regulation.”
“Better Care at Lower Cost for Every American”
Contingencies Magazine – Sept-Oct/08
Stephen Colbert on the
Bush Health Plan
“It’s so simple. Most people who
can’t afford health insurance are also
too poor to owe taxes. But if you give
them a deduction from the taxes they
don’t owe, they can use the money
they’re not getting back to buy the
health care they can’t afford.”
Public Plan Option:
Medicare HMOs Provide a
Cautionary Tale
Despite Medicare’s Lower
Overhead, Enrollment of Medicare
Patients in Private Plans Has Grown
Private Medicare Plans Have
Prospered by Cherry Picking
Public Money, Private Control
The U.S. Trails Other Nations
Canada’s National Health
Insurance Program
Quality of Care Slightly Better in Canada Than U.S.
A Meta-Analysis of Patients Treated for Same Illnesses
(U.S. Studies Included Mostly Insured Patients)
Source: Guyatt et al, Open Medicine, April 19, 2007
A National Health
Program for the U.S.
Phony vs. Real Reform
Phony
• Choice of HMO/insurer
• Coverage = Copays,
exclusions etc.
• Security = Lose it if you
can’t work or can’t pay
• Savings = Less care
Real
• Choice of doctor and
hospital
• Coverage = First $,
Comprehensive
• Security = For everyone,
forever
• Savings >$400 bil on
bureaucracy
Public Opinion Favors Single
Payer National Health Insurance