Veterans Wait 3 Months for Primary-Care Appointment vs. 3 Days for Private Patients


I have noted with dismay that the U.S. government is trying to fix the Veterans Health Administration scandal over wait times by throwing more money at a fundamentally broken system.

Jonathan Bush, CEO of athenaHealth, a leading provider of cloud-base electronic health records (EHR’s) has researched his firm’s database to arrive at a shocking conclusion: Patients wait three days, on average, for a primary-care appointment. And that was for well patients: Sick patients got in in one day.

Bush concludes that veterans trapped in the Veterans Health Administration should be able to shop for care outside the VHA.

States’ “Right to Try” Laws Have a “Strange Allure”


Writing in JAMA: Journal of the American Medical Association, Patricia J. Zettler, JD, and Henry T. Greely, JD, both of Stanford University, criticize the “strange allure” of states’ laws that recognize patients’ “right to try” new medicines before the Food and Drug Administration (FDA) approves them.

These laws should help patients get access to medicines that the FDA forbids. However, these lawyers point out that the FDA’s power may overwhelm these laws:

Despite the attention they have received, right-to-try laws are unlikely to give patients more access to unapproved drugs or devices. Under the “Supremacy Clause” in the US Constitution, federal law trumps conflicting state laws. For example, states can repeal their laws against medical (or nonmedical) use of marijuana, but the federal government may still arrest and convict people in those states for violating medical marijuana prohibitions. Although the federal government has chosen to limit its enforcement of federal marijuana laws in certain circumstances, the FDA is unlikely to ignore unauthorized use of unapproved products, especially because the agency already provides physicians with a regulatory pathway for compassionate use.

U.S. Infant Mortality Still Lags Other Developed Countries


There’s more bad news for the U.S. on the infant mortality front: The U.S. ranks last of 26 countries in infant mortality: 6.1 per 1,000 live births, versus 2.5 in Sweden, according to a new study by the Centers for Disease Control and Prevention (CDC).

Infant mortality refers to the death of a baby before his first birthday. The proportion of pre-term births explains 39 percent of the difference between U.S. and Swedish outcomes, because the U.S. has a large proportion of pre-term births. This has led some to question the validity of the international comparison, because some countries measure very pre-term births (before 24 weeks differently). It has been argued that the U.S. will consider a baby born alive, who might be considered stillborn in another country, thereby making our infant mortality statistics look artificially worse.

Oregon Research Confirms Medicaid Increases ED Use


In 2013, many were surprised to learn that Oregon’s Medicaid expansion did not improve health outcomes. Subsequent research on the same data, published this year, found that low-income, uninsured adults newly covered by Medicaid go to the ER more, not less. As seen in the chart below (reproduced from the article), new Medicaid dependents increased their ED  visits by approximately 40% relative to those who did not enroll. This corroborates what hospitals are starting to admit.


Source: Straining Emergency Rooms by Expanding Health Insurance from Policy Forum.

Are Insurers Bailing in to Obamacare?


Obamacare’s supporters cheered a report by the U.S. Department of Health & Human Services, which claimed, based on preliminary evidence, that more insurers will participate in Obamacare exchanges next year:

  • In the 44 states for which we have data, 77 issuers will be newly offering coverage in 2015.
  • The Federal Marketplace states alone will have 57 more issuers in 2015; a 30 percent net increase over this year.
  • The eight State-based Marketplaces where data is already available will have a total of six more issuers in 2015, a ten percent net increase over this year.
  • Four of the 36 states in the Federal Marketplace will have at least double the number of issuers they had in 2014.
  • In total, 36 states of the 44 will have at least one new issuer next year. And some of the nation’s largest insurance companies will be offering coverage in more than a dozen new states, joining the hundreds of insurance companies already participating in the Marketplace.

GAO Says Congress Can Stop Obamacare’s Health Insurer Bailout


Yesterday, the General Counsel of the U.S. Government Accountability Office (GAO) supported the requirement that the Administration needs appropriations to bail out insurers who lose money in Obamacare exchanges in 2015, via risk corridors:

HHS stated that it intends to begin collections and payments under section 1342 in FY 2015. However, as discussed above, for funds to be available for this purpose in FY 2015, the CMS PM appropriation for FY 2015 must include language similar to the language included in the CMS PM appropriation for FY 2014.

This is a very positive development towards protecting taxpayers’ from the unlimited liability to which Obamacare exposes us by protecting insurers’ income statements from losses in Obamacare exchanges. The Administration had assured us that the risk corridors would be budget neutral, but that was not written into the law.

60 Percent of Commercial In-Network Payments are Value-Oriented. Does It Matter?


The Catalyst for Payment Reform has released this year’s Scorecard for Payment Reform, which reports a dramatic increase in employer-based provider contracts that are “value-oriented”. “The 2014 Scorecard shows a 29 percentage point increase over 2013, when just 11 percent of payments were value-oriented.” However, the details seem to deflate the potential for this transformation:

  • Many providers still don’t have financial “skin in the game.” Just over half (53 percent) of the payments that are value-oriented put providers at some financial risk if they fail to improve care or spend over budget; 47 percent do not put providers at financial risk.
  • Much of value-oriented payment is in “pay-for-performance” arrangements with providers, offering only potential financial reward and no financial risk.
  • A very small percentage of dollars flow through shared-risk arrangements and bundled payment (just 1 percent and .1 percent, respectively), despite the fact that these methods have strong potential to contain costs and improve care.

Kaiser Permanente’s Former Chairman Might Not Understand Why Healthcare Prices Are Different


A version of this Health Alert appeared at Forbes.

Consumer Reports has published an article demanding that we get “mad about the outrageous cost of health care.”

Hey, I’m all for that. The article goes through the usual list of subjects, e.g. $37.50 for a single Tylenol, having two or three MRI scans when one will do, etc. The article also asserts that “health care works nothing like other market transactions. As a consumer, you are a bystander to the real action…” I could not agree more. However, I was a taken aback by a statement from George Halvorson, the former Chairman of Kaiser Permanente:

“There is no such thing as a legitimate price for anything in health care,” says George Halvorson, former chairman of Kaiser Permanente, the giant health maintenance organization based in California. “Prices are made up depending on who the payer is.”

It is the last sentence that is so wrong that I thought it deserved a blog post, especially as it came from one of the most accomplished healthcare executives in the United States. Prices made up depending on “who the payer is” is not unique to health care. It is a characteristic of almost all markets.

In undergraduate economics classes, they teach the characteristics of a “perfectly competitive market.” One of those characteristics is that suppliers are price-takers. One apple vendor, more or less, will have no impact on the market, so one vendor entering or leaving the market will not change the price, especially as an apple is an undifferentiated commodity. This refers to the “law of one price.”

Obamacare Not Yet One Year Old, Providers Preparing to Lobby for More Money


Now that Obamacare is rounding out its first year, and seems to be secure for the time being, providers who advocated for it are starting to change their lobbying tune. When Obamacare was less secure, the story was that it would improve the situation dramatically — for everyone.

Unfortunately, providers are already starting to complain that it’s not enough; they need more money.

Exhibit A: Connecticut hospitals. For the first time that I have seen, a hospital association has reported that Obamacare did not reduce uncompensated-care costs. The Connecticut Hospital Association claims that uncompensated care increased slightly from 2013:

Obamacare Might Have Enrolled Only 2.3 Million; Spent $73 Billion to Save Less than $6 Billion in Uncompensated Care


Things change fast in Obamacare. Just yesterday, I discussed evidence that Obamacare had enrolled only 6 million people in subsidized, private plans on exchanges. Having read the U.S. Department of Health & Human Services’ (HHS’) latest report, it looks like the figure is only 2.3 million: “Based on an estimated 10.3 million decrease in the total number of uninsured and an estimated 8 million increase in the number covered by Medicaid, ASPE estimates that hospital uncompensated care costs will be $5.7 billion lower in 2014 than they otherwise would have been.” The difference between 10.3 million and 8 million is only 2.3 million, and that is quite a comedown from HHS’ May estimate that 8.1 million people “selected” private coverage in exchanges.

If we were asked to give a one-sentence justification for Obamacare’s increased federal spending on Medicaid or tax credits for private health insurance, it would go something like this: “People with health insurance will get timely primary care, and that will relieve the pressure on hospitals’ emergency departments.” This feel-good statement has been rolled out countless of times by advocates of so-called universal coverage. Empirically, it falls flat: Emergency departments are jammed with both Medicaid dependents and (somewhat less so) privately insured patients.