Comments on: Peter Orszag’s Bad Idea

By: David Littmann

David Littmann — Fri, 31 Jul 2009 14:55:31 +0000

JOHN,

SO HOW CAN YOU LIKE PETER ORSZAG? !
HE HASN’T YOUR KNOWLEDGE, EXPERIENCE, EXPERTISE, CREDENTIALS, OR FOCUS IN THE MEDICAL AND HEALTH CARE FIELDS; YET YOU THINK HE HAS THE INTEGRITY TO BE AMERICA’S H.C. TSAR AND ADVOCATE OBAMA’S AGENDA FOR SOCIALIZED MEDICINE?.

…… EXPLANATION PLEASE. (rhetorical)

By: Bob Geist

Bob Geist — Thu, 30 Jul 2009 21:23:47 +0000

John, unlike others, your note is the worst you ever wrote.
First, medicare prices have been progressively fixed below cost since 1971. Can a Czar do better than that? Second, think about how the Canadian Czarship works. They have already destroyed much of their infrastructure wih price fixing and global budgets beloved of Czars. Third, the new “price” to be dictated with ObamaCare is a capitation price for a clinic’s population care–not for patient care. This transfers the HMO gatekeeper role to doctors in “Accountable Care Organizations” (ACOs).So the solution is turn the venality of doctors allegedly doing and ordering “too much care” and doing no “well care” to the benefit corporate stockholders, isrance ‘buyers”, and govermet agencies.
All three of these cost control means are your supply side methods and all have failled in the past. So John, the problem is demand inflaion thanks to poltically driven subsidies for (low-copay style) insurance. It is policy maker malpractice to treat medical costs with suppl side controls (your Czar), when the problem is demand. Your HSA concept controls demand. Let’s stick to that–it works, as long as the actuarily stupid tax subsidies are in place. Bob

By: Paul Nachtwey

Paul Nachtwey — Wed, 29 Jul 2009 19:23:57 +0000

Michael and Chris,

Please share your perspective of the proportion of costs in the system being driven by the lifestyles of the population. What is the contribution of diabetes and co-morbidities to costs and how much diabetes is entirely preventable? What percentage of diet is responsible for cancer? What percentage of heart disease is preventable? The notions of more widely communicating more effective treatments is certainly noble and we should strive to make it better, but is that really the basis of so called “health reform?” I have seen statistics that 70% of our costs in the system are devoted to treating conditions that in many cases are intirely preventable by better living. The debate should be centered on driving behavior change within the population and apportioning resources accordingly.

By: HD Carroll

HD Carroll — Wed, 29 Jul 2009 19:22:17 +0000

I concur that this is, as usual, an excellent post. However, I disagree with requirement number (1) in your next to last paragraph, that “the cost to the government does not go up.” The major cause of the crippling distortion in the system is the fact that, within the historic metric, government has paid and is paying too little for Medicare and Medicaid. I can agree that it is likely that after some transition time during which a truer market equilibrium can be reached, and if the totally unnecessary administrative expenses relating to juggling multiple payer procedures and rules is largely eliminated, the resulting “cost to the government” might level off and even, in real terms, reduce back to the cost “now.” However, it is very likely that the short run result of “freeing” provider price setting (within some established rules, of course) is to increase what the Medicare and Medicaid plans cost now, whether that additional cost is covered through general or tax revenue, decreased benefits, or contributions from the insureds.

It is the price that must be paid for decades of Congress lying to the public that ratcheting down what those programs pay providers is “controlling health care costs,” while the hidden, disruptive, and disorienting tax of cost shifting performed its dastardly deeds. Providers should set their rates according to some agreed established template (RBRVS, DRG, variations) but with freedom to choose their conversion factors. Special global service package pricing can be done consistent with such templates. The key is that once set, those are the charges that must be charged to all patients and their third party payers, with absolutely no discounts or special arrangements with the third party payers allowed. (What happens between the provider and the patient on the net amounts owed by the patient after benefit cost sharing, limitations, and fee schedule limits of the third parties are taken into consideration, is only between them, just so long as it has no connection to a relationship between the patient and the third party. I.e., “no deals.”) This will allow a much truer market place to exist, something we have not had, and will provide a necessary measuring stick for the value of services and relative quality so that all the other elements of health reform can be properly evaluated. Until the pricing mess is fixed in this manner, we won’t be able to tell much of anything about any other changes to the system.

By: Bill H.

Bill H. — Wed, 29 Jul 2009 18:38:13 +0000

I’m in favor of swine flu lingering deaths for all elected and appointed officials. Medicare can pay for cremations.

By: Larry

Larry — Wed, 29 Jul 2009 17:53:01 +0000

This is an excellent post. I would like to see a response from Elliott on their view of the observations that you make about the Dartmouth data juxtaposed with the commercial data.

Other reports over the years from actuaries such as Milliman support the notion of payment shifting from public to private payers to retain revenues when public funding is adversely impacted.

The unfortunate part of this vexing problem is that it is incredibly difficult to get the commercial payers (employers – not insurers) to agree on a consistent direction and approach. (Evidence Wal-Mart’s support of the House bill.)

Insurers have too much self interest and see the plan participant as their customer, rather than the employer who is paying the perponderance of the health care bill. As such they do not support change as they should. Who would if you can demand 8-10% premium (price) increases each year and get them. Reducing utilization is only to their benefit in a given year. Increasing it for the following year as long as it is priced into the insurance premium is a boon to the insurer.

Follow the health care debate at http://www.ilovebenefits.wordpress.com

By: Chris Ewin, MD

Chris Ewin, MD — Wed, 29 Jul 2009 17:16:01 +0000

Supply Side?
The demand from patients is to have access to quality care with a patient-centered medical home.
But they want it for free.
If their is no supply of primary care physicians, then the demand will continue to rise from patients.
That’s why we need to change the business model for primary care to a patient-financed medical home. Then, we can attract med students back to primary care.

By: Devon Herrick

Devon Herrick — Wed, 29 Jul 2009 16:53:53 +0000

Forcing inefficient hospitals to operate as efficiently as the Mayo Clinic, Cleveland Clinic or Intermountain Healthcare is akin to forcing K-Mart to operate as efficiently as Walmart. If it were that easy (or easy to learn), K-Mart would have adopted Walmart’s tactics years ago. Being unable to adapt, K-Mart was run out of business and largely replaced by Walmart and Target. That’s the way competition works: firms unable to compete are replaced.

Furthermore, medical spending in hospitals is a function of doctors who make up the hospital medical staff. A substantial portion of the “waste” related to inefficient hospitals, that would-be reformers talk about, is “income” to the doctors who treat Medicare patients in those hospitals. Asking hundreds of thousands of doctors to voluntarily forgo income to save the government money is a tall order indeed.

By: Jeff Miles

Jeff Miles — Wed, 29 Jul 2009 16:38:18 +0000

John,

You are being too kind. Peter is the poster child for the entire wrongheaded venture. Between him and Sibelius, were screwed unless we stop this whole thing. Frankly, the status quo, no matter how “broken” it is, beats Peter’s fairy tale!

By: Michael Kirsch, M.D.

Michael Kirsch, M.D. — Wed, 29 Jul 2009 16:29:54 +0000

I am one of those physicians who would like to be liberated. Orzag must be commended, however, as one of the few who have spoken out forcefully for comparative effectiveness research (CER), an effort to weed out expensives and wasteful care that doesn’t work well. This is such a key element of reform and has been given only glancing attention in the congressional committees. They are struggling to fund health care reform when there are so many billions of dollars trapped within the system that can be harvested. I realize that it is a lot easier to support CER than it is to implement it. If CER were to get airborne, there will be winners and losers. It won’t be pretty. http://www.MDWhistleblower.blogspot.com