Health Insurance Security Creates Jobs

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People feeling secure that their health insurance will continue (or be easy to get) creates an often overlooked societal benefit, i.e., it promotes job creation – particularly for entrepreneurs. Because this value is hard to quantify, it is seldom seen in policy or political rhetoric. (It is also overshadowed by the general “job lock” phenomenon of employment-based health insurance.)

This week’s National Journal has a great article on this topic (“The Other Jobs Bill”) that examines Massachusetts’ experience with their insurance reforms and coverage requirements: The expert consensus is that these reforms have boosted Massachusetts’ economy and job growth compared to other states. Two quotes from the NJ article highlight the impact:

“Massachusetts, despite the confounding effects of the recession, can now offer aspiring entrepreneurs the freedom to leave large companies and start small ones – and give dissatisfied workers the freedom to change jobs, freelance, or scale back their hours without worrying about depriving their families of health coverage.”

“Despite some initial concern from the business community, companies have largely embraced the law as a benefit, not a burden.”

Implications for the Supreme Court’s Ruling on the ACA

Driving home how interstate commerce is affected by health insurance coverage, the article tells the story of a start-up company’s Founder recognizing the business value of guaranteed access to health insurance through the state’s exchange: It was the factor that “finally snagged her several talented staff members from bigger, established companies out of state.” [emphasis added]

Accountability in Healthcare – What People Think of the Coming Changes

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Following up on my pre-Thanksgiving post, I’m reporting back on what friends and relatives think about some of the terms for new healthcare delivery entities, e.g., Accountable Care Organizations (ACOs) and Patient-Centered Medical Homes (PCMH).

What I heard is consistent with my previous conversations: People think that ACOs are like HMOs, and Medical Homes might be nursing homes, home health, or hospice, etc.  One great insight came from my cousin who is a teacher.  She told me that teachers react negatively to the word “accountability” because of the No Child Left Behind (except those who don’t measure up) law – which according to a RAND analysis from the summer of 2010 is “encouraging teachers to focus on some students at the expense of others, and discouraging the development of higher-thinking and problem-solving skills.” (Yikes! That doesn’t sound good for long-term innovation, economic growth, and international competitiveness.)

Solutions for Engaging the Public with Healthcare Transformation

I’ve been talking to a variety of people involved with health transformation at the national and local level about this information/perception gap, and am looking for ideas for raising the public’s understanding about why more team-based and coordinated care will improve quality and efficiency for them as individual patients.  If you have any thoughts on this, please feel free to comment.  In addition, I’ll be talking to more friends and families during the remainder of the holiday season about their impressions of the new terms, (such as ACOs and PCMHs), as well as the benefits of the healthcare delivery changes that are on the horizon, e.g., why the iconic one-on-one relationship with a solo Dr. Welby-like primary care physician may not be the way to get the highest quality care.

Healthcare Turkey Talk

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Thanksgiving is a great occasion for learning what people think about the future of the US healthcare system.*  This year, I’m going to find out what people are thinking about some of the coming health delivery system changes – particularly Accountable Care Organizations (ACOs) and Patient-Centered Medical Homes (PCMH).

I’ve conducted this two-question informal survey with handfuls of people and found their level of knowledge and positive reactions equivalent to Congress’s approval rating, i.e. 9%.  This is worrisome, since if transforming the US healthcare system to increase value and quality will be partially based on ACOs’ and PCMHs’ superior care coordinating abilities, it will be hard to improve cost, quality, and access at the local level if the average person/patient doesn’t know what these organization are, there is inherent aversion to their names, or there is resistant to unexplained “changes.” (For example, several people I’ve talked to have thought Accountable Care Organizations seem like HMOs, and Patient-Centered Medical Homes are home care, nursing homes or hospice.)

So fair readers of this blog, let me know what you hear at your Turkey dinners and associated holiday events – and I’ll post back next week what I heard from my disparate and decidedly unrestrained friends and relatives.

 

*Unlike most meals and gathering of family and friends, Thanksgiving dinner goes on for a long time, there are no ceremonial interludes, and it is generally a sit-down affair so you can’t move on to someone else – or out the door. This means “Aunt Sally” can pull your ear or kick your leg (either figuratively or literally) for upwards of 2 hours about what’s wrong with the US healthcare system and what how to fix it.  My advice is to ask questions to find out root concerns and to gauge people’s understanding of the coming ACA changes in both healthcare delivery and insurance coverage.  Also, if you find yourself referring to a recent study from Commonwealth or Kaiser Family Foundation, (or a similar organization or government group), STOP, put food in your mouth and nod encouragement for them to keep talking, because quoting the best studies to someone impassioned about their healthcare will be about as successful as convincing your 7-year-old cousin that 3.14159 is a great dessert.

Era of Accountable Care

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For many months I’ve been talking about the array of health transformation initiatives the Department of Health and Human Services has been deploying as both demonstrations and programmatic changes.  I’ve been characterizing this strategy to create more accountability as an evolving menu, buffet, or map – sort of like those magical Harry Potter maps where the lines keep appearing on the parchment to create a recognizable image.

As part of releasing the final rules for the Medicare Shared Savings Program, HHS also put forth a document subtitled “Menu of Options for Improving Care,” which is a list of some of the landmarks in the future map of an Era of Accountable Care. This document listed “options for healthcare providers of all sizes, types, all across the country” to work together to coordinate patient care, improve quality and lower costs. Besides the Medicare Shared Savings Program for Accountable Care Organizations (ACOs), these options include:

  • Partnership for Patients ($1B over 3 years)
  • Bundled Payments for Care Improvements (4 models proposed and 4 more planned)
  • Comprehensive Primary Care Initiative (Medicare partnering with Medicaid and private payers in 5-7 local markets to support primary care improvement)
  • FQHC Advanced Primary Care Practice Demonstration (with HRSA)
  • Advanced Payment Accountable Care Organization Model (pre-funding for physician groups wanting to form ACOs for the Shared Savings Program)
  • Pioneer Accountable Care Organization Model (demonstration program for advanced ACOs)
  • Financial Models to Support State Efforts to Integrate Care for Medicare-Medicaid Enrollees

The Menu document clearly indicates a coherent strategy for doing what the Medicare Payment Advisory Commission recently recommended: “Medicare payments should strongly encourage providers to move towards [ACOs, bundled payments, capitated models, shared savings programs] and make FFS less attractive.”

HSS’ Menu document is an initial description of the map HHS is drawing for providers about these more attractive options.  In contrast, in all the debate about health reform and Medicare there has been very little discussion about the future of Fee-for-Service payments or how to make FFS more sustainable -  except for the $300B budgetary hole and pending 30% fee reduction in  Medicare’s physician payment system’s Sustainable Growth Rate formula.  However, making “FFS less attractive” is certainly one of the transformational “sticks” Medicare has been wielding based upon provisions in the Accountable Care Act* and through other Medicare initiatives such as Value Based Purchasing, not paying for Never Events, and using Competitive Bidding for certain products and services.  And the future will see more and expanded use of these types of initiatives to “make FFS less attractive.”

CMS Has Already Been Transformed

Another significant distinction between HHS’ current actions and what they have traditionally done is that HHS is not moving forward alone by modifying Medicare and Medicaid.  Instead they are actively seeking to work in alignment – if not outright partnership – with private payers.  This is clearly stated in the CPCI and the Multi-payer Advanced Primary Care Initiative, which has already started in 8 states.

I have previously written about Accountable Care, (and how it is fundamental for successful health reform), and with the unveiling of the menu from HHS I am encouraged that we are on the way to an Era of Accountable Care – because that is what people really want and society needs, i.e. Accountability for Clinical Outcomes and Accountability for Economic Results.  It is only through those two avenues of accountability that we will achieve my version of the 3-Part Aim:

  1. Saving Lives
  2. Cutting Costs
  3. Creating Jobs

Health Reform is Essential for Creating Jobs

“Creating Jobs” doesn’t usually appear in lists about the goals for health reform, but it is really a fundamental reason for fixing our fractured healthcare system: By reducing the financial bite healthcare is putting on families and companies – as well as creating security for access to health insurance for individuals – health reform will pour capital and confidence into the economy leading to the creation of jobs.  That will be an era of healthcare that we can all count on.

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* The given name for the health reform legislation is the “Patient Protection and Affordable Care Act,” and it is often referred to as the Affordable Care Act or the ACA.  However, I believe the transformational components of the ACA are its features that will create accountability for the clinical and economic outcomes our healthcare system produces, and thus I call it the Accountable Care Act.  In the context where others are referring to this law as Obamacare, or as a government take-over of the US healthcare system, or portrayed voluntary counseling as death panels, then I am very comfortable nick-naming the ACA the Accountable Care Act.

Smoking is So Bad For You That……..It Makes Me Sick

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The evidence for the ill effects of smoking keeps getting stronger and scarier.  If one were to construct a balance sheet of tobacco’s pros and cons it would look much worse than the one Bernie Madoff was hiding from his investors and the SEC.

Making the Risk of Smoking Personal

I was recently talking with one of my IT consultants and we started discussing tobacco use since he thought his smoking might have been one reason he’d been denied health insurance. What he – and many people – don’t realize is that the major health risk from smoking is not lung cancer, but how damaging it is to the heart and blood vessels, i.e., your cardiovascular system:

  • On Monday USA Today reported on a study showing that smoking cigarettes doubles a person’s risk of stroke.
  • Studies have shown that second-hand smoke increases the risk of heart attacks – which is why many states and even the country of Ireland have prohibited smoking in bars and restaurants.
  • When Ireland banned smoking in pubs the rate of hospital admissions for heart attacks dropped by more than 10% in the following year.

Additional evidence about the risks of smoking is pervasive – sort of like finding a piece of hay in a bale of hay – including a report from the US Surgeon General indicating that smoking ONE CIGARETTE can increase the risk of heart disease as well as cancer. In scientific terminology this means that there is no lower limit or threshold below which tobacco causes no harm.

Similarly, the concept that tobacco in forms other than cigarettes aren’t so bad is, well BS: cigars and “chewing tobacco” are bad for you too – just in different ways depending on how they are used and how often. And the propaganda that hookahs (smoking flavored tobacco through a water pipe) are safe is hooey – smoking a hookah for an hour can be like smoking ONE HUNDRED (100) cigarettes.

So after going through these facts to help my IT consultant put smoking cigarettes into perspective, (i.e., tobacco damages your heart and blood vessels etc.) – and adding a few points about how smoking increases a person’s risk for dementia, Alzheimer’s, other cancers besides lung cancer, and sexual dysfunction – I prioritizing the bad things he could possibly be doing to himself:

  1. Crystal Meth - which rewires your brain in very bad ways that are hard or impossible to reverse
  2. Heroin
  3. Having unprotected sex with multiple IV drug abusers
  4. Smoking cigarettes…. or using any form of tobacco

The Positive Attributes of Tobacco

The positive side of tobacco’s “balance sheet” is pretty slim:

  • Income for tobacco farmers
  • Income for companies that make and sell cigarettes and other tobacco products
  • There are a few rare conditions where nicotine may help prevent flare-ups
  • It’s “cool” and it makes people appear older. (Smoking actually does make people look older by causing skin changes on the hands and face, including wrinkles that can make a 35-year-old smoker look 45 or 50.)

Bottom Line

So adding this all up into a Bernie Madoff-type balance sheet it seems that smoking cigarettes is like:

  • Driving without a seat belt – and twenty bowling balls and big pieces of broken glass in your passenger seat
  • Sleeping with a loaded gun in the waistband of your pajamas
  • Scuba diving or flying an airplane without lessons
  • Riding a motorcycle while juggling

Like smoking, there will be people who might be able to do these things for years without ever developing a “problem.” But I suspect that most smokers don’t understand the real risks they are taking, and certainly wouldn’t take similar risks for themselves or their children by doing other things like replacing their smoke detectors with oil lamps.

And lastly, I believe healthcare professionals are not doing enough to help people stop smoking.  Kicking the nicotine addiction isn’t easy, but there are ways to help: counseling, support groups, prescription and OTC medications, and even financial incentives from health insurers and employer including higher (or lower) insurance premiums.  As an additional incentive, some companies are not hiring people who smoke - although some states have passed laws protecting smokers’ off-duty “rights” to such self-injurious conduct. So unless you’re living in an alternative universe where the job market is “smoking,” putting yourself at a disadvantage for getting a job (or a better job) because you smoke doesn’t seem like a very good career move. It might be better to have committed felony financial fraud since at least that demonstrates some math skills and not just the ability to suck in poisons.

Health Reform’s Challenges – Some Things Don’t Change

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A few years ago I was asked to write a Forward for a book about the transformation of healthcare in the US.  I recently came across what I’d written about the rapidly changing US healthcare system and the challenges of controlling the growth in spending.  I’m sharing it below (in the original Courier font) because what I’d written still is applicable for today’s situation, and particularly the summary sentence: “If today’s leaders — both health professionals and politicians — make wise decisions to support and foster integration of the delivery system and administrative standardization, while guaranteeing universal coverage, we will have a strong health system to support a strong nation.”

Forward

     Health care in the United States is changing very rapidly. This seemingly obvious statement has taken many people by surprise despite the fact that the environment for health care has been evolving for decades.  Both the actual delivery of health care and its financing are dramatically different today than when my father first started practicing medicine.  I do not make this personal reference casually.  Rather, I believe it is very important to remember that for everyone, illness, health, death and dying are among the most personal of issues within their lives and the lives of their family.  I state this up-front because just as health is a very personal concern, health reform is an issue of people, personalities, and their relationships.

    Just two decades ago, well after my father started practice, diagnostic testing was much more limited — MRIs were experimental, and fiberoptics were being introduced.  Treatment options have similarly expanded with new procedures, (ambulatory surgery, fiberoptic surgery, and home IV), and new pharmaceuticals, (ACE inhibitors, antivirals, EPO, and new biologics), are standards of care.  Similarly, reimbursement and financing of health care has also changed dramatically:  Fee-for-service was predominant with payments made for submitted charges.  Discounting and capitation were basically nonexistent for most physicians.  Managed care was an unrecognized concept except in the form of care management by personal physicians prior to the explosion of specialists.

     Clearly health care in 1993 is very different from health care in 1973 — for both patients and physicians.  It is also very different for hospitals, insurance companies and businesses.  To imagine in 1973 that General Motors would be spending more for health care than for steel in the 1990s would have been as inconceivable as imagining that AIDS would redirect the force of the 1960s sexual revolution into a social philosophy of safe sex. Situations such as these permeate American society, and have added many new moral and financial issues to the current round of reform debate.

     Every time I talk with groups of professionals involved with providing or paying for health care — physicians, nurses, hospital administrators, business owners — I try to impart the perspective of rapid change and evolution to them.  I have also tried to convey this to the policy makers with whom I have worked in Washington D.C., both in Congress and on President Clinton’s Health Reform Task Force.  The key is to remember that dynamic change is always a constant process, and health reform — either market driven or legislatively directed — is definitely a continual process.

    Some have argued that “health reform” will result in great losses for many Americans — losses of quality or choice or autonomy or benefits.  Although guarantees are impossible to make in such a sweeping process, I strongly believe that in the end — perhaps after a rocky transition — the gains will greatly outweigh any downsides.  This applies for everyone, not just for those who will gain the most, i.e. the uninsured or the underinsured.  For example, increased organization and uniformity in our health care system will allow health care professionals to focus on delivering health care, maintain control of clinical decisions, and worry less about multitudes of benefit structures and paperwork mazes.  Patients will benefit by having a rational system which provides guideposts to assure coordinated quality care rather than by default having to undertake their own care management because the disorganized system provides little or no assistance.

    This evolution of health care delivery will be tightly linked to reforms of financing and risk assumption.   Successful integrated health delivery systems will be able to accept the risk under a capitated payment system, but their ultimate success will depend upon providing their core “product,” i.e. health care services, and being able to document the quality of the care.  The ability to coordinate these two functions will require a tight working relationship between the system’s administrative management and the systems “product” managers, i.e. physicians and other health care providers.

     In thinking about how to achieve success in health reform, the relationships between individuals is extremely important to remember, and surprisingly easy to forget.  It must be recognized and remembered that health reform is a people issue.  Not only does it involve people’s basic needs, but it is a service provided by people for people.  And at its most basic level, the process of reform is a people puzzle, not a technological one.  This is clearly seen in the personal relationships and negotiations which encompass the politics of health reform.

     Even more striking is the people-centered nature of health reform in the marketplace.  Ultimately putting together a reformed health care delivery system requires the building of new relationships between organizations, i.e., hospitals, groups of physicians, and other providers.  However, these relationships are ultimately personal ones, involving the individual physicians, other caregivers, and the managers of the larger entities.  These relationships are not easy to build, but recognizing their necessity as a foundation for system development is the first step in the process.

     Thus, reform initiatives — both local and national — in the coming years will likely be characterized by the saying “Market Driven & Medically Directed,” because the marketplace will force integration to proceed, but the shape and control of the resulting integrated systems will be directed by health care professionals — predominantly physicians.

    The chapters of this book provide perspectives, information and guidance for health care reform leaders on how to think about health care delivery as a local and a regional phenomenon — an outlook often missing from national debates.  The overriding conclusion is that through appropriate integration and alliance building, health care can be improved and costs contained.

    This volume focuses on: 1) the market forces driving the current evolutionary process in health care, 2) the resulting niches which health organizations are being forced to fill, and 3) how they are responding in order to successfully fill these new niches.  Overall, the volume describes how health care professionals can think and prepare for the coming decades as our health system evolves from one marked by disorganization and multiplicity to one of more integration and uniformity.

     The issues discussed in this book are not the final word in health reform.  In fact, if market driven health reforms are the only changes seen in this country, it will be a road to disaster. One of the major downsides of solely market driven reform is that through integration and the alliances formed by health providers, businesses and insurers are able to reduce cost shifting within the system which has been used to support uncompensated and charity care.  This reduction of a hidden tax would benefit businesses, but carried to its extreme could also lead to a situation where the uninsured truly will be without access to any health care because those who can pay will no longer be subsidizing those who cannot.  This will cost our businesses and the nation more in the long run both financially and morally.

    In the end it will be the actions and decisions of front line health care decision makers which will determine the strength of the health care system the U.S. will carry into the 21st century.  If today’s leaders — both health professionals and politicians — make wise decisions to support and foster integration of the delivery system and administrative standardization, while guaranteeing universal coverage, we will have a strong health system to support a strong nation.  Less fortunate alternatives will leave us weakened both financially and morally.  Although I do not believe in utopian scenarios, I do believe that progress will be made, and problems addressed in a positive and significant manner.  It is clear that the marketplace participants — health professionals and their organizations, being driven by businesses — are following through on their end of this equation.  It remains to be seen how well the political leaders of our country follow through on their end of this balance.

Michael D. Miller, M.D.
November, 1993
Washington, D.C.

18 years later it is clear that the issues and solutions haven’t changed significantly: Cost containment, quality improvement and expanding access were (and are) the goals, and the solutions involve creating “a rational system which provides guideposts to assure coordinated quality care rather than by default [patients] having to undertake their own care management because the disorganized system provides little or no assistance.”

2011 is clearly as different from 1993 as 1993 was from 1975. One of the biggest difference is that political leaders have finally followed through by passing significant legislation – which didn’t happen in 1994. Another significant change is the ability of information systems to acquire, analyze, and distribute data and comprehensible/actionable information to clinicians, payers, providers, and patients.

While we’re making progress, it won’t come unaided and unguided. The pieces necessary for making dramatic improvements are being put into place from a variety of sources, including legislation (e.g., HITECH and PPACA), other government actions (e.g. Medical Home and innovative payment demonstrations), non-profits (e.g., RWJ Foundation’s AF4Q and Care About Your Care), and initiatives from companies (e.g., Prometheus, Leapfrog, and redesigning health benefits).  The challenge now is for businesses, providers, payers, clinicians, regulators, legislators, and patients (or at least their advocacy organizations) to follow through and turn those pieces into a coherent and integrated system – or really connected and coordinated systems – that provides greater value and more accountability for both clinical and economic outcomes.

Healthcare Prevention – Value, Savings and Strategies

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Prevention is often portrayed as either the savior or the step-child for reforming, transforming, or saving the US healthcare system.  How prevention would specifically benefit people and society is presented in various ways to make these points:

US Doing Worse in Prevention Activities

The Commonwealth Fund recently released a study showing the US is doing poorly in reducing deaths from preventable causes. (Variations in Amendable Mortality – Trends in 16 High-Income Nations.)

From Commonwealth Funded Study - September 2011

While this study isn’t a definitive prescription for systemic changes, it illustrates the performance deficiencies of the US healthcare system – and is consistent with other reports looking at related metrics.

Prevention is a Very Effective Strategy

The American Academy of Family Physicians’ journal “American Family Physician” had an editorial last September titled, “Preventive Health: Time for a Change,” which noted that, “According to recent literature, primary prevention appears to work better than any other strategy in medicine.”  This article also had a great poster “prescribing” the formula for good health. (See below.)

Modified From "Preventive Health" Editorial AFP, September 15, 2010

[Note: I've modified it to indicate 5-10 recommended servings of fruits and vegetables. In addition, it should also be recognized that the weight goal requires a long-term strategy - while the other activities are more immediate - and an often cited weight reduction goal is 10% since people generally see that as reasonable, and a 10% weight loss for someone who is obese has been shown to improve clinical outcomes.]

Politics of Prevention

The 2010 Federal health reform law included $15 billion over 10 years for a Prevention and Public Health Fund to assist state and community efforts in preventing illness and promoting health.  However, like many things in the 2010 Federal health reform law, this funding has been targeted for elimination in order to reduce overall government spending. As the Health Policy Director for the Republican staff of the Senate Committee on Health, Education, Labor and Pensions stated during a session hosted by Politico last week, “While everyone supports the idea of prevention, there isn’t a lot of data that suggests that those programs actually reduce healthcare costs,” and this part of the health reform legislation is a “slush fund.”

Conclusions:

So like many things in healthcare, definitions are important – as are priorities and savings calculations – since what I suspect the Senate HELP Committee’s Republican Health Policy Director meant was that many prevention programs haven’t been shown to save money for Medicare or Medicaid, i.e., reduce Federal spending projections. This isn’t too surprising since Medicare is for the elderly and disabled, so prevention in that population may often be secondary rather than primary – and Medicaid faces similar “those who pay may not be those who benefit” challenges. However, such a narrow programmatic and financial mindset fails to recognize that improving prevention for the overall population can slow the growth in total healthcare spending and improve productivity. My “proof” for that sweeping statement – particularly the worker productivity piece – is that growing up in Hartford, CT it was common knowledge that the insurance companies, (most of which had their headquarters in Hartford), had the best prevention and employee wellness programs.  And this was not by chance – they knew it was good business to keep their employees healthy and productive.

Selling Healthcare Changes – Loss Aversion & Adoption of Innovations

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Healthcare issues ranging from national health reform to stem cell research have become a major force in political rhetoric – often overwhelming substantive information. This creates challenges for individuals and organizations seeking to achieve positive changes as their communications are swamped by election-driven messaging.

Creating and implementing successful communications programs in this turbulent environment is easier when the principles of “loss aversion” and the factors affecting the adoption of innovations are used constructively.

Loss Aversion & Campaign Messages: Swinging Votes Not Actions
Campaign communications – particularly negative messages – are very effective because they use loss aversion principles to leverage people’s reluctance to embrace change.

I have repeatedly heard that people need to believe they will receive a gain that is twice as large as their potential loss before seeking to make a change.  However, that 2:1 ratio is derived from some specific social psychology experiments, while loss aversion research demonstrates that the ratio varies depending upon the magnitudes of the risks and rewards for the individual.  For example, many people would willingly wager 10 cents on a coin flip if they could win 11 cents by guessing correctly – if nothing else just for the “fun” of playing, and because losing 10 cents isn’t a big deal. However, very few people would wager $1,000,000 on the same coin flip for the chance to win $1,100,000 – even though the odds and the loss-gain ratio are the same, (and in the player’s favor), because the significance of the risk is much greater.

Kahneman 1991 Loss Aversion Figure

Source: Kahneman et. al. 1991

While these principles are not unique to healthcare, their power for influencing people’s perceptions and actions is greater for healthcare issues because of healthcare’s very personal nature and most people’s impression that they have some healthcare expertise acquired through first-hand experience. [Reader Participation: Insert your story here about a friend or relative who has "educated" or "advised" you with a personal healthcare story, or how someone - perhaps a stranger - has offered healthcare advice based upon something that happened to them, or someone they knew, or they just heard about from someone else.]

The principles of loss aversion make it very, very difficult for potential short-term and individual gains to be the foundation for effective communications campaigns about healthcare improvements for the following reasons:

  1. Loss aversion means that most people are going to want to see a potential gain that is a multiple of the potential loss – and those most affected by a proposed change will see the potential loss as much more significant, and thus require an even larger potential gain in order for them to not oppose it.  (And those most affected will also be the most active and vocal in their opposition.)
  2. For most people, healthcare changes have significant levels of perceived personal risk – whether it’s changing their health insurance benefits, choice of physicians or hospitals, how they can obtain access to new or experimental treatments, or even very specific changes such as stem cell research, abortions, end-of-life counseling, genetic or autism screening, etc.
  3. While potential losses are well understood by most people – since they know what they currently have and realize that change will be “something different” – potential gains are usually much harder to visualize and believe in. (This is why the current Administration has said that under the new health reform law people can keep their current health insurance plans if they like them.)
  4. People’s trust in government and large organizations, (e.g. corporations), has plummeted in recent years, greatly reducing people’s confidence that changes advocated by these sources will actually produce the promised gains. Specifically, in “calculating” potential losses and gains most people will greatly discount potential gains from government or corporate initiatives. For example, suppose a proposed government healthcare change is described as having a gain of 10 and a potential risk of 3. [These numbers are obviously only arbitrary representations of the magnitude of how potential changes might be valued.] This change might be seen as having a gain-risk ratio of 10:3, but a general distrust of government actions could discount the potential gain to 25%, (which is about where Congress’ approval rating is right now), resulting in a perceived gain-risk ratio of only 2.5:3 – and this assumes that people don’t inflate the potential losses because of their low opinion of government, which could make the perceived ratio 2.5:6 or 2.5:9.  Clearly this is not a situation where people would eagerly support a change in something as important as their health.

This means that even for a proposed change where the best projections indicate significant benefits to many, many people, any individual or organization who opposes the change, (for political or other reasons), has a very easy time crafting messages and images that are very effective in undermining support for the proposed change.  (For example, the combination of the following phrases has been effective in undermining support for the new health reform law: “Government Takeover,” “Death Panels,” “Unconstitutional,” and “You Lie.”)

Overcoming Loss Aversion and Negative/Counter Messaging
The solution to overcoming such undermining messages that play on people’s concerns about losing what they have (and know) – as well as their mistrust of governments and other large organizations – is to present proposed changes in ways that expand people’s confidence in and understanding of the potential gains, while also minimizing the perceived loss potential.  One way to do this effectively in a communications strategy is to address the 5 factors influencing the adoption of innovations that Rodgers first described in the 1960s:

  1. Relative Advantage
  2. Compatibility
  3. Simplicity
  4. Observability
  5. Trialability
    [These are derived from Rogers 2003 book and it's earlier editions, and described by Dealy and Thomas in their 2006 book.]

Selling Health Reform as Positive Innovation
Shifting to a “selling” campaign that incorporates these factors – while minimizing the potential affects of loss aversion – moves the communications dynamic away from the slippery losing slope of loss aversion’s context to one that is more favorable to thinking about the longer-term and more tangible benefits of the proposed changes.  For example, the broad communications campaign for the bipartisanlly supported Medicare prescription drug benefit, (Part D -  enacted in late 2003, benefits started in 2006), emphasized  how much individuals would save, rather than the long-term value and security of having  insurance – which is what Part D plans are, they are insurance, not a discounted purchasing scheme. (A USA Today article stated that an average person who enrolled in a Medicare Part D plan would save $1,100 in 2006.)

The Result: While people who did purchase Part D plans were generally happy with their plans, about 10% of Medicare beneficiaries (~4.5 million people) didn’t have prescription drug coverage in 2007 despite some plans costing less than $10 per month. The large number of people who decided to not purchase this very low cost insurance is even more striking because individuals’ premiums increase by a “penalty” of 1% per month for every month between their initial period of eligibility and their enrollment date. (This penalty is to reduce adverse selection, which occurs when people wait until they are ill before getting  insurance.) Unfortunately, the number of Medicare beneficiaries without drug coverage doesn’t appear to be declining – in 2010 it was still about 10% of beneficiaries, and this compares very poorly to the very low percentage of people who declined Medicare Part B coverage.

The significant number of Medicare beneficiaries who decided not to purchase a Part D plan could be due to their aversion to a perceived loss being stronger than the positive messages used to sell the benefits of the plans.  This imbalance results from the gains being presented as short-term financial savings, (rather than the long-term benefits of having insurance), and thus didn’t utilize the factors for improving the adoption of innovations, i.e., Part D insurance plans is comparable to other insurance they have, it is not  complicated (except for the initial large number of choices), they can observe it, the plans can be tried, and the insurance provides a significant relative long-term advantage.

Bottom Line – Sell the Value & Spirit, Not the Calculation
The bottom line is that selling the value of healthcare changes – whether it’s national reform or narrow innovations – needs to encompass broader, longer-term, and tangible values, rather than short-term calculations that may be both uncertain and not believed, while also deflecting and undermining opposing arguments, i.e. capitalize on the factors that ease the adoption of innovations while minimizing people’s inherent aversion to potential losses.

And in closing, (at least for this posting), how these principles were used in a negative way to sell a non-healthcare change might be a useful illustration:

Buying a house with an unaffordable mortgage was seen as OK before 2008 because the potential for loss was believed to be very small – since prices were rising and foreclosures were rare so there was very little to trigger an aversion. And owning a home is compatible with most people’s desires and daily lives, home ownership is observable, renting is akin to a trial of ownership, brokers and agents made it all very simple, and home ownership has potentially great financial and social advantages. However, in retrospect it’s clear that purchasing a home was vastly wrong for many people – and potentially involved outright fraudulent communications – because they had been led to believe in illusory loss-gain (a.k.a. risk-benefit) calculations.

Fixing or Fracturing Medicare?

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Reducing Medicare spending has been one of the focal points in the debt ceiling negotiations, and it was reported that the President is considering throwing the idea of raising the eligibility age for Medicare into the pot as part of a stone soup recipe that might get enough Congressional Ds and Rs to swallow the end product.

Increasing Medicare’s Eligibility Age is Bad Policy and Worse Politics
While increasing Medicare’s eligibility age to reduce spending makes simple arithmetic sense using the formula Spending = Number of People x Spending per Person, like almost everything in healthcare, what is simple is often 30 degrees wrong. And raising Medicare’s eligibility age is no exception because it has significant fiscal and political problems.

First, that simple arithmetic formula ($=#($/#)) doesn’t account for the reality that older Medicare enrollees are more expensive than younger ones, so the savings from eliminating people who are at 65 and a few years older only saves a fraction of the average per person Medicare spending.

Second, raising the age of eligibility won’t eliminate all those people under the new enrollment age since some of them will still qualify because they are disabled or have end-stage renal disease – and these enrollees are more expensive than average too.

Third, eliminating the youngest (and least expensive) enrollees from Medicare will cause the Part B premium to increase because by law it has to account for a fixed percentage of all Medicare Part B spending.

Fourth, those individuals age 65+ who would be ineligible for Medicare would have to buy private insurance – or continue to be covered by their employers’ retiree health plans or state Medicaid programs. And just as they are generally less expensive than older Medicare beneficiaries, they are also more costly to insure than the average person under the age of 65.  Which means that they (or their former employers or Medicaid – which the Federal government also partially pays for) would be paying more per/person for their insurance. AND, including these individuals in the now forming insurance exchanges would raise premiums for everyone else in the exchanges. (In a report released in March, the Kaiser Family Foundation found that raising Medicare’s eligibility to 67 in 2014 would “result in an estimated net increase of $5.6 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree health-care costs,” as well as $0.7 billion more spending by states for their Medicaid plans in 2014.)

So the final score is bad fiscal outcomes, (Medicare is saving less money than might be quickly conceived), along with a bunch of bad political outcomes: People aged 65+ without Medicare would pay the highest private sector premiums – either directly or via their former employers or Medicaid – and middle income people on Medicare would see a Part B premium increase. Of course those effects could be mitigated by subsidizing the Part B premiums and the private sector insurance (and Medicaid) costs to lessen these impacts – and the political fallout. But then what happens to those Medicare “savings?”  If that’s the “deal” that is struck, it would be a direct hit to begin fracturing the fundamental social contract that has defined Medicare since it’s founding – and subsequent whacks would likely be to incrementally increase enrollment age and otherwise cut eligibility criteria.

A Better Idea
A better solution is to actually improve Medicare – and (spoiler alert) much of what is needed to do that was contained in the ACA and the fiscal stabilization legislation.  Specifically, changing incentives for providers from volume to quality and creating support for the adoption of healthcare IT systems.  Neither of these will occur rapidly, but just as real medicine doesn’t cure people like Dr. McCoy did on Star Trek or Dr. House does on TV today, really changing a system as complex as the one that delivers the services that Medicare pays for won’t occur quickly.  The first stones on that path have been laid (e.g. ACO concepts, advanced primary care that coordinates care, similar pilots/demos, and penalties for delivering low value care, a.k.a.”value based purchasing”), and veering off that path  because it’s “hard” or not as speedy a trip as some would want, is like jumping into a turbulent river to get downstream faster without any idea where the rapids or waterfalls might be, or what carnivores (or nasty microbes) are waiting for a tasty snack.

Patient-Centered Care? Or Not?

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The term “patient-centered care” has increasingly been used to describe healthcare structures that deliver better quality care – as well as often doing so with lower costs.  And today there was a news story about how some medical schools are assessing applicants’ interpersonal skills, something that is fundamental for being a patient-centric clinician.

While there are have been numerous articles demonstrating the value of patient-centered care and concluding that it is better and should be promoted – including those looking at the ill named “Patient-Centered Medical Homes” – I’ve found myself pondering the following questions:

“What type of care have clinicians been providing if it hasn’t been patient-centered? Has it been clinician/physician centered? Or revenue centered? Or just intentionally confusing and impersonal care designed to stymie the adoption of evidence based standards of care?”

“And along those lines, is the widespread delivery of non-patient-centered care the reason why the IOM concluded that it takes about 17 years for valuable healthcare information to be adopted into clinical practice? Or why Atul Gawande found that hospitals in other countries have widely adopted surgical checklists to reduce medical errors and adverse outcomes, while only 25% of US hospitals are using these checklists?”

I’m just asking….