Health, Healthcare, and Government Spending (and a Culture of Health)

Why governments care about health and healthcare, how they are connected to government spending and priorities, and why addressing social determinants of health is so important for making lasting improvements, were the subjects I covered in a presentation at George Mason’s graduate policy school in September. My goal was to provide the soon-to-be policy analysts and advisers with a framework for understanding those issues so they will be able to provide useful recommendations to their future decision making bosses. (See the slide below for the topics covered in the presentation.) Links to videos of the talk are below, along with short descriptions – I think that Part 6 is particularly good. (Embedded views of the videos are at the end.)

I’ve had discussions with policy makers and corporate executives about these issues since their organization’s value propositions increasingly require demonstrating individual and population outcomes with specific metrics. Those requirements are part of the broader rapid movement of the U.S. healthcare system towards more accountability. Consequently, the connections among health, healthcare delivery, spending, community organizations, and social determinants of health are becoming a top priority for healthcare and life science leaders in companies and government agencies as they seek to increase value for their organizations and the people they serve.

Any thoughts you have about this talk, the connections among health, healthcare, spending, and community health factors (a.k.a. social determinants of health), would be greatly appreciated. And if there are any aspects of these issues where I can be of help to you or your colleagues – or you know of organizations or audiences that would also benefit from a similar presentation – please just let me know as I’d be happy to discuss that with you.

GMU - 9-29-16 Overview Slide

Part 1: Introduction. Why Governments care about health and healthcare. What is health. What is healthcare. https://youtu.be/KvDVcBGOePc

Part 2: Insights into healthcare spending with a particular focus on the Medicare and Medicaid programs. https://youtu.be/6Onuae2c0Xw

Part 3: Why spending on (and budgeting for) health and healthcare programs are unlike almost all other Federal programs, and why projecting spending is so challenging. https://youtu.be/lyaAjRzD0ic

Part 4: How government and private payers are seeking greater value and better clinical outcomes from their healthcare spending, and how data and analytics are increasingly important components of developing and evaluating those initiatives. https://youtu.be/7abj14xIcMw

Part 5: Examples of value based pricing initiatives and the importance of data and analytics for managing such programs, determining “success”, and sharing savings with physicians, other providers, or patients. https://youtu.be/MeLZA5wcpG8

Part 6: How health, healthcare, and spending on government health programs (and private insurance reimbursements) connect to each other, and how social determinants of health can drive clinical and economic outcomes, i.e., how a culture of health can be so important for transforming health in a community. This Part concludes with a brief discussion of the Affordable Care Act and the future of that program and the U.S. healthcare system. https://youtu.be/66zt_Rqf9hA

Enjoy. Pass along to your colleagues and friends. And as always, constructive comments are welcome!

Challenges Estimating Future U.S. Healthcare Spending

The challenges of estimating future U.S. healthcare spending (and why projections are so often so inaccurate) is the focus of the third video segment from my guest lecture at George Mason University about Health and Budget Policy – see below. (The first two are in previous blog posts and are on the HealthPolCom YouTube Channel.)

The final two video segments on the topics of Medicaid, and the Changing U.S. Healthcare System will be posted next week. The five subjects covered in the video segments from the guest lecture are:

  1. U.S. Spending on Health and Healthcare
  2. Medicare and U.S. Healthcare Spending
  3. Challenges for Estimating Future Healthcare Spending
  4. Medicaid: Federal and State Fiscal Issues
  5. Changing U.S. Healthcare System: New Payment and Delivery Models

Enjoy. Pass along to your colleagues and friends. And as always, constructive comments are welcome!

Medicare and U.S. Healthcare Spending

The second video from my guest lecture at George Mason University about Medicare and U.S. Healthcare Spending in now available – see below. (The first was an overview of Health Spending in the United States, and is in the previous blog and also on the HealthPolCom YouTube Channel.)

The other video segments from my guest lecture that I’ll be posting over the next week or so will be on the following subjects:

  1. Challenges for Estimating Future Healthcare Spending
  2. Medicaid: Federal and State Fiscal Issues
  3. Changing U.S. Healthcare System: New Payment and Delivery Models

Enjoy. pass along to your colleagues and friends. And as always, constructive comments are welcome!

 

U.S. Spending on Health and Healthcare & Update

Sorry to have been so delinquent in publishing new posts.  For most of 2015 I was busy working with the National Governors Association and the Institute of Medicine organizing State Health Leadership Retreats for the Governors of 4 states. Those retreats were modeled on a pilot retreat we conducted in late 2013, and in late 2015 we did a culminating meeting for officials from all the states. Right after that I joined Foley Hoag as their Senior Health and Life Sciences Advisor.

All that has kept me rather busy, but in February I again guest lectured at George Mason about Health Reform and Fiscal Challenges (a.k.a “Health Policy is Budget Policy”). An edited video from the first part of the lecture about U.S. Spending on Health and Healthcare is below, and over the next couple of weeks I’ll be posting additional videos from that talk on the topics of:

  1. Medicare and U.S. Healthcare Spending
  2. Challenges for Estimating Future Healthcare Spending
  3. Medicaid: Federal and State Fiscal Issues
  4. Changing U.S. Healthcare System: New Payment and Delivery Models

Enjoy – pass along to your colleagues and friends – and as always, constructive comments are welcome!

 

New Direction for Health Reform Book

In 2005 I started writing a book about health reform.  As I was working on it, the structure and framework of the U.S. healthcare system kept shifting. I am now returning to work on this book, with the new working title, “Pivoting the U.S. Healthcare System: A Guide to Making Health Reform Work.” Below is a brief overview of the background about the book, which can also be found on my main website.

Comments, suggestions, and general inquiries about this project are welcome.

Overview – “Pivoting the U.S. Healthcare System: A Guide to Making Health Reform Work”

In my very first class in medical school, one of the first things the Professor said was, “Half of what we’re going to teach you is wrong. We just don’t know which half.”  That admission is not something you will hear in political or policy pronouncements, even though in the rapidly evolving U.S. healthcare systems situations change, preliminary data is corrected, projections turn out to be wrong in meaningful ways, and “solutions” fix problems but also lead to new ones.

To provide people with a framework for improving the quality of care and controlling costs for themselves and their communities in this shifting world, this book will examine important ideas, issues, and trends, and the steps individuals can take to help achieve better health, access, and affordability. To do that, I will provide my synthesis of observations and information focusing on policy, political, scientific, and medical changes that are building upon one another. Thus, the book will not be an academic treatise, nor adhere to specific ideological, philosophical or political lines. Rather, it will reflect what I have learned in in more than 25 years of clinical, scientific, and health policy work, and my vision for achieving a better, stronger, more vibrant, and healthier healthcare system.

Long Look Forward

In June 2003, I was invited to address the Presidents of the State Medical Societies about “The Future of the US Healthcare System.” To help these physician leaders see the future more clearly through murky waters, I discussed how the trajectories of the major US healthcare programs (including Medicare and employment-based insurance) were leading to greater transparency and accountability for both clinical and economic outcomes.  I then described a future where clinicians and providers would be responsible for the outcomes their care was producing, how payments would be tied to those outcomes, and how documenting those outcomes would be facilitated by electronic medical records and population-based analytical systems.

The reaction of the assembled physician leaders was one of dismissive disbelief. This was 2003. The world had come through Y2K unscathed, the dot-bomb recession was over, and the stock market was rising every week.  Their primary question was ‘who will pay us to put in electronic medical records and to provide information about quality and costs?’ They didn’t believe my answer that those who wanted the information – such as health insurance companies and government agencies – would pay them to provide data and information about quality and costs. Those reactions were not unreasonable at the time, since I suspect most of this group was planning to retire within the next 10 years. (This was before the Great Recession turned their 401k accounts into 101k amounts.)  However, while 2003 was generally a time of great uncertainty for the U.S. healthcare system, the year ended with the passage of a new law – the Medicare Modernization Act (MMA) – that included the new Medicare prescription drug benefit, and it was the first of several major laws driving fundamental transformation of the US healthcare systems.

Slow Turns

The 2003 passage of the MMA, the 2008 election of President Obama, the 2009 stimulus law (ARRA) that included the HITECH Act to support the implementation of electronic health records, and the 2010 passage of the Affordable Acre Act (ACA, or ObamaCare), have all promoted significant changes in the U.S. healthcare system.  But since it is a huge and extensively connected but disjointed set of enterprises, turning the U.S. healthcare system is a slow process. Even policy focused physicians and senior health managers have been slow to accept or react to those changes.  For example, in March 2009, I gave a Grand Rounds presentation at a hospital in Boston. Like my 2003 presentation to the Medical Society Presidents, I described a future with greater transparency and accountability, and the increased use of electronic health systems – particularly since the HITECH Act had become law the month before. The responses included a “rebuttal” from the Canadian-born Department Chair arguing for a single payer system, and a Resident who felt that the Geisinger model in Danville, PA wasn’t replicatable or relevant because – unlike most of the rest of the U.S. – Geisinger dominates its geographically insulated area.

But the more things change, sometimes they don’t.  For example, I recently heard about a senior manager at a large integrated health system that refused to consider planning for the implementation of the ACA’s many provisions: First, Congress would repeal it. Then, it wouldn’t be implemented because Mitt Romney would win the 2012 election.  And lastly, the Supreme Court would overturn the entire law.  Of course, none of those things happened, so this large health system is now playing catch-up with their regional competitors.  Similarly, in early 2014 I spoke with the physician leadership from a state that has not embraced improvements in their clinical care systems or changing incentives for physicians, hospitals, or patients to improve the quality of care or control spending.  Their attitudes reflected a strong desire to maintain their status quo of autonomy, and particularly to not be held accountable (or responsible) for their patients’ clinical outcomes or the health of their communities. Basically they had healthcare delivery and insurance structures that hadn’t changed much since the 1980s, and such physician-centered care is much better for physicians than patient-centered care.

Health Reform Pivots at the Local Level

While my 2003 presentation to the Medical Society Presidents was in many ways a nexus for the work I’d been doing for more than 15 years, it also led me to start writing a book that had the working title “Fixing the US Healthcare System.” The 2008 election of President Obama (and the subsequent passage of the ACA/ObamaCare) led me to change the title to “Making Health Reform Work.”

Now in mid-2014, with many of the major components of the ACA having begun to be implemented – and their effects starting to be seen – I’ve returned to the book and the pieces I’ve been writing for almost 10 years. With the dramatic shifts that have occurred in that time, I’ve pivoted the book’s focus to explore more directly the important changes occurring at the local level and within healthcare delivery. Therefore, I’ve also changed the working title to “Pivoting the U.S. Healthcare System: A Guide to Making Health Reform Work.”

Goal of the Book

The goal of the book will be to provide readers with insights and greater understanding of how to evaluate and influence the rapidly changing healthcare world that encompasses delivery, financing, public health, and information technology – particularly at the local and personal level. The book will explore how initiatives at the local level are what will primarily improve the health of people and communities in the coming years. Specifically, while ObamaCare and governmental activities are changing the framework and the contours of the playing field, how local leaders, organizations, and communities are allocating their resources, setting their priorities, and improving their practices involving health benefits, clinical services, and public health activities are what will most dramatically effect the lives of people and communities.

The book will enable and empower people to alter and accelerate those important changes based upon their personal and local perspectives by working with different groups to make improvement more meaningful for them and their communities. This local multi-stakeholder engagement and alignment is increasingly recognized as crucial for improving healthcare quality and controlling costs: Large employers, insurance companies, and government programs now appreciate that they are not large enough to drive major changes in any market or at any provider organization. Similarly, large hospitals, health systems, payers, and public health agencies increasingly understand that their work and goals are interconnected so that their actions needs to be aligned, and at times even directly coordinated.

Physicians are also an important group to include in this process since physicians (and other clinicians) are primary guides for patients in making healthcare decisions, and greatly influence healthcare spending and quality.[1] And of course patients – and their indirect advocates in the media, government, non-profits, and foundations – need to be part of these intertwined dialogues and decision-making.  The bottom, middle, top, left, and right conclusions all indicate that in the struggle against rising healthcare costs and burdens of disease and disability brought on by aging populations and other factors, united we can succeed, but divided we shall continue down the same failing path.

p.s. To see an old version of the working summary click “Making Health Reform Work.” The latest summary and outline are on my whiteboard and computer.  Please contact me if would like more information about my progress, focus areas, and conclusions.


[1] As an old axiom states, “the most expensive piece of medical technology is the pen in the physician’s hand.”  Today, that prescribing and referring pen is being replaced with a keyboard, a mouse, and a touchscreen, but the effect is similar, even as electronic medical records and systems are raising their own concerns about costs and quality.

Medicare Trust Fund Solvency Projections (History Of)

The 2014 Medicare Trustees’ Report was released yesterday.  Amidst all the reporting was how the revised projections for the Medicare Trust Fund (for Part A) increased by 3 years from last year’s report. The Kaiser Family Foundation has a great summary of Medicare financing and projections for future spending, but below is another chart that shows the actual number of years of projected solvency for the Part A Trust Fund in the years since 1970 – in the years when the Trustees’ Report included such projections:

Medicare Trust Fund Solvency - 07-28-14-v2Two things to note about this chart: The dramatic leap up in 2010 mostly reflects a combination of the healthcare spending slowdown in the Great Recession and the legislative changes in the ACA that pared back Medicare payments. (Note – those payment reductions were included in Republican proposals for replacing/supplanting the ACA.)

Another interesting item in the Trustees’ Report that both Kaiser Family Foundation and Sarah Kliff have noted is an actual dollar decline in per Medicare beneficiary spending on hospital costs. This may be due to some combination of greater scrutiny for hospitalizations, greater efforts to avoid rehospitalizations, and medicines ability to treat more things as outpatients. However, it also might mean that Medicare enrollees are facing higher cost sharing if they are getting more treatments as outpatients, which are covered under Medicare Part B.

This all seems to confirm the old saying, “The more things change, the less they stay the same,” i.e., projections change as the underlying conditions don’t stay the same.

Medicaid and State Level Health Transformations

I recently guest lectured on Medicaid and state level health transformation at a George Mason University public policy class.

To start, I led the class through a discussion of how states differ from each other around 14-plus factors related to healthcare delivery, financing, policy, and politics. In this discussion we talked about the importance of policy makers appreciating those factors as they consider how to improve health, and the different routes states have taken for Medicaid improvements and expansion. (See picture of white board below.)

We had a great discussion, and I emphasized the importance of both multi-stakeholder alignment, and health information systems that can provide data for transparency and accountability – which together are fundamental to health improvement and reform efforts. Later in the class we talked about how all the state and federal health reform and improvement efforts have transparency and accountability at their core, and how decision making comes down to people and relationships. Continuing that theme, we discussed how healthcare is local, and for most states the relevant geographic “unit” for transformation of healthcare delivery, public health, and the social determinants of health is the city, community, or region – depending upon how each of those terms is defined.

One of my favorite parts of this class was talking with the students about the intersection of policy and politics. We talked about how the baseline for improvement/reform efforts are the 14-plus factors discussed at the beginning of the class, and the need for policy makers and implementers – such as the students in their current and future work lives – to keep focused on what measurable objectives they are trying to accomplish, i.e., not just on processes disconnected from outcomes. (See slide below.)

Thoughts or comments?

Health Reform and Transformation in San Diego & California

I recently sat down with Kevin Hirsch, MD, President of Scripps Coastal Medical Group* to talk about health reform and transformation in the San Diego region. (See video below.)

Dr. Hirsch’s insights are interesting and timely because California often precedes the rest of the country in adopting new approaches to healthcare delivery and financing problems.  An example of this may be California’s 2006 Hospital Fair Pricing Act, which addressed very high hospital bills for the uninsured. This month’s Health Affairs includes an article that analyzes the impact of this law, and the authors’ findings contrast markedly with Steven Brill’s Time magazine article, “Bitter Pill: Why Medical Bills Are Killing Us.”

The California law is a significant step, and the Health Affairs authors describe it as a “detailed and well-structured approach.” The Act did have  limitations: it only protects uninsured people with incomes under 350% of the FPL, the state has minimal enforcement activities, and it only covers hospital bills and not those from physicians or outside services. (Note: In 2011 the law was expanded to include bills from ED physicians.)

Since the ACA will leave many people without health insurance, the Health Affairs authors conclude, “Policy makers and health planners in other states searching for options to protect the uninsured should be encouraged by our findings and should seek to learn more about California’s approach and determine how they might adapt similar laws to their own state’s health care system.”


(Disclosure: I’ve known Dr. Hirsch for many years – and aside from out obvious East Coast-West Coast attire differences, we continue to share a similar hairstyle and are both working to improve healthcare quality and efficiency.)

 

*Scripps Coastal Medical Group includes more than 140 family medicine, internal medicine, obstetrics and gynecology, pediatrics, physical medicine and rehabilitation, rheumatology and general surgery clinicians practicing throughout San Diego County, and exclusively provides medical services through Scripps Health, a nonprofit integrated health system, under the Scripps Coastal Medical Centers brand.

Health Reform and Low-Income People in Washington DC

I recently sat down with George Jones, Bread for the City’s CEO, to talk about health reform and the challenges low-income people in Washington DC have accessing healthcare. The video of our discussion is below.  A couple of notes: 1. George’s title changed from Executive Director to CEO about a year ago.  I’ve known George for more than 15 years, so my bad when I introduce him as the Executive Director. 2. Please excuse my verbal stumbles and be impressed by George’s answers – we filmed this in one take in his small, hot office at Bread for the City.  I’m confident there will be improvement in future videos – and of course, your feedback is always welcome!

Health Spending: For What, To Whom, and Where It Is Heading

The data for 2011 US healthcare spending was reported in the January issue of Health Affairs.  Below are some graphs showing how spending was distributed across the different categories of healthcare services in the years 2000, 2007, and 2011, as well as who paid for the spending.  (My analyses and commentary follow these graphs. The source for all graphs is Health Affairs, 32, no. 1 (2013):87-99)

What Healthcare Spending Went For:


Where Healthcare Spending Funds Came From:
Three highlights from the Health Affairs article are:

  • The distribution of healthcare spending for various services and providers has been relatively constant despite significant growth in total and per capita spending. (See chart below)
  • Growth in hospital spending slowed in 2010 and 2011 after bumping up in 2009. (Y/Y increases were 6.7% in 2009, and 4.3% and 3.9% in 2010 and 2011, compared to 3.9% for total National Health Expenditures for each of these years over the prior year.) The Health Affairs article notes that “The growth in use of hospital services remains low, with the number of inpatient days declining by 1.1 percent in 2011, following a decline of 1.6 percent in 2010, and the number of outpatient visits increasing by 0.7 percent, a slowdown from the increase of 1.5 percent in 2010.”
  • The percentages of healthcare spending coming from private businesses and households has decreased. This probably reflects higher government spending for the new Medicare prescription drug benefit and increased Medicaid enrollment during the economic downturn being only partially offset by private insurers shifting costs to individuals.

Effects of Health Reform (ACA)

While only a few of the ACA’s provisions went into effect during 2010 and 2011, there has been much speculation as to how (and how much) the ACA has or will change healthcare spending.  The Health Affairs article includes data about changes in private insurance enrollment from the requirement that companies offer coverage for dependents up to age 26. But it also points out that this age group is relatively inexpensive to insure so it probably didn’t produce great changes in spending.  However, Medicaid coverage and spending did change significantly, with more people in Medicaid programs due to the economic downturn, and the states’ costs increasing with the end of the temporary bump in Federal matching rates.

The Health Affairs authors don’t speculate about is how healthcare providers and organizations are shifting their operations and attitudes in anticipation of various of various new Federal programs, such as the Shared Savings Program for ACOs, value based payments, EMR Meaningful Use incentives/penalties, and penalties for avoidable adverse events. With private payers expanding clinical and economic accountability for healthcare providers through various payment innovations that are aligned with Medicare’s policies, the acceleration of system-wide transformations may be greater than projected – and lead to greater and earlier cost savings.  I have written about the factors that may be moderating healthcare spending growth, and believe that the relatively slower rate in hospital spending  and inpatient days reported in the Health Affairs article are the leading edge of this trend.  However, as hospitals purchase physician practices they may establish local market power that limits competition, and the prices charged to Medicare by these acquired practices could increase as they shift from the category of clinicians’ office to hospital outpatient facilities. Conversely, to the extent that these integrated healthcare systems assume risk for savings and quality performance – probably with payments involving episodes or bundles of care – then these concerns will be diminished, although not eliminated if they can still limit price and quality competition and comparisons.

Looking Forward to Future Health Spending

The Health Affairs article speculates a bit about where healthcare spending is heading in the near future. And, as is typical when trying to predict the future, the article doesn’t completely agree with what others have written. Not to be critical of the Health Affairs authors, (or professionals at the Congressional Budget Office or other organizations), but modeling is hard. To illustrate how difficult this task is – and how it can lead to different predicted outcomes even with lots of historical data to work with – below is a map showing the multiple predicted paths for 2012 Hurricane Sandy.

Communicating the meaning of the latest data can also be confusing. For example, the New York Times and the Wall Street Journal delivered significantly different verdicts on the meaning of the Health Affairs article. The Times’ headline declared, “Growth of Health Spending Stays Low” and quoted the Medicare agency’s chief actuary as saying “’I am optimistic.  There’s lot of potential.  More and more health care providers understand that the future cannot be like the past, in which health spending almost always grew faster than the gross domestic product.’”  Conversely, the Journal’s headline was “Health-Cost Pause Nears End,” and the article noted that the Health Affairs article, “…showed that the amount of spending to treat individuals, as opposed to spending on administration and insurance premiums, began to rise in 2011.” It then concluded that this was “signaling that cutbacks in health spending hadn’t become permanent.”

Predicting the Future is Easy

Predicting the future is easy. Accurately predicting the future is difficult. 2014 will almost certainly bring significant changes to how many people in the US get health insurance, how healthcare organizations deliver care, and how Medicare and Medicaid operate.  Like CMS’ chief actuary, I am optimistic, even though I also recognize that he is also correct in that, “The jury is still out whether all the innovations we’re testing will have much impact.” But I also see his actuarial caution as a reason for optimism because I believe that modeling based upon few precedents causes projections to be overly cautious, which should mean that actual savings will be greater than expected.