Meanwhile, Congress chugs along with a health care bill

Highly recommended article from David Leonhardt, Econonics correspondent at the NYT.

Since I’ve resigned myself that something like one of the two bills in Congress is going to pass, I hope it does something related to costs, like at least keep the “cadillac” tax in place to stop the maddening growth of tax-subsidized employer-based health care.

He seems optimistic about the Senate bill. I’m not, but it is better than the bill that just passed the House.

Commenting on the Baucus plan

So, I’m back from vacation. I’m sure my one reader missed me.

Marc Ambinder, by all I can tell a left-leaning blogger, has a nice analysis of the Baucus plan on The Atlantic where he points out how it really is a good start to something moderate. On first blush, I’d agree, given that the ever-more-shrill Republicans broadly puked on it and the liberal left complained greatly. That says to me it must be pretty good!

The bill represents by far the most serious effort to implement the innovative thinking from the community of health care reformers looking to move the medical system away from today’s fee-for-service model toward a system that ties payments to providers to results for patients. It contains about a dozen major ideas-most of them implemented as national programs under Medicare, not merely as pilot projects-to nudge the medical system toward adopting the integrated models used by institutions such as the Cleveland and Mayo clinics and the Geisinger Health System to deliver high quality care at lower cost.

This may be a tad optimistic. Part of why those integrated health clinics do well is because they can skim the cream and only treat customers who they are good at treating. Let’s get some specifics:

Starting in 2013, the bill imposes payment penalties on hospitals who readmit too many patients for preventable reasons after treatment. It imposes more modest penalties on hospitals whose patients acquire the most infections within the hospital itself.

This is great. I think one of the biggest problems we have is the pay-for-treatment model. Any steps away from that I support. And penalties for re-admittance is likely a good idea – one of the great scandals in medicine today is how many infections are contracted at hospitals.

Another proposal addresses the concerns popularized by surgeon and New Yorker writer Atul Gawande on the vast divergence between spending on medical services in different communities: that provision would compare the amount all physicians spend on patients with similar conditions, and starting in 2015 cut Medicare reimbursements by five per cent for those who order up the most care. Hospitals would receive similar treatment. Today’s law requires hospitals to record whether they meet a list of quality measures, like providing aspirin to heart patients. The Baucus bill, for the first time, would link their reimbursements to their actual performance on those measures.

I’ve written before on Atul Gawande’s findings, but I’m a bit skeptical here. I like linking pay to outcomes, but the problem is that many of the outcomes are hard to measure. A hospital may be great at getting aspirin to heart patients, but worse in other areas that are harder to measure. I suppose it is an improvement, but there will most certainly be unintended consequences.

This is also a good idea:

The bill does use the pilot mechanism for another big reform: it authorizes a voluntary national test on bundling payments that would provide incentives for doctors, hospitals and nurses to coordinate care for a patient admitted to hospitals. The bill would encourage such providers to work together by allowing them to share in any savings they produce.

And this is my favorite part, but also the one most likely to be attacked by a traditional Democratic power base, the unions.

One final element in the bill could also put downward pressure on long-term costs: the tax on the most-expensive insurance plans. That proposal achieves, in somewhat diluted form, the goal many reformers hoped to advance by capping the tax exclusion for health insurance provided through employers: encouraging consumers to pick less-expensive plans.

I hope that one stays in. This will be one of the harder things to keep in the bill, but Obama has supported it, so hopefully it will also stay:

The bill creates a second new institution that could be even more important: an independent Medicare Commission, as Obama has proposed. The commission would be required to offer proposals for cost-savings whenever Medicare spending rises too fast and Congress would be required to give their proposals fast-track consideration. The commission would likely become a vehicle to move into law the most promising payment and coordinated care reforms that emerge from the tests and pilot programs that the bill’s other provisions set in motion. “If it develops into a respected independent body it could be one of the most significant parts of this legislation,” said the senior administration officials. “I think that’s the most auspicious path forward for promoting fundamental reform.”

We’ll see. There are a lot of new incentives in this bill – if it passes in any form like it is right now, things will definitely change, and hopefully for the better. The problem with any big change is that there most certainly will be unintended consequences, just like when they passed the tax deduction for employer-provided health insurance decades ago.

Why is health care so expensive?

From Atul Gawande in the New Yorker, we bring you McAllen, Texas, the most expensive city in the U.S. for health care.

I’ll give you the cliff’s notes version of the important points:

1. Doctors. The doctors in McAllen are businessmen first, and not only practice medicine, but form real estate partnerships, invest in retail space, etc.
2. Whole Person Care. There is much discussion about the Mayo Clinic which pays their staff flat salaries (not by the procedure) to deliver good health outcomes. In Grand Junction, Colorado, doctors have agreed, informally, to work together to pass information and not duplicate care to deliver good health outcomes.
3. Nobody has any idea what things cost. It’s not like the doctors/hospital admins/etc. are trying to squeeze as many dollars as they can out of their patients. The folks in McAllen were genuinely surprised to find out they were anything other than average cost.
4. Higher cost does not equal better outcome. But you probably knew that already.

Update: Atul and some others have an Op-Ed in today’s NY Times