Genetic Discrimination and the Future of Health Insurance

Have health insurance companies outlived their useful life?

The Genetic Information Nondiscrimination Act (GINA) is taking effect.  The employment provisions are effective on November 21.  The health coverage provisions began to apply on May 21, 2009, with group coverage required to comply with on the start of the plan or policy year following that date.  As a Monday NYT story describes,  the purpose of GINA is to prohibit discrimination in employment and health coverage on the basis of genetic condition.  The Times cites examples of denial of coverage on genetic grounds;  some additional “horror stories” are told of people denied coverage due to a genetic marker for a medical condition.

Genetic discrimination is widely regarded as an “unfair” basis on which to deny health coverage.   As then-President George W. Bush explained in 2001:

Genetic discrimination is . . . unjustified — among other reasons, because it involves little more than medical speculation. A genetic predisposition toward cancer or heart disease does not mean the condition will develop. To deny employment or insurance to a healthy person based only on a predisposition violates our country’s belief in equal treatment and individual merit.

This assessment seems to match our general sense of fairness.  But why is a genetic predisposition different from other predispositions for insurance underwriting purposes?  Does hypertension mean that stroke or heart attack will develop?  Does the occurrence of a heart attack mean that another will occur?  Not necessarily, but both are statistically valid indicators of future health costs, as are some genetic predispositions.  One person’s medical speculation is another’s actuarial probability.  So why ban the use of genetic information, but not the use of preexisting illness?  Or, for that matter, age and gender?

GINA passed overwhelmingly, but Congress has otherwise been slow to limit health-based underwriting.  Part of the explanation for carving out genetic information is its novelty, and the fact that one’s DNA is never one’s “fault.”  But manifestation of genetic conditions is also not one’s fault, and GINA has nothing to say about underwriting based on symptomatic genetic disease.  Maybe a more powerful force behind GINA’s passage was researchers’ fear that genetic discrimination would drive test subjects away from genetic research.  Dr. Francis Collins, then-Director of NIH’s National Human Research Genome Institute, testified to this concern:

[T]he science of genomic medicine is rocketing forward. But fear of genetic discrimination threatens to slow both the advance of such groundbreaking biomedical research and the integration of the fruits of that research into our nation’s health care.

So, is GINA’s incursion into health insurers’ common freedom to charge more for those likely to be sick an anomaly?  It does seem to run afoul of what Donald Light, in 1992, wryly called the “inverse coverage rule”:

the inverse coverage law: the more people need coverage, the less coverage they are likely to get, or the more they are likely to pay for what they get.

Increasingly, Americans seem to have had it with business models premised on denying care to those most in need.   A recent WSJ/NBC poll found that the most popular currently proposed reform provision “by a mile” was that forbidding exclusions for pre-existing medical conditions.

Here’s a modest proposal.  It is time to end insurers’ use of risk selection.  Insurers face steady erosion in their ability to risk-select as that practice increasingly rubs against our basic moral principles.  In addition, health coverage is less and less like “insurance,” as routine care is covered, and as it is easier and easier for insurers and consumers alike to discern who is likely to need to draw down on the “insurance” pool.   Insurers already do a great deal of their business, without bearing risk or using risk selection to generate income, administering self-funded plans for large employers (as ASOs or TPAs).  It is time for government to bear the risk (which it increasingly does anyway), and for insurers to be set to tasks that add social value.  They add value in their ability to form, maintain, and administer provider networks.  Why should their profit or loss depend on their ability to identify and exclude the needy?   Clearly health reform in 2009 won’t get us this far, but let’s start admitting it: exclusion from coverage and care on the basis of need for health care should not be a business model supported in America.

Taking Steps Toward Reform

Should an imperfect health reform bill be passed?  Health reform should be about four things: 1) expanding coverage to all; 2) providing health security for those already insured; 3) ending the fragmentation of health care delivery in favor of sound coordination of care; and, 4) constraining cost to ensure that we can afford appropriate care in the future.

The House leadership bill (HR 3962) does a good job on the first, reaching a large proportion of the uninsured — although it will not achieve universal coverage.  It also gets good marks for reforming insurance regulations — although its weak version of the public plan will make true insurance reform more difficult to achieve.  It makes some tentative progress on care coordination, mostly through pilots and demonstrations in public insurance programs.  It provides some cost saving measures in Medicare and through encouraging alignment of financing systems — but cost containment is clearly the weakest aspect of the bill.   So, should the reform be passed, warts and all?

After months of criticism of the majority’s plans and promises of the production of a better plan, House Republicans proposed a substitute to the House leadership bill.   How does it stack up?  The CBO finds that the Republican substitute would reduce the deficit over the next ten years by about $68 billion, which is about $40 billion less than the reduction the CBO projects from the Democratic version.   The CBO also estimates that the Republican bill would reduce the number of uninsured over the next ten years by “about 3 million relative to current law, leaving about 52 million nonelderly residents uninsured,”  compared with its assessment that HR 3962 would reduce the number of nonelderly uninsured by 36 million during that time period.  So, the GOP substitute would do less to reduce the deficit, and cover 33 million fewer uninsured.   It includes some insurance reform provisions, many based on consumer-directed models that tend to further fragment, rather than coordinate care.  HR 3962 is far from perfect, and the CBO’s estimates have been subject to criticism, but the reports provide food for thought for those who hoped that the Republican plan would offer a meaningful alternative.

Sometimes proceeding in steps is necessary, particularly with complex systemic reform.  Massachusetts has in many ways been a model for drafters of federal reform plans, and stands as an example of incremental steps toward full reform.  It enacted sweeping health insurance reforms in 2006, creating a marketplace for regulated private insurance, the addition of public plans, and responsibility shared among businesses, individuals, and providers.  It has been remarkably successful at expanding access, driving the uninsurance rate down to 2.6% as of the spring of this year, and enjoying continuing strong support within Massachusetts.    Costs are a growing concern.  But the coalition of business, consumer, and provider groups behind the reform anticipated the need to circle back and tackle finance.  Cost concerns have only grown with the economic downturn, as tax receipts lag and countercyclical demand for Medicaid coverage strains budgets.  Resolve to push forward appears strong.  Representatives of several stakeholders reported last year that,

Since passage, all stakeholder groups have remained deeply engaged in implementation.  Despite news reports of higher-than-expected costs, the governor, legislative leaders, and stakeholders have repeatedly reiterated support for full implementation.  This consensus, crucial to enactment, has proved equally vital to implementation.

Massachusetts reformers made the decision to proceed in two steps: coverage first, cost control second.   While no one is proposing a two-step process for federal reform, expanding coverage and reforming insurance practices have been the overriding emphases in Washington.  And HR 3962 does advance the cause of care coordination for the chronically ill.  It was interesting to see the Dutch Health Minister in a recent interview emphasize coordinated care as a central feature of reform.  In describing his country’s reforms (from which some draw lessons for our country), he explained:

We are trying to make sure that no one receives health care that is not coordinated. And [we intend] that the general practitioners cannot negotiate any longer with insurance companies unless they are part of a coherent group that is offering coherent care.

What does the GOP bill do for people with chronic illness?   The CBO found that provisions in the proposed substitute would “tend to increase the premiums paid by less healthy enrollees.”   The substitute, then, entails fiscal benefits for the well at the expense of those who most need care and coverage.

HR 3962 reforms the insurance market to safeguard coverage for those who have it now; expands coverage for the uninsured; and begins the arduous task of shifting care delivery from fragmentation to coordination.  The GOP alternative covers one-twelfth as many uninsured, makes coverage for the chronically ill harder to maintain, and does less to reduce the deficit.  Common sense tells us that taking positive steps toward reform is vital, and that the GOP substitute is no reform at all.

Medical-Legal Partnerships

Sometimes gesturing toward a good idea is worse than ignoring it.  Section 2537 of the House reform bill (HR 3967) would create a demonstration project supporting medical-legal partnerships.  Medical-legal partnerships are a great thing.  So why is Section 2537 bad?

Medical-legal partnerships (”MLPs”) help the poor and ignored get well.  Look at a couple of examples.

Refnely Jaime.   Refnely was a 3-year old who kept getting sick — pneumonia, rashes, and weight loss.  Her doctors realized that her problems related to her poorly maintained, vermin-infested housing, and referred her and her mother to the Medical-Legal Partnership in Providence, Rhode Island.  The attorney there, with the law on her side, prevailed on the landlord to bring the building up to code. Refnely’s health was restored through enforcement of sanitary laws.

Norris Nicholson.   Norris’s diabetes, coronary artery disease, arthritis, and other chronic conditions kept him from working.  His doctors prescribed medication to keep him well, but he couldn’t afford them.  Uninsured, it was either food or medicine; he had applied for disability-based Medicaid coverage, but was denied.  He was referred to the Southern Illinois Law and Health Project.  After another denial, his attorney filed a legal action, and the court found Norris disabled and ordered Medicaid coverage.  He can now both eat and take his medicine.

MLPs were the 1993 brainchild of Dr. Barry Zuckerman, a pediatrician at Boston Medical Center.  He recognized that some debilitating and expensive illnesses persist notwithstanding the smart, compassionate work of doctors, due to the crushing disadvantages of socioeconomic circumstance.  He partnered with an attorney to address the legal needs of his patients that stood in the way of their good health.  The idea became a movement, and there are now over 180 such partnerships around the country — a great achievement, but a drop in the bucket compared to the need.

So why is Section 2537 bad?  It provides for funding of MLPs to “assist patients and their families” to improve health outcomes, and enhance the treatment and prevention of chronic conditions.  The problem lies in Section 2537(c)(1), which prohibits using the funding “for any medical malpractice or other civil action or proceeding.“ The malpractice prohibition makes some sense — but no other civil action or proceeding?  Norris’s attorney asked very nicely that he be approved for Medicaid coverage, but the government said no.  Without resort to litigation, Norris would still be choosing between drugs and medicine.  And if Refnely’s attorney had not been able to threaten enforcement of sanitary codes, her landlord would still be content to see her dodging rats and mice.

MLPs can save lives and money.  On many occasions, a lawyer or paralegal can achieve these goals without litigation by helping a patient understand a government program, or by explaining the law to a landlord.  But on occasion it is necessary to enforce the law — something for which non-poor people routinely seek legal advice.  Section 2537 gestures to MLPs, but ties their hands.  Leave in the malpractice bar — MLPs often steer clear of these matters in any case — but let the advocates to their jobs.

Reforming Medical Treatment for People with Serious Mental Illness

What group could health reform help most?  The obvious choice (maybe the right one) would be people with no insurance, or lousy insurance.  It is clear that un- or underinsurance is bad for your physical and fiscal health.  How about people in need of skilled nursing care and assistance with activities of daily living?  Some provisions of pending bills would allow these folks to avoid the Hobson’s choice of institutional care or too little care.  But the cohort that might stand to gain the most from reform is the population of people with serious mental illness.

People with serious mental illness have long been known to have excess morbidity and mortality as compared to people without serious mental illness.  Although much of this excess is attributable to “unnatural causes” - e.g., suicide – studies have identified in this population substantially elevated natural causes of illness and early death from conditions such as cardiovascular and respiratory disease.    Some of these conditions are caused or exacerbated by side effects of newer atypical antipsychotics.    Much of this excess morbidity and mortality is preventable, and some causes (e.g., poorly controlled diabetes) could be addressed through sound chronic care management techniques I’ve described in an earlier post.    Inadequate attention to the management of the medical concerns of people with severe mental illness could be a particularly attractive goal of health delivery reform.

The National Association of State Mental Health Program Directors issued a Technical Report last year on this issue.  Its literature review rendered the following judgment:

Recent data indicates that, on average, persons with serious mental illness die 25 years earlier than the general population.  Eighty-seven percent of years of life lost to premature death are due to chronic disease, especially infectious, pulmonary, and cardiovascular diseases, and diabetes.  Cardiac events alone account for more deaths than suicide.

The data are emerging; more work needs to be done to evaluate comprehensively the connection between incidence of severe mental illness and lack of appropriate, coordinated medical care.  Whatever exact relationship is revealed, the situation is clearly dire: the fragmentation of our health care system causes particularly severe problems for people with serious mental illness.  The Association noted that emerging chronic care management techniques offer a way out of this unconscionable mess.  It advocates the adoption and application of patient-centered medical home programs that bring together primary care, mental health care, and care for chronic medical conditions in a patient- and community-centered environment.

The current bills offer some funding for such measures, at least as pilots.  The House bill, for example, contains language supporting Medicaid medical home demonstrations with initial funding tilted to the federal, in order to encourage states to try these programs out.  Let’s hope these and similar measures, which offer hope for the correction of terrible health disparities in a cost effective manner, survive the production of final legislation.

The Cost of (Not) Implementing Chronic Care Management

Health reform’s primary beneficiaries will be the uninsured, but it should also benefit those with “good” insurance.  We all know horror stories of well-insured relatives and friends driven from pillar to post in attempts to get good treatment for serious chronic conditions.  It too often seems that no one is in control: doctors aren’t paid to talk to patients, but rather to do things to them, and the roles of other professionals (e.g., advanced practice nurses) are sometimes minimized.  As I’ve described earlier, there is some good news regarding medical practice reform in the bills, particularly for people with Medicare or Medicaid.

How do we get people into medical settings where their chronic conditions can be well-managed?  Interesting work is being done in many quarters on this issue.  In a recent Health Affairs paper, Steven D. Pizer and coauthors reported that people with chronic conditions in regions of the country with thin Medicaid programs are likely to be uninsured, notwithstanding Medicaid’s strong orientation toward disability and chronic care.  In a companion article,   Andrew P. Wilper and coauthors reported on high levels of uncontrolled — often undiagnosed — chronic conditions (hypertension, diabetes, and elevated cholesterol) among  people without insurance.  Public insurance expansions in pending reform bills would assist these low-income people with chronic illness get coverage, and the chronic care provisions have the capacity to provide appropriate medical management of their most pressing conditions.

Structure is emerging on best practices for the delivery of sound coordinated care.  The NCQA has worked with physician groups to create tools to evaluate practice settings according to their ability to serve as therapeutic homes for all, but in particular for those with chronic conditions.  The Physician Practice Connections - Patient-Centered Medical Home program provides tools for public and private payers to evaluate a physician practice before designating it a “medical home” - and compensating it accordingly.  The tools evaluate prospective medical homes on factors such as their active support of patient self-management; use of non-physician staff for patient management; employment of procedures to maintain high levels of patient communication; and adoption and use of evidence-based care management protocols for chronic illness.

So how much does it cost to do this right?   A recent study from Commonwealth Fund sheds some light on this complex issue.  In the study, Stephen Zuckerman and coauthors take on the difficult task of examining the marginal cost of converting a 20^th Century practice to a 21^st Century medical home.  It makes interesting reading, and tentatively suggests that the cost could be modest.  Zuckerman et al. are attempting to compute cost. They recognize that cost is only a component in a more important calculation: what is the value of creating medical homes?  They cite to a 2008 Deloitte report that gathers research tending to show that the cost is probably worth it, even in purely economic terms.  That is, it appears that the savings achieved in avoided hospitalizations and other expensive interventions is significant, washing out the cost of supporting sound chronic care management.  It is not, of course, only about efficiency; ending the chronic care horror stories is the true goal.

Expanding insurance is only the first step in delivering the care people need.  For people with chronic illness, the finance and delivery system needs to work with the whole person, family, and community, and not slice the patient into 8 minute blocks and procedure codes.  A consensus statement of the American Academy of Family Physicians, the American Academy of Pediatrics, the American College of Physicians, and the American Osteopathic Association describes a commendable principle of care coordination that has particular application for people with disabilities and chronic illness:

Care is coordinated and/or integrated across all elements of the complex health care system (e.g., subspecialty care, hospitals, home health agencies, nursing homes) and the patient’s community (e.g., family, public and private community-based services).  Care is facilitated by registries, information technology, health information exchange and other means to assure that patients get the indicated care when and where they need and want it in a culturally and linguistically appropriate manner.

Practice follows payment.  Payment reform must facilitate the adoption of practices that serves chronic needs.

Home and Community Based Services in Health Reform

As we head to floor votes and reconciliation, it’s important to keep our eyes on some of the less visible programmatic issues in the reform proposals. Many of these issues are old friends, have been kicking around Congress for years, and have been hammered out by members, advocates, and staff over many months. It would be a shame for them to be left on the cutting room floor in the interest of a “cleaner” bill. Home and community based care is one of those issues.

The reform bills adopt two complementary strategies to improve access to long term care (LTC): correct Medicaid’s institutional bias, and shift some LTC financing away from Medicaid. There is some history on which to build for the first strategy. Home and community based service (HCBS) reforms have chipped away at Medicaid’s institutional bias over recent years. HCBS waivers have increasingly moved care to the community settings, and reforms derived from DRA ’05 allowed further state flexibility in this area. Governors are strongly in favor of moving LTC funding to the community –- usually the most appropriate and economical setting –- but are seeking financial protection from increased demand. A recent paper from Harriet Komisar and others for the Scan Foundation proposed a four-prong proposal for HCBS Medicaid reform:

• Require –- or provide strong financial incentives for –- states to expand home and community-based services.
• Provide federal financial assistance to states through an enhanced matching rate to help finance expansions.
• Make home and community-based services eligibility available on an equal footing with nursing home care.
• Invest in workforce development.

Read more

Consumer Protection in a Reformed Health Care & Insurance System

Implementation is critical to the success of translating universal coverage into access to appropriate health care for all.  Sound follow-through demands the design and execution of well-tailored consumer protection regulations. The first step is a prohibition of underwriting or rating decisions based on preexisting illness.  Insurers have agreed to this reform, as a quid pro quo for the millions of new customers they’ll get from coverage mandates.  Universal coverage and this prohibition of discrimination go together.  Insurers are right that it doesn’t make business sense to ignore preexisting illnesses if consumers can wait for illness to appear before contributing to the insurance pool.  They seem to agree that coverage mandates can adequately do the work of preexisting illness exclusions, rendering them superfluous.

Insurers’ position on non-discrimination would clearly change if folks like Rep. Tom Price (R. Ga.) have their way.  Price objects to mandates because they would allow the government to define “insurance” thereby disadvantaging some forms of currently-marketed coverage, such as bare-bones and HSA-linked consumer-driven products.  But underinsurance has been devastating the American middle class for years; real reform must establish basic levels of fiscal security, as well as medical coverage.  Representative Price’s attack on standards is, then, merely a back door attack on universal coverage.  It is a necessary package deal: either we have universal coverage with an end to preexisting illness exclusions, or markets will continue slicing and dicing “insurance,” leaving huge gaps in coverage. Read more

Implementing Reform: Children with Special Health Care Needs

The public option took a hit on Tuesday, as the Senate Finance Committee rejected amendments adding it to the Chairman’s Mark of the Baucus bill. As I have written previously, a public plan could improve care for the most vulnerable, including those with chronic illness, who tend to struggle for appropriate care under commercial plans. If the public option is dropped, the implementation of the resulting private plan-based system, including enforcement and regulatory design at the federal and state levels, becomes that much more critical to the task of assuring access to appropriate care.

The bills build on the benefits design of the private insurance market, as did Medicare and SCHIP before them. Those programs adopted familiar, private-sector benefits design and payment methods for political and pragmatic reasons: powerful stake-holders were comforted, and implementation was simplified. The bills build on this lineage. The Baucus bill, for example, requires all plans offered by the insurance exchanges to provide:

preventive and primary care, emergency services, hospitalization, physician services, outpatient services, day surgery and related anesthesia, diagnostic imaging and screenings (including x-rays), maternity and newborn care, pediatric services (including dental and vision), medical/surgical care, prescription drugs, radiation and chemotherapy, and mental health and substance abuse services that at least meet minimum standards set by Federal and state laws.

Pretty standard stuff. But describing a slate of covered benefits, and ensuring that that care is properly delivered by private, mostly for-profit firms, are different things entirely.

Take the example of children with special health care needs (”CSHCN”). The Maternal and Child Health Bureau of DHSS defines CSHCN as “…those who have or are at increased risk for a chronic physical, developmental, behavioral, or emotional condition and who also require health and related services of a type or amount beyond that required by children generally.” The Catalyst Center at Boston University identifies these children’s health conditions as including:

chronic illnesses such as diabetes, sickle cell anemia, cystic fibrosis, and heart disease; developmental disabilities such as mental retardation, sensory impairments, and autism spectrum disorders; emotional or behavioral health needs including ADHD and mental health conditions; and physical disabilities such as cerebral palsy, spina bifida, or muscular dystrophy.

Simply providing “health insurance” to children with these conditions is no guarantee that they’ll receive appropriate services. A 2002 study by Harriette Fox and others for HRSA reported that insurers have interpreted contract terms to exclude categorically some conditions such as mental retardation or “inorganic disorders.” Others have limited medically necessary services such as speech therapy or habilitation therapy because they are not curative or restorative, but merely needed to maximize a child’s ability to function.

These contract terms and their interpretations have not often been challenged by state departments of insurance, because those terms and interpretations have the power of custom and industry practice behind them. These customs and practices, however, can deny care that children desperately need to live socially integrated and healthy lives. Amy Davidoff and coauthors in 2004 examined the difference in children’s coverage experiences when covered by Medicaid on one hand, or by private plan-mimicking SCHIP on the other, with respect to denial of access to needed services, including medically necessary ancillary services. They reported that,

Medicaid-eligible children tend not to face these concerns, in part because Medicaid explicitly covers medically necessary services not covered by private insurers. To the extent states pattern their SCHIP programs on private insurance and not Medicaid, the children lose that benefit.

The Baucus bill adds to Medicaid’s strength in this regard. At Title II, Subtitle B of the Chairman’s Mark (after the acceptance of an amendment from Senator Debbie Stabenow), a new Medicaid state plan option will permit states to offer, for children with at least two chronic conditions or one serious and persistent mental health condition,

Comprehensive care management; care coordination and health promotion; comprehensive transitional care, including appropriate follow-up, from inpatient to other settings; patient and family support; and referral to community and social support services, if relevant…

What of families covered by the private competitive marketplace of health insurance or SCHIP? The bills speak in general terms of the power of federal and state regulators to ensure adequate and appropriate coverage. This enforcement power should be used to ensure that coverage applies to chronic and disabling conditions as it does to run-of-the-mill medical/surgical cases. Future posts will examine some of the specific enforcement language, which will be key to the realization of the promise of reform to CSHCNs and others with chronic and disabling conditions.

The 85% Solution and Health Costs

Reform may be bogging down over cost issues.

Blue Dogs and Republicans argue that the cost of reform is too high.  Attempting to predict what large expenditures set off fiscal responsibility alarms is chancy (Financial bailout? Iraq war? Health coverage for all?).   Public money should be spent wisely, but outrage at the scale of the thing — about $100 billion per year to bring equity and sense to a system that cost $2.4 trillion in 2008, and is projected to cost $4.4 trillion by 2018 — doesn’t scan well.  Time lines have been stretched.  The level of political energy has ratcheted up, with the President fully engaged, and business and the health industry  more publicly pushing back.

It may be time to think back to a catch-phrase of the last health reform period.  It was common at that time for objectors to assert that reformers were applying a 100% solution to a 15% problem — that is, that comprehensive reform was unnecessary to address a problem affecting “only” the 15% of the population without health coverage.  There are glimmers of a similar argument this time, with objectors asking whether it is worth it for the haves (taxpayers) to provide for the have-nots (the uninsured).  This argument would be flawed definitionally, as plenty of the working poor without insurance pay a higher total tax rate than better-off insured people.  More significantly, the message should be rejected on its merits: this round of reform is necessary for everyone, and not just the uninsured.

So, what’s the 85% solution?  The figure 85% pops up in a couple of interesting places in the health reform debate.  First, a NYT/CBS poll last month found that about 85% of Americans believe that the American health system needs to be “fundamentally changed or completely rebuilt,” numbers that match well with an EBRI Issue Brief published earlier this month.  This number demonstrates the inclination of the insured to support reform.  After all, the other place the figure 85% pops up in insurance coverage rates — 85% of Americans are insured, and 85% of Americans recently told Gallup that their own health care as “excellent” or “good.”  In the sharpening public debate, progressives should keep this group in focus.  They’re empathetic toward the uninsured, but that empathy is doing too much work.  They should be engaged, in addition, by the fact that health reform is in their direct interest.  They need reform for at least three reasons: our system is fiscally unsustainable and will run off the rails in coming years without comprehensive reform; our system encourages procedure-driven medical practice that serves patients poorly, and even harms them; and the basis for competition in the private insurance market is less on quality and service, and more on seeking out “good risks,” driving into public programs or uninsurance those who most need care, inefficiently increasing taxes or health insurance premiums for the 85%.  Those rallying support for reform should pay heed to these issues.

Attention to an 85% solution is not in tension with covering the 15%.  Uninsurance kills people, and extending coverage to all is critical.  Most Americans clearly care about universal coverage, but the negative blitz will be intense, and it will be helpful to also emphasize that reform helps the 85% as well as the 15%.  Benefit to the 85% sometimes gets underplayed, allowing nay-sayers to create a divisive us-them dynamic.  Today’s reform efforts are necessary because the system is broken with respect to all participants.

All of the health reform draft bills address the key issues of cost, practice reform, and risk selection to greater or lesser degrees.  They could, of course, be improved in these areas. But too often, the debate tends to be reported as though sponsors are advocates only for the uninsured, while Blue Dogs and Republicans fight a rear-guard action to protect those with insurance.  If the struggle is so mischaracterized, reform is unlikely to pass.  We need reform that contains cost for all, restores incentives to practice humane medicine, and reduces as much as possible insurers’ incentives to avoid covering those most in need of care.  Below are some quick thoughts on comparative effectiveness analysis as cost containment, in this spirit.  I hope to touch, in coming days, on the need for reimbursement reform and for an end to insurance competition on the basis of risk.

Cost containment: Health Technology Assessment

There’s been a lot of talk about how to “bend the curve” of health care cost projections.  Containing cost increases helps everyone, of course.  It would be tragic indeed for Congress to expand coverage to all only to find in a few years that we can’t sustain the new program.  One important, and controversial, aspect of cost containment is comparative effectiveness research (CER).   CER is often demonized as rationing.  The Institute of Medicine’s recent work in this area defines this hobgoblin, however, in terms that seem positively pro-patient:

[CER] is the generation and synthesis of evidence that compares the benefits and harms of alternative methods to prevent, diagnose, treat, and monitor a clinical condition or to improve the delivery of care.  The purpose of CER is to assist consumers, clinicians, purchasers, and policy makers to make informed decisions that will improve health care at both the individual and population levels.

Shouldn’t we care about whether expensive new devices and procedures improve health?  The scare tactics should be taken on in two ways.  First, as the IOM makes clear, most CER is directed toward choosing the clinically appropriate alternative.  A second, rhetorically more difficult task, is to point out (as have both my colleague Frank Pasquale and economist Uwe Reinhardt ) that “rationing” is not a swear word, but rather a description of a method for allocating scarce resources.  The choice isn’t whether rationing to some degree will occur, but rather whether it will be done through a transparent process rather than on the basis of ability to pay — or on the basis of an insurer’s preference.

That good health technology assessment should be a concern for the 85% was made clear by David Leonhardt’s recent NYT piece on slow-growing, early stage prostate cancer.  Leonhardt describes the five forms of treatment commonly prescribed, ranging from “watchful waiting” to proton radiation therapy.  The price, he reports, ranges from “a few thousand dollars” to over $100,000.  Which works best?  No one knows.  Remember — the question posed by the article isn’t which produces the most QALYs per unit cost; rather, it reveals that there is no real scientific basis to choose among the options.  Shouldn’t we encourage research to allow us, and our doctors, to choose wisely?

Competition among private plans: Who is served?

Our private health insurance marketplace works poorly.  Commentators including Jacob Hacker, and many Democratic legislators, argue that the creation of a public plan to compete with existing private plans will assist in the dual tasks of improving quality and reducing cost inflation.  Responding today to these assertions in a NYT Op-Ed, David Reimer and Alain Enthoven argue that there is a role for government in a reformed health finance system, but not as a market participant.  Rather, they argue, it is as a regulator that government can cure the ills of our poorly functioning insurance marketplace.  Implementing their vision might or might not benefit well, low-cost workers; it would not, however, help those with chronic illness and other high-cost insureds — those who need coverage the most.

Reimer and Enthoven argue that government-run exchanges can adequately address market failure in the health insurance market, allowing well-regulated private insurers to compete in terms of price and quality.  The exchange would ease consumer comparisons of insurers by limiting incentives (tax or otherwise) to a benchmark created by reference to the lowest-price qualifying plan.  As consumers would then be required to pay any excess out of pocket, plans would be incented to stay at or close to the benchmark price, driving cost pressure down to providers, thereby reducing health inflation.  At relatively uniform prices, plans would presumably distinguish themselves by putting together “good, economical plans.”

The argument over whether the market for purchasing health insurance could operate in a classically efficient manner, at least absent distorting outside influences, is long-running.  Enthoven has argued the affirmative vigorously and ably for decades.  Tim Jost and others have argued that classical economic analysis is largely inapplicable to the market for health insurance because the timing of the purchasing decision confounds consumer decision-making, and because health care is a sufficiently special good that we are unlikely to hold people to their restrictive ex ante decisions as to coverage.

Let us for the present accept that a market for health insurance, well-regulated as Reimer and Enthoven suggest, can produce “good, economical plans” for the average consumer.  This would occur because insurers would seek to enroll as many of these average consumers as possible, and to maintain good service and low pricing to keep them enrolled.  But, as I described previously,  there is a class of people insurers would not welcome.  Health care costs are heavily concentrated in the sickest 10% of consumers, and many of the most expensive users are easily identifiable in advance because they have chronic illnesses.   Rational, self-maximizing insurers would shun these consumers absent some risk-adjustment payment Reimer and Enthoven do not mention, and that indeed appears not to exist to an extent adequate to reasonably combat insurers’ selection bias.  Insurers can be required to offer them coverage, even to provide coverage for chronic care services.  But will rational, self-maximizing insurers serve them well, left to their own devices?  Why would they, if they could discourage their patronage by providing lackluster care coordination, home care, physical therapy, and other services that are markers for expensive chronic illnesses?  We ought not rely on self-interested market participants and expect them, all else being equal, to act contrary to their own self-interest.

Competitive private markets for health coverage might make sense if health costs were homogeneously spread, or even if high costs occurred unpredictably.  In a world where a large number of Americans are predictably poor bargains for insurers due to known chronic conditions, we need, as an option, an entity whose sustainable, reliable mission is to provide good, economical coverage for those who most need care, and who incidentally represent a substantial portion of our health care budget.  If committed public plans show the way to excellent chronic care coordination, we will be able to judge the efforts of private insurers in this important regard; otherwise, the needs of the chronically ill can too easily be swept under the rug.

Public plans and chronic care

 

The public plan question continues to permeate health reform discussions.   Last week, surprising analysis from the CBO seemed to be leading some Democrats to support stripped-down reform.  On Sunday, polling data was published showing overwhelming support for a public plan that could compete with private plans in a reformed marketplace.  Senator Conrad has proposed a “health cooperative” as a “compromise” between those for and against public plans, suggesting that a plan operated by and for its members could serve many of the functions of a public plan, without presenting the political problems presented by public plans - which he regarded as insurmountable.

Tim Jost and Tim Greaney in previous posts here and here have raised important concerns about cooperatives.  Cooperatives, as they point out, are not new; in the form of mutual insurers, non-profits, and Blues, things very like what Senator Conrad describes existed for decades.  Unfortunately, they have mostly wandered from their community mission to mimic the business practices of for-profit insurers.  Senator Conrad may be agreeing on forms of oversight and organization of a “cooperative” that may lessen the gulf between his original proposal and those of public plan proponents.

What does this have to do with chronic care?  Reform 2009 has focused on access and the uninsured, although cost is certainly another driver.  It is now well-known that health costs are not homogeneously spread; instead, a small number of people need most of the expensive care each year.  Many of these people need expensive care because they are living with multiple chronic illnesses.   Care for chronic conditions is often poorly coordinated, and the costs of care are increasingly shifted to the patient in the form of copayments, coinsurance, and deductibles.

Current draft reform bills gesture to the need to coordinate chronic care.  The House June 19^th House version, at section 1178, would create “fully integrated dual eligible special needs plans” to “optimize” the health and well-being of people eligible for both Medicare and Medicaid, with serious chronic illnesses, and at section 1302, would create a Medicare medical home pilot program for people with chronic illness.  What about those covered in the private marketplace?  Section 1441 would add as a “consideration” in the Secretary’s setting of health priorities “health care provided to patients with prevalent, high-cost chronic diseases.”        The Senate version would directly address the chronically ill in private insurance.  Section 101 would amend the National Health Service Act to require health coverage to contain  ”care coordination and chronic disease management” activities, as well as “medical home” provisions which, as described further in section 212 of the draft bill, would require the plans to provide for medical teams to coordinate chronic  care.

Adding chronic care management provisions to Medicare and Medicaid is a good step.  Nudging private plans to provide appropriate chronic care is also a good thing.  As Robert Kane (University of Minnesota), Edward Wagner (MacColl Institute), Thomas Bodenheimer (UCSF), and others have increasingly demonstrated, patient-centered, clinically-based chronic care coordination has the potential to greatly improve care and patients’ quality of life.  There is increasing evidence that chronic care management can save money, as well.

Private plans - for-profit and non-profit - are aware of advances in chronic care, and to varying degrees have adopted innovative care coordination methods.  But they don’t do enough, for two entirely rational reasons.  First, employers and individuals switch health insurers frequently, for a variety of reasons, leading insurers to regard members as “theirs” for only a few years.  Paying for expensive care (e.g., bariatric surgery for obesity) that pays dividends over a longer time frame, then, pays dividends for their competitors.  Second, insurers who do an excellent job maintaining panels of chronic care specialists, and coordinating care among them, risk becoming “sick people magnets,” attracting exactly those people their actuaries tell them will hurt their bottom line.  Risk adjustment is a partial corrective, but clearly does not level the playing field enough in a market where marginal profits spell success or failure.  Mandating that insurers act against their interests is the right thing to do in this case, but we should not be surprised if they react with less than dizzying zeal.

We all have a chronically ill parent, child, grandparent, or friend whose health has spiraled down because our current delivery and finance systems have failed them.  There are many barriers to reversing the trend away from patient-centered, humane, chronic care.  One barrier that must be addressed is the structural failure of our competitive health insurance market in this regard.  It doesn’t pay to be good at chronic care, and things that don’t pay are, for perfectly understandable reasons, problematic in that marketplace.

President Obama said yesterday that competition from public plans can be “an important tool to discipline insurance companies.”  Others have argued that the public plans can serve as a benchmark, or a compass setting, for private plans.  In chronic care management, here’s what that might get us.  A public plan can be charged with doing an excellent job coordinating chronic care.  Private plans can be similarly charged, but, for the reasons described above, they will have strong market interests to avoid that charge.  The public plan in this area (as in others) can allow us to recognize, by comparison, how well private insurers are doing at the task we most need them to do: provide care for the ill — for those who really need health coverage and care.

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