PHYSICIANS FOR A NATIONAL HEALTH PROGRAM 29 EAST MADISON SUITE 602 CHICAGO, IL TEL: (312)

The Uninsured

Hannum thought he had a stomach flu or food poisoning from bad chicken. On Monday, his brother saw him looking ashen and urged him to go to the hospital. "He had a little girl on the way," his older brother Curtis Hannum said. "He didn't want the added burden of an ER visit to hang on their finances. He thought 'I'll just wait,' and he got worse and worse." By the time Hannum got to the hospital and was admitted to surgery, it was too late. Paul Hannum, 45, died on Thursday, August 3, 2006, from a ruptured appendix. His daughter, Cameron was born two months later.

Financial Suffering Among the INSURED

Rising Economic Inequality

Persistent Racial Inequalities

Racial Disparity in Access to Kidney Transplants

Rationing Amidst a Surplus of Care

Unnecessary Procedures

Variation in Medicare Spending: Some Regions Already Spend at Canadian Level

Half of Americans Live Where Population Is Too Low for Competition Source: NEJM 1993;328:148 A town’s only hospital will not compete with itself

ACOs: A Rerun of the HMO Experience?

Why the ACO/HMO Concept Resonates Proliferation of redundant high tech facilities and useless, even harmful interventions Neglect of primary care, public health, prevention, mental health Lack of teamwork Widespread quality problems need system solutions Inadequate public accountability

HMO and ACO: Similar Definition, Purpose, and History Diagnosis: FFS and “fragmentation” Rx: Invert FFS incentives, shift insurance risk to doctors; “protect” patients with report cards; consolidate providers into larger entities Same vague definition: network of providers “held accountable” for cost (via capitation) and quality (via report cards) Shared poster child: Kaiser Permanente Both initiated by politicians advised by key policy entrepreneurs (HMO: Paul Ellwood; ACO: Elliot Fisher)

HMO-ACO Logic FFS is the problem; capitation (shifting insurance risk) the solution. But... small clinics and hospitals can’t bear risk, so consolidation is necessary. Shifting risk creates incentive to deny care, so report cards are necessary.

Predicting the Impact of ACOs Track record of HMOs Results of Medicare’s Physician Group Practice Demonstration, Evidence on tools ACOs likely to use:  prevention and disease management  “care coordination”  report cards and P4P schemes  electronic medical records

Prospect of ACOs is Already Causing Consolidation “ When Congress passed the health care law, it envisioned doctors and hospitals joining forces, coordinating care and holding down costs…. Now, eight months into the new law there is a growing frenzy of mergers involving hospitals, clinics and doctor groups....If ACOs end up stifling rather than unleashing competition,’ said Jon Leibowitz, the chairman of the [FTC], ‘we will have let one of the great opportunities for health care reform slip away.’” New York Times, November 21, 2010, A1.

Medicare’s PGP Demonstration: An ACO Prototype “The ACO model builds on similar initiatives that Medicare has implemented in the past several years. Starting in 2005, the Physician Group Practice Demonstration engaged ten provider organizations and physician networks, ranging from freestanding physician group practices to integrated delivery systems, in a ‘shared savings’ reform.” McClellan, McKethan, Lewis and Fisher. Health Affairs 2010;29:

Medicare’s PGP/ACO Demo. Project : Gaming, But No Savings “T he model for the ACO program... has been tested in the PGP Demonstration Project... diagnosis coding changes the PGP sites initiated... produced apparent savings that resulted in shared savings payments to some of the demonstration sites, but not actually fewer dollars spent” Berenson RA. Am J. Managed Care, 2010; 16:

CBO: ACOs Would Cut Medicare Spending by Less Than 0.1% The Congressional Budget Office estimated that enrolling 20% to 40% of Medicare patients in an ACO-like payment system would cut Medicare spending by $5.3 billion over the period, when total Medicare spending will be $6.8 trillion. CBO estimated that paying PCPs under a partial capitation system would save even less - $5.2 billion Source: Congressional Budget Office, Budget Options: Volume 1, Health Care, December 2008, Options 37 and 38

ACO Cost Cutting Armamentarium Prevention Disease management “Care Coordination” (consolidation, gate- keeping, utilization review) Electronic medical records Report cards and P-4-P

Prevention Saves Lives, But Not Money “Although some preventive services do save money, the vast majority reviewed in the health economics literature do not.” Cohen JT et al., New England Journal of Medicine 2008;358: “It’s a nice thing to think, and it seems like it should be true, but I don’t know of any evidence that preventive care actually saves money.” Gruber J,quoted in “Free lunch on health? Think again,” NY Times, August 8, 2007: C 2.

Medical Homes and Enhanced Primary Care Don’t Require ACOs “Medical Homes” that integrate more nurses, social workers etc. into primary care and cut physicians’ panel size may improve care and reduce ED and inpatient utilization, possibly enough to offset the additional personnel costs But this intervention does not require recycling the HMO experiment.

More Computerized Hospitals: Higher cost bivariate, no difference multivariate No administrative savings, possibly raised administrative costs Slight improvement in quality scores (Due to better documentation?) 100 “Most Wired” no better for cost or quality Source: Himmelstein, Wright & Woolhandler, AJM 1/2010. Analysis of 4000 U.S. hospitals

Pay for Performance “I do not think its true that the way to get better doctoring and better nursing is to put money on the table in front of doctors and nurses. I think that's a fundamental misunderstanding of human motivation. I think people respond to joy and work and love and achievement and learning and appreciation and gratitude - and a sense of a job well done. I think that it feels good to be a doctor and better to be a better doctor. When we begin to attach dollar amounts to throughputs and to individual pay we are playing with fire. The first and most important effect of that may be to begin to dissociate people from their work.” Don Berwick, M.D, Source: Health Affairs 1/12/2005

P4P – Scores on Whatever You Pay for Improve, But... “The [British P4P] scheme accelerated improvements in quality for 2 of 3 chronic conditions in the short term. However, once targets were reached, the improvement... slowed, and the quality of care declined for 2 conditions that had not been linked to incentives.” Source: NEJM 7/23/2009:368

Profit-Driven Upcoding Makes Accurate Risk Adjustment Impossible: H igh Cost Providers Inflate Both Reimbursement and Quality Scores by Making Patients Look Sicker on Paper

Regions Where Patients Get More Diagnoses Have Similar Overall Death Rates, But Risk Adjustment Makes them Look Better Welch, H. G. et al. JAMA 2011;305:

ACOs and HMOs: Faith-Based Solutions Capitation as magic bullet Consolidation among providers cuts costs Prevention, care management & EMR/ computers save money P-4-P encourages global quality Risk adjustment can overcome gaming (upcoding of diagnoses)

Truly Accountable Care Non-profit All capitation payments used for patient care, not for capital investments, profits, bonuses or exorbitant salaries. Separate capital funding based on regional health planning Eliminate insurance middle-men Rich and poor in same plan Quality data used for improvement, not financial reward

Investor-Owned Care: Inflated Costs, Inferior Quality

For-Profit Hospitals’ Death Rates are 2% Higher Source: CMAJ 2002;166:1399

For-Profit Hospitals Cost 19% More Source: CMAJ 2004;170:1817

For-Profit Dialysis Clinics’ Death Rates are 9% Higher Source: JAMA 2002;288:2449

Drug Companies’ Cost Structure

“In April [2010], AstraZeneca became the fourth major drug company in three years to settle a government investigation with a hefty payment -- in its case, $520 million for what federal officials described as an array of illegal promotions of antipsychotics for children, the elderly, veterans and prisoners. Still, the payment amounted to just 2.4 percent of the $21.6 billion AstraZeneca made on Seroquel sales from 1997 to 2009.” New York Times – 10/3/10 Drug Firms’ Fraud: Pay the Ticket and Keep on Speeding

High Deductible Insurance: Except for the Healthy and Wealthy, It’s Unwise

Mandate Model Reform: Keeping Private Insurers In Charge

“Mandate” Model for Reform Proposed by Richard Nixon in 1971 to block Edward Kennedy’s NHI proposal

“Mandate” Model for Reform Government uses its coercive power to make people buy private insurance.

“Mandate” Model for Reform 1.Expanded Medicaid-like program  Free for poor  Subsidies for low income  Buy-in without subsidy for others 2.Employer Mandate +/- Individuals 3.Managed Care / Care Management

“Mandate” Model - Problems Absent cost controls, expanded coverage unaffordable Computers, care management, prevention not shown to cut costs Adds administrative complexity and cost; retains wasteful private insurers Impeccable political logic, economic nonsense

Massachusetts’ Model Reform: Massive Federal Subsidies, Skimpy Coverage, Persistent Access Problems

Massachusetts Health Reform New Coverage < 150% Poverty - Medicaid HMO < 150% Poverty - Medicaid HMO 150% - 300% poverty - Partial subsidy 150% - 300% poverty - Partial subsidy > 300% poverty – Buy Your Own > 300% poverty – Buy Your Own

Massachusetts: Required Coverage (Income > 300% of Poverty) Premium: $5,600 Annually (56 year old) Premium: $5,600 Annually (56 year old) $2000 deductible $2000 deductible 20% co-insurance AFTER deductible is reached 20% co-insurance AFTER deductible is reached

Crimes and Punishments in Massachusetts The Crime The Fine Violation of Child Labor Laws $50 Employers Failing to Partially Subsidize a Poor Health Plan for Workers $295 Illegal Sale of Firearms, First Offense $500 max. Driving Under the Influence, First Offense $500 min. Domestic Assault $1000 max. Cruelty to or Malicious Killing of Animals $1000 max. Communication of a Terrorist Threat $1000 min. Being Uninsured In Massachusetts $1212 $1212

Just Because the Democrats Got it Wrong Doesn’t Mean the Republicans Have a Better Idea

McCain on Health Reform “Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.” “Better Care at Lower Cost for Every American” Contingencies Magazine – Sept-Oct/08

Stephen Colbert on the Bush Health Plan “It’s so simple. Most people who can’t afford health insurance are also too poor to owe taxes. But if you give them a deduction from the taxes they don’t owe, they can use the money they’re not getting back to buy the health care they can’t afford.”

Public Plan Option: Medicare HMOs Provide a Cautionary Tale

Despite Medicare’s Lower Overhead, Enrollment of Medicare Patients in Private Plans Has Grown

Private Medicare Plans Have Prospered by Cherry Picking

Public Money, Private Control

The U.S. Trails Other Nations

Canada’s National Health Insurance Program

Quality of Care Slightly Better in Canada Than U.S. A Meta-Analysis of Patients Treated for Same Illnesses (U.S. Studies Included Mostly Insured Patients) Source: Guyatt et al, Open Medicine, April 19, 2007

A National Health Program for the U.S.

Phony vs. Real Reform Phony Choice of HMO/insurer Coverage = Copays, exclusions etc. Security = Lose it if you can’t work or can’t pay Savings = Less care Real Choice of doctor and hospital Coverage = First $, Comprehensive Security = For everyone, forever Savings >$400 bil on bureaucracy

Public Opinion Favors Single Payer National Health Insurance