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more Ethics in the News |
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Kaiser Foundation study of employer-provided health insurance: 6.1 % increase outpaces wage growth
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The cost of employer-provided health insurance rose 6.1 percent this year, the smallest jump since 1999 but still well above the increase in wages and consumer prices, according to an annual survey released yesterday by the Henry J. Kaiser Family Foundation. …
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The $12,106 average cost of family coverage this year is roughly equivalent to a year's salary for a full-time worker earning the minimum wage, which is $12,168. …
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'We are witnessing a slow but certain long-term erosion of our employer-based system,' said Jon R. Gabel, an author of the Kaiser study and a Washington-based senior fellow at the nonprofit National Opinion Research Center.
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The number of Americans without health insurance rose to a record high of 47 million in 2006, an uptick that Census Bureau officials attributed largely to continuing declines in employer-sponsored coverage. …
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The slowdown is scant consolation for workers. The 6.1 percent rise in health insurance costs in 2007 is higher than growth in wages (3.7 percent) and more than double the inflation rate (2.6 percent), the Kaiser survey found. …
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—From 9-12-07 Washington Post, "Rise in Cost of Employer-Paid Health Insurance Slows: Study Says 6.1 % Increase This Year Still Outpaces Wage Growth, as Percentage of People Covered Shrinks," By Christopher Lee, Washington Post Staff Writer.
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"Economic Scene: No. 1 Book, and It Offers Solutions," By DAVID LEONHARDT
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In 1967, Jack Wennberg, a young medical researcher at Johns Hopkins, moved his family to a farmhouse in northern Vermont.
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Dr. Wennberg had been chosen to run a new center based at the University of Vermont that would examine medical care in the state. With a colleague, he traveled around Vermont, visiting its 16 hospitals and collecting data on how often they did various procedures.
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The results turned out to be quite odd. Vermont has one of the most homogenous populations in the country — overwhelmingly white (especially in 1967), with relatively similar levels of poverty and education statewide. Yet medical practice across the state varied enormously, for all kinds of care. In Middlebury, for instance, only 7 percent of children had their tonsils removed. In Morrisville, 70 percent did.
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Dr. Wennberg and some colleagues then did a survey, interviewing 4,000 people around the state, to see whether different patterns of illness could explain the variations in medical care. They couldn't. The children of Morrisville weren't suffering from an epidemic of tonsillitis. Instead, they happened to live in a place where a small group of doctors — just five of them — had decided to be aggressive about removing tonsils.
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But here was the stunner: Vermonters who lived in towns with more aggressive care weren't healthier. They were just getting more health care.
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Dr. Wennberg would eventually move to Dartmouth and, over the last 30 years, has done versions of his Vermont study for the entire country. Again and again, he has come up with the same broad result. And that result holds the key to health care reform — how to spend less on health care while not making the population any less healthy.
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Dr. Wennberg's story forms the backbone of 'Overtreated,' by Shannon Brownlee, which is my choice for the economics book of the year. …
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As you've doubtless heard, this country spends far more money per person on medical care than other countries and still seems to get worse results. We devote 16 percent of our gross domestic product to health care, while Canada and France, where people live longer, spend about 10 percent.
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Some of this difference is unavoidable. The United States does more than its share of medical research and bears much of those costs. It also has a diverse, economically unequal population, which, in turn, leads to a diverse and complicated set of health problems. … 'We spend between one fifth and one third of our health care dollars,' writes Ms. Brownlee, a senior fellow at the New America Foundation and former writer for U.S. News & World Report, 'on care that does nothing to improve our health.'
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Worst of all, overtreatment often causes harm, because even the safest procedures bring some risk. One study found that a group of Medicare patients admitted to high-spending hospitals were 2 to 6 percent more likely to die than a group admitted to more conservative hospitals.
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Why is this happening, then?
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Above all, it's the natural outgrowth of our fee-for-service health care system. It turns doctors into pieceworkers, as Ms. Brownlee puts it, 'paid for how much they do, not how well they care for their patients.' Doctors and hospitals typically depend on the volume of work for their income, and they are the gatekeepers who decide when work needs to be done. They also worry about being sued if they do too little. So they err on the side of overtreatment.
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Patients play a role, too. We're entranced by the wonders of modern medicine and fooled by our byzantine health insurance system into thinking that we're not really paying for all those unnecessary spinal fusions. …
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[Brownlee's book] includes some steps that should be widely popular, like giving doctors incentives to explain the risks and benefits of procedures more clearly than they do now. Research has shown that patients frequently decide against marginal care when they know the true risks and benefits. Malpractice laws would also need to be changed so doctors were not sued by patients who later changed their minds.
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Other solutions would be more difficult — because medical evidence is often murky, because hospitals and insurers would fight to keep their revenues and because most Americans think itΥs the other guy whoΥs getting unnecessary treatment. These are the reasons that presidential candidates donΥt focus on wasteful treatment.
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But models for reform are out there. Hospitals that don't use the fee-for-service model, like those run by the Veterans Health Administration, are already getting better results for less money. They closely track their performance — that is, the health of their patients — and motivate employees to improve it. …
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—From 12-19-07 New York Times, "Economic Scene: No. 1 Book, and It Offers Solutions," By DAVID LEONHARDT.
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“Economix:
Health Care as if Costs Didn't Matter,” By DAVID LEONHARDT
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But if we are really at the start of a once-in-a-generation push to fix health care, we need to be clear about the true problem. The main reason so many people lack health insurance is because of its cost. And a big reason for that cost is the explosion of expensive, medically questionable care, be it knee replacement, preventive angioplasty or lumbar fusion. The route to an affordable health insurance solution runs straight through this thicket.
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Along these lines, the three leading Democratic candidates have quietly come up with nearly identical ideas. Deep inside their health care plans, Mrs. Clinton, Mr. Edwards and Mr. Obama have each called for the creation of a national institute to figure out which kinds of medical care actually work. This institute would sort through the scientific research on, say, spinal fusion and help people understand when it may make sense and when it's likely to be just another big medical expense that doesn't solve anything.
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Medicare and private insurers could then use the research findings to determine when a procedure or a drug would be covered. There would be room for exceptions, based on a doctor's judgment. In general, though, a doctor and a patient could proceed with dubious treatment only if they didn't stick the rest of us with the bill. …
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But campaign advisers acknowledge that any institute will ultimately help set insurance payments, and they are not the only ones pushing the idea. Peter Orszag, the head of the Congressional Budget Office, has mentioned it when talking about the fiscal disaster that awaits if Medicare spending isn't slowed. A number of Republican health care experts also favor some sort of cost-effectiveness institute. It's another way to cut wasteful government spending.
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Still, we shouldn't be naïve: a lot of people would lose if medical care came to be based more on what actually worked. Right now, drug companies and medical device makers can go to the Food and Drug Administration and get approval for an expensive new product so long as they show that it's as effective as its predecessor. They can then turn around and suggest to doctors that the new product is more effective than its predecessor. The doctors often profit, too. And many patients demand the latest, most expensive procedure, regardless of the evidence.
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So reforming the system will require a fight — not just over the meaning of the word 'universal' but also over finding tough, sensible ways to save money. …
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The simple truth is that medical spending can't continue to rise at its current rate. Somehow, we need to make choices.
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—From 6-6-07 New York Times, "Economix
Health Care as if Costs Didn't Matter," By DAVID LEONHARDT.
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Put Physicians on Salary
Doctors in the United States earn two to three times as much as they do in other industrialized countries. Surveys by medical-practice management groups show that American doctors make an average of $200,000 to $300,000 a year. Primary care doctors and pediatricians make less, between $125,000 and $200,000, but in specialties like radiology, physicians can take home $400,000 or more.
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In Europe, however, doctors made $60,000 to $120,000 in 2002, according to a survey sponsored by the British government in 2004.
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Given the years of training that doctors require and the stress and importance of their jobs, few would disagree that they should be well paid. In addition, with a year of medical school now about $30,000, many doctors leave school deeply in debt. And many doctors would argue that cutting salaries would only persuade talented, college graduates to pursue better-paying professions.
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Still, the lower salaries are a significant part of the reason that European countries spend less on health care than the United States does — a fact liberals avoid mentioning when they preach the advantages of a European-style single-payer system. …
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The way that doctors are paid may be an even more significant factor driving up costs and may lead to unnecessary care, said Dr. Peter B. Bach, a pulmonary physician at Memorial Sloan-Kettering Cancer Center and a former senior adviser to Medicare and Medicaid.
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In the United States, nearly all doctors are paid piecemeal, for each test or procedure they perform, rather than a flat salary. As a result, physicians have financial incentives to perform procedures that further drive up overall health care spending.
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Doctors are paid little for routine examinations and very little for 'cognitive services,' such as researching different treatment options or offering advice to help patients get better without treatment. …
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Primary care doctors and pediatricians, who rarely perform complex procedures, make less than specialists. They are attracting a declining percentage of medical students, and some states are facing a shortage of primary care doctors.
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Doctors are also paid whether the procedures they perform go well or badly, Dr. Bach said, and whether they are crucial to a patient's health or not.
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'Almost all expenditures pass through the pen of a doctor,' he said. So a doctor may decide to perform a test that costs a total of $4,000 in order to make $800 for himself — when a cheaper test might work equally well. 'This is a highly inefficient way to pay doctors,' Dr. Bach said.
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Medicare, especially, does not like to second-guess doctors' clinical decisions, said Dr. Stephen Zuckerman, a health economist at the Urban Institute. 'There's not a lot of utilization review or prior authorization in Medicare,' he said. 'If you're doing the work, you can expect to get paid.'
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As a result, doctors have steadily increased the number of procedures they perform on Medicare beneficiaries — and thus have increased their income from Medicare, Dr. Zuckerman said. But the extra procedures have not helped patients' health much, he said. 'I don't think there's any real strong evidence of improvements in health status.' …
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BUT [the commonly proposed cost-saving] measures are a minor fix, said Dr. Alan Garber, a practicing internist and the director of the Center for Health Policy at Stanford University. Instead, he argues, the United States should move toward paying doctors fixed salaries, plus bonuses based on the health of the patients they care for.
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—From 7-29-07 New York Times, "Sending Back the Doctor's Bill," By ALEX BERENSON.
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From 7-29-07 New York Times, "Cancer Patients, Lost in a Maze of Uneven Care," By DENISE GRADY:
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Cancer, more than almost any other disease, can be overwhelmingly complicated to treat. Patients are often stunned to learn that they will need not just one doctor, but at least three: a surgeon and specialists in radiation and chemotherapy. Diagnosis and treatment require a seemingly endless stream of appointments. Doctors do not always agree, and patients may find that at the worst time in their lives, when they are ill, frightened and most vulnerable, they also have to seek second opinions on biopsies and therapy, fight with insurers and sort out complex treatment options.
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The decisions can be agonizing, in part because the quality of cancer care varies among doctors and hospitals, and it is difficult for even the most educated patients to be sure they are receiving the best treatment. 'Let the buyer beware' is harsh advice to give a cancer patient, but it often applies. Excellent care is out there, but people are often on their own to find it. Patients are told they must be their own advocates, but few know where to begin.
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'Here it is, a country with such a great health system, with so many different breakthroughs in treatment, but even though we know things that work, not everybody who could benefit gets them,' said Dr. Nina A. Bickell, an associate professor of health policy and medicine at the Mount Sinai medical school in Manhattan. …
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Private vs. Single Payer Health Insurance
When asked to identify the two most important items from their list of 10 public policy commandments, most antigovernment crusaders pick (1) public spending shall be kept to an absolute minimum and (2) the state shall not transfer income from rich to poor.
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No government heeds these admonitions in any literal sense. Yet they have had a profound impact on public policy decisions, especially in the United States. Often, however, their impact has been the opposite of what antigovernment crusaders intended.
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The problem is that many compellingly advantageous public policies cannot be enacted without violating the two commandments. Every significant policy change benefits some people and harms others. If the gains to winners substantially outweigh the costs to losers, solutions can always be found that allow everyone to come out ahead. But those solutions often involve higher taxes and income transfers to the poor. . . .
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This example is part of a much broader pattern. In health care, for example, the private insurance system employed in the United States delivers worse outcomes at substantially higher cost than the single-payer system employed in virtually every other industrial country. But switching to the single-payer system would require higher taxes and increased benefits for low-income citizens, steps that would violate the two commandments. So for now, we remain saddled with a system that everyone agrees is dysfunctional. . . .
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Is it better to solve a problem by spending two extra dollars in the private sector than by spending one additional dollar in the public sector? The two commandments insist, preposterously, that it is.
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Economic efficiency is a worthy goal because when the economic pie grows larger, everyone can have a larger slice than before. Antigovernment crusaders deserve credit for emphasizing the importance of this goal. But as events of recent years have repeatedly demonstrated, they are often the biggest obstacles to its achievement.
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—From 3-15-07 New York Times, "When to Violate the Top Two Commandments of Antigovernment Crusaders," By ROBERT H. FRANK; Robert H. Frank, an economist at the Johnson School of Management at Cornell University, is the author of The Economic Naturalist, which will be published this spring. Contact: www.robert-h-frank.com.
But:
In short, altruism has its limits, as does the public's appetite for trade-offs in their own lives for the sake of the uninsured, said Bill McInturff, a Republican pollster who worked for the insurance industry in 1993 and 1994. "Never, in my years of work, have I found someone who said, 'I will reduce the quality of the health care I get so that all Americans can get something,' " he said. "Every time the debate reaches that point, it collapses."
—From 9-16-07 New York Times, "Elective Surgery: Unveiling Health Care 2.0, Again
By ROBIN TONE.
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“To Lower Costs, Hospitals Try Free Basic Care for Uninsured ”
Unable to afford health insurance, Dee Dee Dodd had for years been mixing occasional doctor visits with clumsy efforts to self-manage her insulin-dependent diabetes, getting sicker all the while.
In one 18-month period, Ms. Dodd, 38, was rushed almost monthly to the emergency room, spent weeks in the intensive care unit and accumulated more than $191,000 in unpaid bills.
That is when nurses at the Seton Family of Hospitals tagged her as a 'frequent flier,' a repeat visitor whose ailments — and expenses — might be curbed with more regular care. The hospital began offering her free primary care through its charity program.
With the number of uninsured people in the United States reaching a record 46.6 million last year, up by 7 million from 2000, Seton is one of a small number of hospital systems around the country to have done the math and acted on it. Officials decided that for many patients with chronic diseases, it would be cheaper to provide free preventive care than to absorb the high cost of repeated emergencies.
With patients like Ms. Dodd, 'they can have better care and we can reduce the costs for the hospital,' said Dr. Melissa Smith, medical director of three community health centers run by Seton, a Roman Catholic hospital network that uses its profits and donations to provide nearly free care to 5,000 of the working poor. Over the last 18 months, Ms. Dodd's health has improved, and her medical bills have been cut nearly in half. . . .
'For most preventive efforts there is an upfront expense,' said Alan D. Aviles, president of the corporation. 'But over the long term it saves money.'
Denver's public system, Denver Health, has 41,000 uninsured patients enrolled in its clinics. Officials there calculate that for every dollar they spend on prenatal care for uninsured women, they save more than $7 in newborn and child care. . . .
Still, only a fraction of the uninsured, in Central Texas and in most other states, are benefiting.
'All these local efforts are commendable, but they are like sticking fingers in the dikes,' Ms. Davis of the Commonwealth Fund [a foundation in New York that concentrates on health care] said, noting that the larger trend was hospitals' seeking to avoid the uninsured. . . .
'All the hospitals here provide some uncompensated care, and they are eating it and passing the costs along to the payers,' said Patricia A. Young Brown, president of the Travis County Healthcare District, which was set up last year to oversee care of the indigent through public clinics, drawing on property taxes to pay.
'So insurance rates go up, and then more businesses drop insurance,' Ms. Young Brown continued, describing a trend unfolding nationwide. 'It's hard to see where it will end. We hear a cry for national and state leadership.' . . .
Natavidad Martinez, 51, who used to work as a bookbinder for $7 an hour and never had insurance, has found herself in a bureaucratic nightmare.
In March 2005, Ms. Martinez, a Seton patient, was found to have liver cancer. She was put on Medicaid, applied for federal disability and was put in line for a liver transplant, without which, doctors said, she had six months to two years to live. Through the summer of 2005, she made the hour-and-a-half drive from her home to San Antonio for preparatory tests.
That August, she was awarded disability payments of $561 a month. But because her income surpassed the $535 limit for Medicaid in her circumstances, she said, she was told by the state that her coverage had ended, and the hospital said it could not proceed with a transplant.
'I asked Social Security if they couldn't just reduce my payments by $30 a month,' she said, 'but they said it doesn't work that way.'
In another twist, by federal rules, she will qualify for Medicare two years after the initial finding of disability. She awaits the start of Medicare coverage next March, when she can rejoin the transplant line. . . .
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—From 10-25-06 New York Times, "To Lower Costs, Hospitals Try Free Basic Care for Uninsured," By ERIK ECKHOLM.
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“After Years of Growth, What About Workers' Share?”
JOB growth is starting to slow, and wages are barely keeping up with inflation. Five years into a relatively robust economic expansion, it's understandable that many American workers feel that they are not getting their fair share of the pie.
In fact, the share of the economy devoted to workers' wages and benefits has eroded in the United States over the last five years. But if it's any consolation, the trend for workers in other rich industrial nations isn't much better.
The portion of the economy going to the workers in wages and benefits is perhaps the broadest measure of the workers' share of economic growth. The numbers are based on how many workers are employed and how much they are paid for their toil.
In the United States, this economic slice, including wages, health insurance and pension benefits, declined 2.5 percentage points from 2000 to 2005, to 56.5 percent of gross domestic product, according to the United States Bureau of Economic Analysis.
Workers in some countries have lost even more. According to data from the Organization for Economic Cooperation and Development, the forum of industrialized countries, the workers' share of gross domestic product in Germany fell 3.1 percentage points over the last half-decade. In Japan, the decline was 3 points. . . .
In the United States, where labor unions have lost much of their bargaining power and few workplace regulations limit employers' decisions, companies have had an easier time reducing real wages. In the last year, wages have risen only enough to keep pace with inflation. In real terms, the wages of nonmanagement employees in the United States are now 10 percent below their level in the early 1970's, according to Labor Department statistics.
In Western Europe, collective bargaining has been more successful in keeping wages up. These differences affect the distribution of the workers' share. America's low-wage labor market is virtually nonexistent in the European Union. There is no Western European equivalent of the American earning $5.15 an hour, the federal minimum wage, on the overnight shift as a convenience store cashier. A $7-an-hour baby-sitter is nearly impossible to find in London. Over all, the wage distribution in Europe is much less polarized than it is in the United States. . . .
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—From 10-15-06 New York Times, "Economic View: After Years of Growth, What About Workers' Share?," By EDUARDO PORTER.
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“The Choice: A Longer Life or More Stuff”
There is no question that the American medical system does suffer from a lot of waste, be it insurance industry bureaucracy or expensive procedures that haven't been proven effective. But the No. 1 cause of the cost increases is still the one you can see at the hospital and in your medicine cabinet — defibrillators, chemotherapy, cholesterol drugs, neonatal care and other treatments that are both expensive and effective.
Not even most forms of preventive care, like keeping diabetes under control, usually save money, despite what many people think. The care itself has some costs, and, more important, patients then live longer than they otherwise would have and rack up medical bills. 'When I make this point, people accuse me of wanting people to die earlier. But it's exactly the opposite,' Dr. Jay Bhattacharya, a researcher at Stanford Medical School, told me. 'If these expenditures are keeping people alive, it's money well spent.'
As Dr. Mark R. Chassin of the Mount Sinai School of Medicine in New York says, 'You almost always spend money to gain health.' Of course, the opposite is also true: the best way to reduce health care spending is to reduce health care itself.
Which is exactly what we're starting to do. The growing number of families without health insurance are, in effect, families who have been kicked off the country's health care rolls. Many will go without available treatment, will get sicker than they need to get — and will thereby save the rest of us money. They are what now passes for a solution to the health care mess. . . .
It's easy to be against high costs, and it will no doubt be hard to come up with a broad health care solution. But the way to start is by acknowledging that an affluent society should devote an ever-growing share of its resources to the health of its citizens. 'We have enough of the basics in life,' Mr. Cutler, the economist and author, points out. 'What we really want are the time and the quality of life to enjoy them.'
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—From 9-27-06 Washington Post, "Economix: The Choice: A Longer Life or More Stuff," By DAVID LEONHARDT.
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![[William S. Boardman; Department of
Philosophy]](B_PhLg30b2.GIF "William S. Boardman/Philosophy")
