Evidence-Based Medicine Examined
Every Little Bit Helps
I thank you for your interest and support over the past year. It's always fun to meet readers when I'm traveling and hear that they enjoy this publication. The Galen Institute has its work cut out for it in the coming year and we hope you will consider supporting the effort with a year-end tax-deductible contribution. For the first time, we are able to accept on-line donations. A gift of any amount would be appreciated and would be the kind of vote of confidence that really matters.
Evidence-Based Medicine Examined
Twila Brase, the president of the Citizens' Council on Health Care in Minnesota, has issued a powerful review of the Evidence-Based Medicine (EBM) movement. Her paper, "How Technocrats are Taking Over the Practice of Medicine - A Wake-up Call to the American People," is a landmark analysis of the attempt to bureaucratize medical practice, which has been happening largely under the radar screen of most Americans. In 25 pages, with 226 footnotes, she explains how the underlying assumptions and practical applications of EBM will turn physicians into pawns of the payers at the expense of their patients. EBM assumes, for instance, that variation in medical procedures is inherently bad and should be rooted out so that all physicians do the exact same thing. It ignores that variation in patients may require variation in practice. It assumes that there is one best way to do medicine - and that we know what that one best way is. It ignores that medical knowledge is exploding and what seemed to be right last week may be wrong next week.
One of the most powerful arguments in the paper discusses the validity of practice guidelines, and notes, "In 2000, a group of researchers determined that more than 75 percent of the guidelines developed between 1990 and 1996 needed updating." Ms. Brase says that "they discovered that half of the guidelines were outdated in 5.8 years." Yet the development of guidelines is slow, cumbersome and expensive, taking as long as two years and costing as much as $100,000 - unless the government does it, in which case it costs $800,000.
The guidelines themselves are based on "research" that may be biased, incomplete or self-interested. Certainly we have seen numerous examples of research not getting published because it contradicts the claims of the sponsors of the research. Even the decision of what research to fund is often made for political, not medical, reasons.
Research is often contradictory. Hormone Replacement Therapy was found to lower the risk of heart disease in the Nurses Health Study, while the Women's Health Initiative study found that it increased heart attacks by 40%. But neither study can tell a clinician how to treat one particular woman with one particular genetic profile and one particular set of risk factors and co-morbidities. Population-wide information may be interesting, but it is no substitute for individual diagnosis and treatment. Relying on averages never works when dealing with individuals. In fact that may be the biggest problem with EBM - it is trying to standardize medicine at the very time when we should be customizing medicine so that each patient gets precisely the treatment that is best for his or her particular needs.
Still, research and guidelines for all their flaws can be very valuable in growing the knowledge base. The danger is not the research, but how the bureaucrats want to use the research. They want to control physicians who comply and punish those who do not through the use of financial incentives, malpractice exemptions, and even hospital privileges and licensure, all tied to compliance with EBM guidelines.
This is the polar opposite of consumer empowerment and choice. EBM advocates want only to empower themselves, and we all owe Twila Brase a hearty congratulations for bringing this to the attention of the American people.
Making Healthcare More Affordable – White House Economic Summit
It is an honor to be invited here today. Thank you Mr. Secretary, fellow panelists, and distinguished guests?
?Gail has shown us that we are entering a new world of health care.
We finally can see that the light at the end of the health care tunnel isn?t the train of socialized medicine coming at us but, instead, the light of a new health care system that empowers free markets and free choices for consumers.
Ownership society: President Bush has offered new ideas based upon a new vision, one built around an ownership society where consumers will have more options in how they obtain health insurance and health care ? ownership that, in his words, brings ?security, dignity, and independence.? This ownership society creates new incentives to put the genius of the American consumer to work in transforming our health sector.
I don?t think it is overstating the case to say that we now have an historic opportunity to transform American health care from the bureaucratic, paternalistic system that it has been to one that is more streamlined, efficient, and accountable to the needs of every American.
Fear not: But some people are afraid of this new era, often called consumer-directed health care, because it brings change. Yet we know that change is essential to address the high costs of care, the lack of choice, lack of competition, uneven quality of care, and the need to help the many people who don?t have health insurance.
The changes shouldn?t be frightening because they are based upon allowing the health sector to be guided by the same principles that govern the rest of our economy: competition and free choice. (This doesn?t mean asking a patient who is nearly unconscious when he is wheeled into an emergency room after an accident whether he wants an MRI or an X-Ray. It does mean people sitting around their kitchen table and deciding how they want to protect themselves financially if illness strikes or an accident happens.)
Options: This new era of consumer-directed care can take many forms. It may be in providing more choices of doctors and health plans, in better information, or in new financial arrangements that give consumers more options and more control over their health spending. The common goal is to engage consumers in making better use of health care resources.
Health Savings Accounts are the bright new star in the consumer-directed health care universe. They work much like 401(k)s or IRAs. HSAs allow individuals and/or employers to put money aside tax free to pay for routine health costs. Consumers pay directly for the health services they prefer while still having protection against high-cost medical care. Whatever people don?t spend in their accounts can be rolled over year to year and saved for future needs. HSAs are portable and can stay with a worker even when changing jobs.
To enhance HSAs, President Bush wants to allow anyone to deduct the cost of the health insurance policy they must buy to open an HSA.
What the Election Will Bring in Health Care
What the Election Will Bring in Health Care
The election is over and a lot of press is devoted to anticipating what the second term and a new Congress will bring. Kent Hoover writes in many "Business Journals" that a new Bush term "bodes well for health care reforms sought by small businesses." First among these are association health plans that would be exempt "from state regulation and coverage mandates." Mr. Hoover says the legislation has stalled in the Senate, but with a larger majority, "Senate Republican leaders plan to take up legislation in the first 90 days of the next Congress that addresses the growing numbers of Americans without health insurance." Also on the agenda is "continued support of health savings accounts," according to the article.
Second Term Focus on AHPs HSAs
The "Atlanta Journal-Constitution" also looked ahead at the new term writing, "In an effort to hold down health care costs, Bush will seek to make the system more responsive to market pressure." It adds, "He will focus on consumer-driven health programs [and] may offer tax credits for low-income people to establish health savings accounts." It also mentions association health plans and prescription drug benefits for people on Medicare.
Movement Leaders
I want to do something different with the newsletter this week. I'm writing this on Monday night and election anxiety is so high that it is hard to concentrate on much else. By the time you have time to read this, you may already know the results. On the other hand, it may drag out for weeks - who knows?
In either case, the mission of the Galen Institute and our Center for Consumer Driven Health Care will remain the same. We do not look to politicians for leadership when it comes to reforming health care. Certainly it is helpful when politicians want to return power to the hands of American consumers and the Bush administration has been terrific in getting HSAs enacted and promoting them. But the real impetus for health care transformation comes from the broader community of consumers, physicians, employers, insurers, brokers, hospitals, and pharmaceutical companies who realize our current system of third-party payment is not working very well and are willing to think boldly about changing it for the better.
Issues to Consider When Choosing HSAs
We haven't visited the local Business Journals in a while. They are a real asset. Not only do they give a good glimpse of what is happening on Main Street, but they are producing some of the best benefits writing and most interesting dialogue in the country. Let's start with a comparison of the Bush/Kerry campaigns by Kent Hoover. This article has been published in more than a dozen of the local journals and is one of the most concise and factual comparisons I've seen of the two campaigns and how they will affect small business. For example, Mr. Hoover succinctly describes the two campaigns on health care as -
"Bush:
Favors association health plans
Would give tax credits to people who don't have health insurance through work
Would expand heath savings accounts
Kerry:
Wants tax credits for small businesses that provide health insurance
Favors small business access to congressional health plans
Wants catastrophic coverage provided by feds."
He then provides a narrative explanation of the proposals and gets reaction from business owners. Obviously the descriptions are not complete, but they provide a great nutshell picture of the essence of the two candidates' proposals.
Response to Milt Freudenheim’s Article in The New York Times
I was disappointed to read Milt Freudenheim's Oct. 13 article, "Bush Health Savings Accounts Slow to Gain Acceptance." HSAs are a very new product, just launched January 1, and it is astonishing that insurers and financial services institutions so quickly responded by providing a product to sell on the first day. Further, it is taking some time for people to learn that this new option is even available.
Most companies can't offer HSAs until next year because they negotiate the contracts for their employees' health coverage a year in advance. Many companies, in fact, this summer reopened their 2005 contracts that had already been completed to include HSAs.
It is not surprising that the majority of those buying HSAs first are those purchasing individual health insurance. But even they are faced with state laws that, in some cases, make it difficult if not impossible to purchase the accompanying high deductible health insurance policy.
Markets take time to adjust to a new idea and a new offering, both on the buyer and the seller side. What we are seeing is the beginning of success as vendors and customers negotiate and help shape this new product. A slow start is a good thing, and certainly not a sign of failure.
Tufts Health Plan
Back in the Saddle Again
After a winter and spring of brutal travel, giving 33 speeches in 26 weeks almost all out of town, I was able to spend July and August at home, getting caught up on my reading and authoring a new paper on the uninsured (see below). But now I'm back on the road, with four presentations last week and three more this week.
In Pittsburgh with SEPP and the Allegheny Institute
I'm writing this in the airport in Pittsburgh where I just finished giving a presentation on HSAs to the Allegheny Institute and the Society for the Education of Physicians and Patients (SEPP). On the program with me were Nina Owcharenko of The Heritage Foundation and Allen Wishner of Flexible Benefit Service Corporation. Senator Rick Santorum (R-PA) keynoted the day and brought with him Senator Jim Bunning (R-KY) who was in town for a fundraiser. Sen. Santorum could not have been more gung ho about HSAs, reminding the group that he was one of the first sponsors of an MSA bill in 1992 when he was in the House. The event attracted about 150 people, including quite a few physicians, business owners and media. Congratulations to doctors Bob Carroll, Dennis Gabos, Bob Urban of SEPP, and Jake Haulk president of the Allegheny Institute.
Federal Reinsurance Schemes Examined by AEI and Inquiry
The American Enterprise Institute held a briefing this week that included an actuarial analysis of the cost of Senator Kerry's health care proposals. Grace-Marie Turner was there and will write about this more extensively in Health Policy Matters this week (if you don't already subscribe to HPM, you can do so by going to http://www.galen.org/newsletters.asp). Today I want to raise just one small thought - the idea of the government "re-insuring" employer-sponsored health coverage. Mr. Kerry has proposed that the government pay 75% of the costs above $30,000 for employer-sponsored health plans. As an article by Urban Institute researchers Linda Blumberg and John Holahan in the journal "Inquiry" indicates, this is not an entirely new idea. They cite a number of similar proposals that have been made by academics over the past ten years. The article looks at various approaches to such reinsurance proposals but states that the unifying theme for all of them is, "?the notion that at least a portion of the expenses associated with higher-cost individuals is a broad social responsibility" and hence paid by taxpayers instead of by insurance premiums. Interestingly, this article estimates the cost of a Kerry-like proposal at $40.9 billion in the first year -- not that far from AEI's estimate of $573 billion over ten years.
More important than cost estimates are the operational issues raised by the Blumberg/Holahan article. This includes picking the target population (individual, small group, large group, all of the above, or some other combination), the level of coverage (Mr. Kerry says 75%, others have argued for a scaled rate of coverage), and the threshold of expenses that are reinsured ($15,000, $30,000, $50,000?). They add, "Once a threshold level of expenditures is chosen, the design [of the reinsurance program] also has to specify the particular health expenditures that can be applied to that threshold." And here is the biggest rub of all. To qualify for meeting the threshold does an expense have to be "reasonable and customary?" And if so, how is that defined? Does every service qualify or just those covered by the insurance plan? Do only "medically necessary" expenses qualify? Do "alternative providers" qualify? Over-the-counter drugs? Essentially Mr. Kerry would have a federal agency making all these decisions and effectively controlling the entire health care system.
The reasons Blumberg and Holahan offer for supporting such an approach are dubious at best - "[I]nsurers' incentives to exclude individuals whom they expect to be very high cost would be diminished with the government covering at least a portion of these high costs." They add, "In addition, the incentive to significantly 'rate up' premiums charged to those with high expected costs would be reduced as well." But carriers' ability to predict who will incur $30,000 or more in the coming year is not very good. This level of expense is largely unpredictable, including things like sudden trauma, burn victims, brain damage, birth defects and the like. Insurance company underwriting is aimed more at chronic conditions, like diabetes, hypertension, arthritis, and asthma - the kind of conditions that may consume $5,000 - $10,000 in expenses in the course of a year, and every year after that. Reinsurance pools will have no effect whatsoever on this level of expense, and so will have no effect whatsoever on underwriting practices.
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