May 29, 2017

Where Do All the Dollars Go?

The editor-in-chief of one of my favorite health news sources, Kaiser Health News, recently published her first book—for over twenty years she has been a journalist at the New York Times—and it’s an important one. An American Sickness: How Healthcare Became Big Business and How You Can Take it Back, by Elisabeth Rosenthal, is a powerful if somewhat monotonous recounting of the evils of American health care. But it only seeks to explain one weakness of contemporary American medicine, albeit an important one: it costs too much. Or, more accurately, prices are too high. As Uwe Reinhardt put it years ago, “it’s the prices, stupid.” 

Understanding the behavior of physicians, hospitals, drug companies, health insurers, and device manufacturers, as this book seeks to do, is critical if we are to change the system. The problem that they create, however, isn’t just that health care costs consumers too much; it’s also that the quality lags behind what is achievable—is evidenced by the poor standing of the US compared to other developed countries. Failing to consider both quality and cost is regrettable—we might, after all, be willing to tolerate the enrichment of drug company shareholders if what we got in return was an excellent, if pricey, product.

The litany of shenanigans by big business may be familiar to many readers, but Rosenthal's comprehensive and detailed accounting is impressive and compelling. Consider the first chapter on “the age of insurance.” The book recounts the story of how the same treatment costs orders of magnitude more--$100,000 vs $19,000 per medication infusion for a drug given monthly—when administered at NYU’s Langone Medical Center than when provided at another nearby facility. For the patient, whose treatment was covered by insurance, it didn’t much matter over the short run. But for the system as a whole, and ultimately for all patients through higher insurance premiums, it did matter. And the reason for the discrepancy is that NYU negotiated a better deal with third party payers than did the competition. What Rosenthal outlines but does not emphasize is that more powerful hospital systems and physician researchers interact with (some might say collude with) health insurance companies to produce this result. She explains that because of an arrangement with the NYU researcher who was largely responsible for creating the drug, NYU derived profit if total sales of the drug exceed a particular threshold. By negotiating a very high payment for the drug from the insurer, NYU is likely to exceed the threshold and cash in. So it’s not just the motivations of physicians, hospitals, and insurance companies acting separately that impact the health care system; it’s the way all of these forces work together that is crucial to achieving the end result.

Rosenthal presents one disturbing case after another. There’s the way hospitals and physicians game the system to assure that patients essentially have to use out-of-network providers when their insurance company will only cover in-network providers, forcing patients to shoulder what can be enormous costs. There’s the notorious “facility fee” that enables hospitals to charge insurers vastly more for a simple procedure such as injecting anti-inflammatory medication into a joint if it is done in an outpatient clinic than if it is done in a private office. What she neglects to explain is the way the system conspires to provide what is often inferior medical care to patients. Maybe this is more egregious with older patients than younger ones, and her focus is overwhelmingly people who aren’t enrolled in Medicare: either those with private insurance or no insurance at all. The facility fee example, for instance, doesn’t just mean higher costs. For a frail older person to get to a hospital clinic may mean going by car, negotiating a confusing parking garage, and walking a considerable distance from the garage to the office, none of which is so easy if you’re 85, have severe arthritis (the reason for going for the joint injection in the first place), and maybe have a little cognitive impairment to boot. The enthusiasm for high tech procedures, driven in part by the manufacturers of the devices used in the procedures, doesn’t merely drive up costs: for vulnerable, older individuals, such technological intervention may cause more harm than good. The anesthesia may result in confusion and the hospital stay in functional decline—quite apart from the effect on the cost of medical care.

Alas, the fixes the author proposes, the part of the book devoted to taking "health care back" from big business, aren’t going to fix the system. She calls for creative insurance plan design, for example plans that cover “essential” treatment fully and levy co-pays for “semi-elective” treatment. That’s much like what the ACA does when it requires full coverage for preventive services such as a screening colonoscopy, but allows the same colonoscopy to be billed in full (if the patient has a high deductible health plan) if the procedure is ordered to remove a cancerous polyp. Maybe that’s a good idea, although it leads to some bizarre incentives—better to get that polyp removed at the end of the plan year, when you might already have burned through your deductible, than at the beginning of the year, when the growth might be more curable; better to say nothing to your doctor about the blood you’ve noticed in your stools and just have a “screening test” than to mention the blood and undergo the procedure to treat a “disease.” But whether or not “benefit redesign” is a good idea—and one of the last major benefit redesign ideas wasn't so thrilling, it was those very high deductible health plans that are conquering the market—it’s not going to help patients now. Even the suggestions that could, in principle, help right away, such as “demanding price transparency” when getting an MRI, are a bit pie-in-the sky. You’re in the doctor’s office and s/he wants you to get a scan right away. You’re supposed to get a list of 5 centers that do MRIs and compare their prices? Really? What about quality? What about accessibility of the image to your physician? What about transportation to these other sites?

An American Sickness goes a long way to uncovering the workings of the health system and for that it is to be lauded. It is extensively and for the most part carefully researched, though there are errors. Rosenthal says pharmacists should be able to prescribe birth control pills because they all have PhDs and shouldn’t just be relegated to counting pills. Maybe they should be able to prescribe birth control pills, but most pharmacists have a BPharm (a bachelor’s degree), not a PhD. She says the website GoodRx allows comparison of prices for prescription drugs only for Medicare patients. Maybe that was once true, but it is no longer. But read this book for the insight it may give you on how the design of the system affects outcomes. We will need to build on that scaffolding to investigate the full range of systemic consequences—for quality as well as cost of health care, and to engage in meaningful reform.

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