If health care reform fails, what will the insurance industry do for an encore?
Nearly two decades ago, after insurers successfully campaigned to deep-six President Bill Clinton's health care reform effort, the industry moved tens of millions of Americans with employer-based coverage into health maintenance organizations (HMOs). The shift succeeded in holding down costs for a while. But by the late 1990s, their ham-handed strategy of using HMOs to deny coverage in an irrational manner provoked a patient rights backlash. Faced with the probability of tough new rules regulating their behavior, the insurers backed off and near double-digit health spending growth rates quickly returned.
If their current campaign to defeat reform succeeds, the insurance industry will once again be faced with major decisions about how to curb skyrocketing costs. In recent weeks, there has been renewed attention on two strategies that will probably see much more emphasis in the years ahead. Both would be encouraged by reform, but are not dependent on it. They involve moving people into health plans that 1) use value-based insurance design (VBID), which adjusts co-pays to encourage greater use of and better compliance with high-value health services; and 2) place more emphasis on wellness programs, which reward employees who work to improve their own health (or, in some cases, penalize those who fail).
What's notable about both approaches is that they seek to hold down costs by using economic incentives to change the choices made by millions of patients, who are viewed as health care "consumers." While they claim to borrow a page from the burgeoning field of behavioral economics, which asserts that carefully designed incentive programs can nudge people to do the right thing, the main argument in favor of their eventual success is the expectation that individuals seeking health care will behave like other consumers and gravitate to the least costly alternatives.
What's not expressed, but is equally notable, is that they both absolve health care professionals and the institutions that deliver care from adjusting their own practices, such as the overuse of high technology imaging or invasive procedures, which are the major drivers of skyrocketing health care costs. The architects of VBID and wellness programs assume that it is easier to lower demand that restrict supply. Suppliers, as Elliott Fisher and colleagues at Dartmouth have repeatedly shown, have the uncanny ability to create their own demand and the political acumen to get politicians and patient advocacy groups to scream "rationing" whenever anyone attempts to stand in their way.
But can VBID and greater use of wellness programs actually succeed in bending the cost curve down? And can they do it without triggering a new backlash from patients and the insured public?
The 40 percent excise tax on high-cost health insurance plans looks like a done deal. But before it gets enshrined in law, it's worth taking a last look at the arguments for and against this punitive levy since its inclusion could trigger a backlash that sinks the entire bill.
Over the weekend, the excise tax on high-cost plans was touted as "the most significant measure" to curb the relentless rise in health care spending that pending health care reform legislation has to offer. The core premise is that forcing patients to have more skin in the game will turn them into wiser purchasers of services in the medical shopping mall, and thus reduce unnecessary spending. "Requiring workers to pay more out of pocket would force them and their doctors to think a lot more carefully about whether an expensive test or treatment is really necessary," the New York Times editorialized on Saturday.
Will consumer-driven health care through higher co-pays and deductibles succeed in holding down health care costs?
Surgeon-writer Atul Gawande suggests in a recent New Yorker magazine article that controlling health care costs will be an evolutionary process, a town-by-town struggle, painful in spots, but ultimately manageable because it will take place over many decades. The incentives for delivery system changes contained in the Senate health care bill are, in his view, a significant down payment because they highlight best practices that will be implemented gradually over the next several decades.
A struggle is underway for the soul of health care reform.
It's not being fought out on the coverage side, where there is general agreement on how to move toward a more universal system. Reduced to its essence, the House/Senate plan relies on a large expansion of federally-subsidized state Medicaid programs coupled with a requirement that individuals purchase private insurance that will be subsidized for lower income individuals and families who aren't so poor that they qualify for Medicaid.
Rather, it's being fought on the cost-control side, where the Obama administration has failed at every turn to send a strong signal to the special interests that dominate the provision of health care that the era of ever-rising costs is over. The President's visit to Capitol Hill yesterday where the subject barely came up is a case in point. Without White House leadership, both houses of Congress have felt free to cater to the special interests that pay their reelection bills.
The Senate devoted long sections of its 2,074-page health care reform bill to promoting wellness, both in the Medicare and Medicaid populations and among the privately insured. The bill establishes demonstration wellness projects in government programs and asks all insurers to report on what they do to promote better health.
And, in what at first blush looks like a bold use of economic incentives, the bill permits employer-based insurance plans to award premium discounts of up to 30 percent to plan beneficiaries who participate in smoking cessation, stress management, physical fitness, nutrition, weight management, and heart disease and diabetes prevention programs as long as the programs are "not unreasonably burdensome (and) are not a subterfuge for discriminating based on a health status factor." Current Labor Department regulations limit the incentives to 20 percent of plan costs.
Promoting wellness makes sense. An estimated 20 percent of Americans suffer from chronic conditions like heart disease and diabetes that arise from being out-of-shape and overweight. Chronic disease now account for 75 percent of all health care costs.. Nearly half of all cancers are related to smoking and obesity. Reducing chronic disease and adopting significant cancer prevention strategies (as opposed to screening, which is early detection) are key to any strategy that hopes to hold down the rate of growth in the nation's $2.4 trillion health care tab.
But do private insurers, which will add tens of millions of new customers to their 170 million-person base through the new subsidies in the bill, have the know-how that will convince employees and their families to participate in wellness programs? Will financial incentives like those allowed by the Senate bill encourage greater use? And, most importantly of all, will employer-based wellness programs actually succeed in reducing health care costs?
One of the major impediments to greater use of evidence-based medicine is the disconnection between patients who eventually take drugs or receive devices and those who participated in the clinical trials that led to their approval.
There are three major reasons for this state of affairs.
How solid is the evidence behind the new targeted therapies for fighting cancer? Not very, according to a new technology assessment from the Agency for Healthcare Research and Quality.
As breast cancer awareness month winds down, it's worth taking the time to review the messages that women received on how to prevent the disease. There are 25 risk factors listed on the Susan G. Komen for the Cure website. Eight of them rate a "strong increase in risk" for breast cancer.
Unfortunately, there's almost nothing a woman can do about any of those factors. They include being a woman, being older, having the BRCA1 and BRCA2 mutations, having dense breasts, and having a family history of breast cancer.
Factors that represent a "moderate increase in risk," on the other hand, tell another story.
Safety has become a nagging question for millions of Americans lining up for flu vaccines this fall. While some fear extremely rare events like Guillain-Barré syndrome and others believe there is a connection between autism and trace amounts of the mercury preservative thimerasol contained in some of the vaccines, the bigger worry comes from the increasingly globalized nature of the drug and vaccine manufacturing industry.
The 2007-08 heparin scandal, where nearly a hundred people died from taking a blood thinner made from imported Chinese heparin, has given people ample cause for alarm. As former Food and Drug Administration associate commissioner William Hubbard wrote recently in the Archives of Internal Medicine, the heparin scandal's contributing factors included a "primitive" Chinese raw material manufacturing facility, no regulation by the local authorities, no prior FDA inspections of overseas facilities, and a finding of gross violations of basic "good manufacturing practices" when the FDA finally did show up.
With two Chinese manufacturers now licensed by the China State Food and Drug Administration to produce H1N1 flu vaccine, can the safety of the local supply be trusted? "The U.S. flu vaccine is not coming from China, it is coming from FDA-approved manufacturers in the U.S. and Europe," said Andrew Pekosz, an associate professor of molecular biology and immunology at Johns Hopkins University's Bloomberg School of Public Health in Baltimore. He was responding on an online Washington Post forum last week to someone who had heard from a health care worker that the vaccine was Chinese-made.
Even if this year's supply comes from advanced industrial countries with good manufacturing records, how long will that remain the case? Given this year's logjam in production and the increasingly prominent role foreign manufacturers are playing in the vaccine business because of their lower costs, it is inevitable that more of the U.S. vaccine supply will be coming from abroad, especially Asia. Will the FDA be able to police the vaccine industry's increasingly sprawling manufacturing network?
As the swine flu hysteria mounts and desperation grows to get 200 million vaccines manufactured and administered to the American public, a few lonely voices are raising doubts about the efficacy of pandemic preparedness, both for the new H1N1 (swine flu) strain and the seasonal vaccine routinely offered the public. A long article in the November edition of Atlantic Magazine by veteran health journalists Shannon Brownlee and Jeanne Lenzer gives voice to those skeptics. "Does the Vaccine Matter?" the headline asks.
The loudest voice quoted in the story comes from Tom Jefferson, an American-born, European-based physician who heads the vaccine review group for the Cochrane Collaboration, a voluntary international consortium that conducts and publishes systematic evidence reviews. Jefferson told the Atlantic that most of the efficacy studies are "rubbish"; that estimates of deaths and hospitalizations from flu are based on intrinsically suspect studies of large population cohorts; and that regulatory authorities ought to demand a placebo-controlled trial testing whether the vaccine really works -- a move rejected out-of-hand by most researchers in the field as unethical.
As the article pointed out, Jefferson is treated as a pariah by most pandemic flu researchers and public health officials. The authors offer a heartrending portrait of him eating alone at one of their annual meetings.
The problem with Jefferson's comments to the press, though, is that like all too many professional critics, he overstates his case, at least in public.