A blog about Policy

In recent years, American companies have been complaining of rising health care premiums. Some have argued that it is putting American companies at a disadvantage and have even advocated national health care. As the nation debates health care reforms, the companies are taking matters in their own hands.

 Within the last two years, companies including Toyota, Spring Nextel, Florida Power and Light, Credit Suisee and Pepsi Bottling Group have opened or expanded on-site clinics. And many employers are adding or planning to add even more clinics, which were experimented with about 30 years ago but fell out of favor amid questions about their cost-effectiveness.Today a new wave of clinics is opening, driven largely by a motive that was less of a factor in the past: employers’ desires to reduce their health insurance premiums by taking care of workers before they need to see outside doctors. More than 100 of the nation’s 1,000 largest employers now offer on-site primary care or preventive health services — a number forecast to exceed 250 by the end of the year, according to David Beech, a health benefits consultant.[Link]

While it does seem to a great idea, the problem is that running clinics is not their core competency.If health premiums were to go down tomorrow, the health clinics will disappear as fast as they have appeared. Also, it would be quote interesting to see how the big insurance companies react to this threat.

Gov. Arnold Schwarzenegger on Monday proposed extending health care coverage to all of California’ss 36 million residents as part of a sweeping package of changes to the state’s huge, troubled health care system. The plan, which Mr. Schwarzenegger estimated would cost $12 billion, calls for many employers that do not offer health insurance to contribute to a fund that would help pay for coverage of the working uninsured. It would also require doctors to pay 2 percent and hospitals 4 percent of their revenues to help cover higher reimbursements for those who treat patients enrolled in Medi-Cal, the state’s Medicaid program.[link]

The number of the uninsured in United States (currently 44 million) is fast approaching a critical mass where a public policy intervention would make political sense. Massachusetts was first off the block but of course , California is unique. It’s much larger than and also has a very high proportion of undocumented workers. It remains to be seen how many taxpayers are willing to pay for them.

The proposal makes a lot of sense to Schwarzenegger personally. California  usually votes blue in Federal elections and he is looking for a possible Senate run in 2008. If he can carry it off, it can yield some excellent electoral benefits. The proposal would meet some strong resistance primarily from Republicans and their core constituency -small business. California has already amongst the highest minimum wages in the country and the effect this will have on the general business envoironment remains to be seen.

Finally, there is little doubt that movement towards universal health care is going to pick up steam. Apart from the 2006 elections, the cost of Medicaid, the program which takes care of the poor is going through the roof. In some larger states, it is estimated that without reforms, it will reach almost 50% of the state budget. Completely unsustainable. Interestingly enough, couple of states, noticeably Maryland and Florida are practically privatizing their Medicaid in order to cut costs.

In an interview with New York Times, Harvard Business School professor Clayton Christensen offers some radical proposals to improve the US health care system (link via).

Prof Christensen believes that the current system is woefully inefficient in terms of affordability and accessibility. His basic premise is that with advances in medical diagnoses and cures, treatment of certain diseases should be more widely available rather than being restricted to a handful of trained professionals (ie doctors, with apologies to my co-blogger!) and institutions (hospitals).

The whole interview is worth reading, but here are some parts that I found intriguing.

Q. The nation’s medical system is regularly offering increasingly advanced procedures and treatments. Isn’t that a good thing?

A. If you look at the progress that today’s hospitals and the medical profession have made, they continue to push the leading edge of what’s very difficult to do. But that’s a very different dimension of performance improvement than the one that makes more people better off, and that is making it affordable and accessible. In other industries, whenever affordability and accessibility have come, it has not come from making mainframe computers better but rather from commoditizing mainframes so that average people with average money can have access to high-quality computing, meaning personal computers. It came from disruptive technology rather than improvements on the existing system. Michael Dell could assemble one of these things in his dorm room.

Q. What’s the relevance to health care?

A. In health care, rather than replicating the expensive expertise of Mount Sinai Medical Center or Mass General Hospital or replicating the expensive expertise of doctors, we have to commoditize their expertise. That comes through the precise ability to diagnose the diseases that people have. Our ability to diagnose the diseases is moving ahead at a breathtaking pace, but regulation and reimbursement are trapping the delivery of rules-based medicine in high-cost business models.

Q. Are you saying doctors rather than the pharmaceutical industry are the root cause of what’s gone wrong?

A. The pharmaceutical industry has been focused on therapy, not diagnosis. The medical profession has simply accepted that many of these diseases are well-diagnosed, when in fact they aren’t. As a consequence, we haven’t moved the health care profession into a world where nurses can provide diagnosis and care. Regulation is keeping the treatment in expensive hospitals when in fact much lower cost-delivery models are available.

……

Q. Wouldn’t your solution require a dramatically different regulatory environment?

A. It differs state by state. In Massachusetts, nurses cannot write prescriptions. But in Minnesota, nurse practitioners can. So there has emerged in Minnesota a clinic called the MinuteClinic. These clinics operate in Target stores and CVS drugstores. They are staffed only by nurse practitioners. There’s a big sign on the door that says, “We treat these 16 rules-based disorders.” They include strep throat, pink eye, urinary tract infection, earaches and sinus infections.

These are things for which very unambiguous, “go, no-go” tests exist. You’re in and out in 15 minutes or it’s free, and it’s a $39 flat fee. These things are just booming because high-quality health care at that level is defined by convenience and accessibility. That’s a commoditization of the expertise. To have those same disorders treated in Massachusetts, you’ve got to go to a regular doctor, go through a long wait in their office, you go in and see the doctor for two minutes. He says, “You have an earache,” which you knew already, and then they charge you $150.

Having gone through the experience of being offered an appointment three weeks in future for a current cold symptom, and then having to wait hours in various rooms to see a doctor for ten minutes, the idea of such small clinics are particularly welcome (there is actually one being built alongside our neighborhood Eckerd).

My main question is whether medical science is really at that stage when a majority of diagnosis can be confidently prescribed by such ‘go, no-go’ metrics ?

The professor also talks about the problem of having non-integrated players in the health care system:

The current health care system is divided into buckets. You have the insurers, the employers who put up the money, the providers such as doctors and nurses, and the hospitals. Because they exist as independent companies, they can each improve themselves, but they can’t re-architect the system in the way that it needs to be changed.

There are two health care systems in the West, Intermountain Health Care in Utah and Kaiser Permanente in California, that are in fact integrated across each of those pieces of the system. They are far ahead of the rest of the world in bringing rules-based diagnosis and therapy in cost-effective business models to their patients.

Of course, all these changes cannot happen without a strong will from the government to overcome the regulatory framework of the current system.

The government will be the hardest because a lot of the regulations that require that care be given by people with particular expertise and in expensive hospitals were put in place during a prior era when the science was not really as well-defined. The regulations just haven’t kept up with the science.

[Cross-posted here]

…in the battle against diabetes. A wonderful example of how combining incentives with information dissemination and counseling can lead to an effective public health policy.

For the past 10 years, the city of Asheville has given free diabetes medicines and supplies to municipal workers who have the disease if they agree to monthly counseling from specially trained pharmacists. The results, city officials say, have been dramatic: Within months of enrolling in the program, almost twice as many have their blood sugar levels under control. In addition, the city’s health plan has saved more than $2,000 in medical costs per patient each year.

…..Asheville’s public health experiment is something of a ray of hope, an example, however modest, of the kind of house-to-house, block-to-block battle that can win results and save lives in the face of a disease that has resisted quick-fix solutions.

Do read the whole thing.

A recent study seems to indicate that majority of Americans support public policies and government-induced incentives that can potentially reduce adult obesity.

A large majority of Americans say they support changes in public policy to stem the rising tide of obesity among adults, a new survey shows.

“There is a lot of support for employer and health policies aimed at preventing obesity,” said lead researcher Bernard Fuemmeler, an assistant professor in the department of community and family medicine at Duke University Medical Center, in Durham, N.C.

“This study provides tangible evidence that people support wide-scale policy changes that can affect obesity in the U.S.,” Fuemmeler added.
…..
The new telephone survey of 1,139 adults found that 85 percent supported tax breaks for employers who made exercise space available to employees.

In addition, 73 percent said they’d support government incentives for companies that reduced the cost of health insurance for employees who had healthy lifestyles and shed extra pounds. Seventy-two percent said they would support government policies requiring insurance companies to cover obesity treatment and prevention programs.

“There is growing public advocacy for these kinds of policy changes,” Fuemmeler said. “There is also advocacy in the research community for large-scale policy changes. With some push, we might be able to get some changes that would help us better address the obesity epidemic in the country.”

Health insurance and other incentives (such as providing subsidized gym membership) are probably a good way to go towards tackling obesity. It will take a while though to figure out the effectiveness of such programs. Also, as the article itself suggests, incentives are no guarantee that employees will take advantage of them:

However, “It’s not clear what will motivate the employees,” Kolasa said.

One problem is misinformation about weight loss. “Most individuals that present for nutrition counseling have significant amounts of misinformation about food and beverages that prevent them from being successful in weight loss or weight management,” Kolasa said.

“Also, people continue to say that it costs more money to eat healthy, when it has been demonstrated time and again you can eat healthy at no greater cost,” Kolasa added.

Baby boomers are spending a higher amount caring for their elderly parents. As the average life expectancy increase, this cost will only go up.

 Ms. Rodriguez is among the legion of adult children — more than 15 million, according to various calculations — who take care of their aging parents, a responsibility that often includes paying for all or part of their housing, medical supplies and incidental expenses. Many costs are out of pocket and largely unnoticed: clothing, home repair, a cellular telephone. Adult children with the largest out-of-pocket expenses are those supervising care long distance, those who hire in-home help and those whose parents have too much money to qualify for government-subsidized Medicaid but not enough to pay for what could be a decade of frailty and dependence.[link]