In the middle of 2009, a New Yorker article by Atul Gawande told the puzzling tale of McAllen, Texas, the most expensive city for Medicare recipients to receive medical care in the United States. But what made McAllen puzzling was not that medical costs were high, but that they were almost twice as high as El Paso, McAllen's demographic twin 750 miles to the northwest. But for all that extra cash, outcomes were the same. Thousands of dollars were just disappearing into the health ca re system.
The Gawande article offered a tantalizing prospect for policymakers: figure out how to make the country's high-cost McAllens look more like El Pasos and save billions, ensure the solvency of Medicare and reduce the economic drag of health care spending, which currently eats up 16 percent of the GDP of the United States. The article was required reading in the White House, and "McAllen," in health policy and health economics circles, soon become synonymous with "waste."
Pinning down the problems in McAllen proved difficult for Gawande. The high spending wasn't linked to poor health (El Paso had a similarly sick population of seniors). It wasn't the fault of trial lawyers (doctors in both cities were protected by Texas' tort reform law that diminished the threat of malpractice). And it wasn't because the extra money was buying better health. Gawande settled on a "culture of money" as the explanation: McAllen simply had a high proportion of entrepreneurial doctors who had become exceptionally good at squeezing money from the system.
Still, efforts continued to tease out the McAllen vs. El Paso dichotomy, and the most intriguing analysis was published earlier this month in the journal Health Affairs. In the article, researchers from the University of Texas looked both at the costs associated with the Medicare population in the two cities as well as per-patient costs incurred by a private insurer, Blue Cross and Blue Shield of Texas. The results, in aggregate, appeared to vindicate McAllen: while the findings replicated Gawande's findings with regard to Medicare, across all Blue Cross/Blue Shield members, costs were actually slightly lower in McAllen than El Paso.
If there was a "culture of money," it wasn't being enabled by Blue Cross/Blue Shield, went the argument. The authors suggested that the more-watchful eye of Blue Cross/Blue Shield was keeping costs in check: things like requiring pre-authorization and using disease management programs. "... the fact that utilization management mechanisms exist for private insurers may prompt some physicians, who might otherwise overuse certain services, to exercise more restraint," said Luisa Franzini, Ph.D., the lead researcher and an associate professor at the University of Texas Health Science Center at Houston School of Public Health, in a press release.
That's was good news: the hint that, just maybe, if Medicare worked a little more like private insurers, some overuse could be squeezed out of the system. Even Gawande expressed cautious "hope," writing on his blog: "Nonetheless, if Blue Cross is succeeding, that means health costs can be malleable -- even in one of the most expensive cities for health care. Rationing, in other words, is not our only option."
But there is also reason to doubt that insurance companies can teach Medicare how to do away with overspending. A closer look at the numbers eroded the broad conclusions in the Health Affairs piece: while younger patients in McAllen were clearly generating fewer health costs, those aged 50 to 64 -- a group closer to the 65+ Medicare demographic -- were far more costly in McAllen, using inpatient services at nearly twice the rate of their peers in El Paso and generating more than twice the inpatient costs.
Overall, for those older than 50, per-patient care ran 23 percent higher in McAllen than in El Paso. On the one hand, that's a smaller gap than was seen in the older, sicker Medicare patients. On the other hand, the results show that, despite Blue Cross/Blue Shield's best efforts, medicine remains expensive -- really expensive -- in McAllen.
So the puzzle of McAllen and its "culture of money" remains. More zealous policing of costs only goes so far. That doesn't mean that there won't be ways to bend the cost curve in McAllen (and other high-cost locations), only that the solutions to the problem will no doubt be a lot more complex than could have been envisioned before Gawande set foot in southern Texas.
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Healthcare plans to succeed should contain Rewards and Disincentives (R&D) to be a "Savvy Consumer of Healthcare" for all stakeholders - public, patients, doctors, hospitals.
For Public and Patients, the Reward:
Semi-annual TAX-FREE REBATE CHECK totaling up to 25% of the premium for being a "Savvy Consumer of Healthcare" as CERTIFIED BY patient's Primary Care Provider (PCP). This serves as a financial incentive and as risk adjustment.
Weighted Points System for Rewards for every adult who:
1. Has a PCP of their choosing.
2. Avoids smoking, other risky behavior and participates in an exercise program.
3. Is within recommended Body-Mass Index for their age, sex and ethnicity.
4. Undergoes an annual physical examination, screenings and vaccinations as advised by the PCP.
5. When ill, takes prescribed medicines and follows advice of the patient's physicians. If admitted to the hospital, patient-stay is within DRG (diagnostic related group) guidelines.
6. Will obtain and UTILIZE THEIR OWN non-medical support services for good healthcare.
7. Maintains PCP appointment schedules and follows their advice.
Disincentives to not be a "Savvy Consumer of health-care":
Insurance will not pay non-indicated (non-medical or medical; diagnostic or therapeutic) services; including non-emergency visits to hospital's Emergency Department.
"Individual incentive" for good healthcare practices significantly reduces overhead costs for actuaries and other risk management personnel employed by insurance carriers. The focus is the relation and responsibility of the individual-person and their care-provider.
Between 2011 and 2019, the share of Part B enrollees subject to the income-related Part B premium will rise from 5 percent to 14 percent (from 2.4 million enrollees in 2011 to 7.8 million enrollees in 2019), according to this analysis. Monthly Part B premiums will range from $161.50 to $369.10 per month in 2011 for those with incomes above the threshold, depending on income, while the standard Part B premium will be $115.40 per month in 2011.
http://kff.org/medicare/8126.cfm
The Medicare tax doesn't have a wage cap. The 'well to do' pay a lot on it before they retire.
Let's see here, you have a system that you are putting in about $1200 and the other person is putting in $2000 - yet you are getting exactly the same benefit. What would be 'more fair' is for you each to pay $1600.
Medicare, despite conventional wisdom, was not enacted to insure quality health care for seniors. It was enacted to privatize the profits and socialize the losses of health insurance companies. After seniors paid continuous premiums their whole life for coverage, then get old enough to actually NEED that coverage, private companies are let off the hook by Medicare. Private insurers keep a lifetime of premiums when a senior is diagnosed with cancer on their 66th birthday, and taxpayers take it in the shorts.
You think the millionaires on Capitol Hill were doing seniors a favor when they passed Medicare?
The Prescription Drug Plan was made as a gift. No negotiations on drugs was their gift.
Private insurance is really bad. I got sick and my insurance company dropped me, then they reinstated me and would not pay for my necessary medicines and I had a high deductible.
You almost have to have a Medicare drug plan, if not you will pay full price for overpriced drugs. Mine would cost $600 a month plus the premiums.
The best doctors on earth are at Walter Reed Army medical center.
Private medicine extorts care for cash.
Profits go up when suffering is prolonged, not cured.
Universal health care, free taxpayer civilian access to Army doctors, is the only real fix. Time to "militarize" our health care system and let our soldiers fight the enemy within us all - disease.
Yeah, I know - laughable analogy in Ferengie-run America, where profits trump suffering and even death.
Don't forget that Medicare started in 1963 for affordable medical care for the elderly. It is expensive now. My husband and I pay Medicare premiums, Medicap premiums, and Prescription drug premiums. I pay a $250 deductible on drugs. After I hit the donut hole in 6 months, it will cost me about $300 for medicine each month, if they cut the prices in half.
Medicare wants everyone to have a lot of 'New to Medicare' tests and they are mamograms and colonoscopies, etc. That couldn't be cheap.
What Medicare/Medicaid do need now is the ability to negotiate for lower Rx drugs, procedures, devices, etc.
Consequently, all the major stakeholders should come under a broad regulatory umbrella: hospitals, doctors, pharma, academia, and the payers. While it's far from a perfect solution an examination of other public utilities shows how efficiencies can be optimized via regulation without eliminating all the benefits of competition. I also see no justification to allow insurers to continue as for profit entities. They should return to their original form as non-profit corporations subject to a community benefit charter that limits their use of profits.