Kansas only state to increase number of uninsured: A how NOT to do it strategy

The title of Alan Bavley�s article, �Kansas is only state to see an increase in its uninsured rate, survey says�, (Kansas City Star, August 5, 2014) kind of says it all. It could be seen as a victory by some. Four years after the passage of the Affordable Care Act (ACA), aimed at expanding health coverage to more Americans by a combination of strategies including the creation of both state-run and federally-run (for those states that chose not to run their own) insurance exchanges to match people seeking coverage with insurance companies and subsidizing premiums for the moderately low-income, and expanding Medicaid for the very low-income, Kansas has succeeded in actually reducing the number of people covered!

The adult uninsured rate in Kansas rose from 12.5 percent last year to 17.6 percent during the first half of this year, giving the state the seventh-highest rate in the nation, according to data collected as part of the Gallup-Healthways Well-Being Index�. in other states uninsured rates declined or remained unchanged. Kansas was the only state with a statistically significant increase in the percentage of uninsured residents.

One could construct a fantasy out of whole cloth demonstrating how this proves why the opponents of the ACA were right all along; that it is not increasing health care coverage because it is evil and socialist, and that the increased costs for some people, along with cuts in the number of employed folks because of policies that do not always support �job creators� (read: very rich people) have decreased our employer-based insured group. Of course, that would be incorrect, but I expect to see it anyway.

In fact, those governing my state have worked very hard to make this happen. Governor Brownback and most of the state legislature are strong opponents of Obamacare, and have done what they could to make it not succeed. When the Supreme Court ruling allowed states to opt out of expanding Medicaid, Kansas did so, eliminating the very poor (under 133% of poverty) from the method the law intended for them to receive coverage. Kansas also chose not to develop a state-run insurance exchange and pu up as many obstacles as it could to the federally-run one. One of two Court of Appeals decisions (discussed in this blog in ACA: Where are we? And where should we go?, July 27, 2014) ruled that subsidies could be available only to enrollees in state-run exchanges (which Kansas doesn�t have); it hasn�t gone into effect yet, because another district�s Court ruled the other way, so we will have to wait for the Supreme Court to decide, but if it is upheld would bolster the number of Kansans not getting insurance.

But a decrease in the number of insured? The only one? Surely that is a notable accomplishment. How did we pull that off? ��It�s eye-popping. Kansas really sticks out,� said Dan Witters, research director for the Well-Being Index, an ongoing national poll that surveys people�s health, relationships and finances.� For starters, it could, possibly, not be exactly true, but a data anomaly of the survey somehow. This is basically the position of the state�s Insurance Commissioner, Sandy Praeger, who said

�the number �appears to be an anomaly that needs more review. To have the uninsured jump that much in one year would be unprecedented.� The uninsured numbers in Kansas have hovered around 12 to 13 percent for many years, Praeger said, adding, �We will try to find out where the discrepancy is.�

This is worth noting, as Praeger is one of the few honest, trustworthy, and non-ideological members of state government in Kansas. Note that she does not claim that it is a liberal lie, or that it is a good thing, but just that it is inconsistent with previous data and she will try to find out why there is a discrepancy. If that is the reason, I�m sure she will.

But there are reasons to think that the numbers may not be inaccurate, even if they turn out not to be quite as bad as this survey indicates. Since the election of Governor Brownback in 2010, and with the support of the legislature, taxes in Kansas have been slashed, particularly income tax rates on high-income people and corporations and business taxes. The motivation was a profound belief in supply-side economics, that tax cuts would stimulate job growth.  Unfortunately, it has not. Job growth in Kansas has been more sluggish than in the country as a whole, and the state is facing enormous deficits. Cuts in spending have been dramatic, but the problem is, in fact, on the supply side � not enough tax revenue.  People don�t have jobs, and thus often don�t have enough income to qualify themselves for the exchanges, even if subsidies are allowed by SCOTUS to continue. The state has a very large number of undocumented workers (and most are indeed working, or in families of people working) who would not be eligible for coverage by any part of ACA, and can only get it if their employers pay for it. Which many do not.

While many states with Republican governors have pursued many of the same tacks as Kansas, including limiting the impact of ACA and cutting taxes, Kansas has been in many ways a test case for these strategies, even more than Wisconsin, because of its strong Republican tradition. Americans for Prosperity has a very strong political and financial influence in the state, and it is heavily financed by the Koch brothers whose Koch Industries is based in Wichita, Kansas (where Charles Koch still lives). Cutting taxes for the wealthy and corporations, and blocking any opposition to fossil fuel expansion, is the cornerstone of state politics, not ensuring the health or well-being of its residents.

In a larger sense, however, this is more than a story about Kansas. It may be the only state with a statistically significant increase in uninsured in the last year, but it is far from the state with the largest percentage of uninsured. Many other states that have not expanded Medicaid, and cut social services, have similar situations. Sadly, of course, many of these states (particularly in the southeast) started pretty far down, much worse than Kansas did, and have dug themselves deeper in the hole. The real story, I think, is in the states that, despite being southern and conservative, have chosen to expand Medicaid, and have seen real benefit for their people.

The Gallup poll found that the 10 states with the largest reductions in uninsured rates this year had all expanded their Medicaid programs and had either created their own exchanges or partnered with the federal government on an exchange. Arkansas saw the steepest decline, from 22.5 percent uninsured in 2013 to 12.4 percent this year. Kentucky was second with a decline from 20.4 percent uninsured to 11.9 percent.

Good policies can actually help. The state with the actual highest rate of uninsured people is Texas. �Look out, Texas,� Governor Brownback stated in announcing his original tax cuts, �here comes Kansas!�  He was talking about job growth, which we haven�t achieved, but we are making much more progress on denying people access to healthcare coverage.

Treatments that don't cure the disease; we are spending money on the wrong things

In �Heralded treatments often fail to live up to their promise� (Kansas City Star, May 17, 2014), Alan Bavley, writing with Scott Canon, continues to demonstrate that he is one of the excellent health journalists � excellent journalists � in the US, along with Elisabeth Rosenthal of the New York Times. The common practice in the news media (and, thanks to a typo, �medica�) is to hype the new, exciting, dramatic, expensive, and hard to believe even though you want to. In politics, we often see the media acting as flaks for the government, the rich, and the powerful (sometimes, of course, these can be in conflict). Bavley and Rosenthal  and their ilk actually do investigative journalism, trying to the best of their ability to find out the truth rather than to reprint press releases.

The article begins with a review of a surgical procedure that was designed to control high blood pressure (hypertension) without drugs, by cutting some of the nerves to the kidneys. It made sense, it was seen as a big breakthrough (�The potential benefit was huge,� said a cardiologist). Unfortunately, when actually subjected to appropriate scientific study, it didn�t work. Or, rather, it worked just as well as placebo, a sham surgical procedure. The same cardiologist remarks ��This could be considered the biggest disappointment in cardiology of this century, but �the medical community went about it right.� 

Science worked. Unfortunately, the authors add,

�If only that were always the case. A combination of industry marketing, overly eager doctors, demanding patients and news media ready to cheer on anything that sounds like a breakthrough is popularizing many drugs, surgeries and other treatments long before they�re adequately tested. Far too often, they�re ultimately proved ineffective, no better than older, cheaper therapies, or even hazardous. Billions of dollars are wasted and tens of millions of patients are put at risk�

Yup. They go on to cite the Vioxx scandal, in which Merck concealed evidence of its biggest-selling drug causing an increase in heart disease. But that was taken off the market; many other unproven (or worse, proven to be ineffective) treatments are not. They talk about arthroscopic knee surgery, still often being done for conditions for which it has been shown to be no more effective than a sham procedure. They discuss surgical robots, costing upwards of $1.5 million, and proton-beam radiation treatments (those babies, the machines, really cost a lot!) for which the evidence of effectiveness compared to more standard and much cheaper treatment is mixed, at best. But hey, if you�re a hospital, and the competition has robots and proton-beam accelerators, who�s going to come to you if you don�t have one? Poor people? Heaven forfend!

And it is all about getting the advantage on the competition to make more money. A good argument can, and should, be made that competition in hospitals helps no one. That if there were an expensive item that there were an actual medical need for one of in the community, there should be one, not one at every hospital. But that would presume that the goal of the health system was to increase the health of the American people at the lowest effective cost. It isn�t. It�s to make money. If I can get your patients to come to me instead, it is seen as a victory (from a competitive business sense). It is really a loss for the health of our people and the pocketbooks of us all.

It is particularly depressing because that money is not buying us health. If you still harbored the belief that �we have the best health care system in the world�, it�s time to acknowledge that you are wrong (although we forgive you given the hype!). We should all know how expensive our health care system is, that we spend way more than any of the other developed countries (members of the Organization for Economic Cooperation and Development, OECD). The attached graph, from Steven Woolf, MD, PhD, who was a plenary speaker at the recent Society of Teachers of Family Medicine Annual Conference, shows a comparison of spending and life expectancy for the OECD countries. That�s the US way off to the right, spending more than anyone by far, but having a life expectancy close to the Czech Republic. Better than Mexico, Poland, Slovakia, Hungary and Turkey, but at enormously greater cost!

Woolf was the lead author of the Institute of Medicine�s (IOM) recent report �Shorter Lives, Poorer Health� , which presents depressing, but unfortunately accurate, data on our health status. We are among the �leaders� in death rates from communicable and non-communicable diseases and from injuries. Only for a few causes are our death rates better than the average. Our life expectancy at birth is worse than any of the 17 comparison countries for men, and second worst for women. Our probability of survival to age 50 is lower than any of 21 comparison countries. At any age until 75, we are never better than 15 out of 17 in terms of life expectancy. We do have better survival rates once we reach age 75, but there is no information on how much of that is keeping people alive despite poor quality of life.

Want more? In case you think it is only the minority populations (although that would be part of our population), non-Hispanic whites rank no higher than 16 of 17 at any age below 55. And the only portion of our population for whom mortality rates have risen is non-Hispanic whites with less than 12 years of education. From 2005-2009, the US had the highest infant mortality rate of the 17 countries and the 31st highest in the OECD. Non-Hispanic whites and mothers with 16+ years of education also have higher infant mortality rates than those in other countries. Among the 17 peer countries, mortality from transport accidents decreased by 42% in the OECD between 1995 and 2009, but by only 11% in the US. The same trends hold for child and adolescent health � and ill-health and mortality.

And then there are the areas where we really shine, particularly health issues related to guns.

• In 2007, 69% of US homicides (73% of homicides before age 50) involved firearms, compared with 26% in peer countries.
• A 2003 study found that the US homicide rate was 7 times higher (the rate of firearm homicides was 20 times higher) than in 22 OECD countries.
• Although US suicide rates were lower than in those countries, firearm suicide rates were 6 times higher.

We have the highest child poverty rates in the OECD, our preschool enrollment is below most countries, and the ratio of social services spending to medical spending is below almost all other OECD countries.

This is insanity. We are spending enormous amounts of money, but we are spending it so that our hospitals can compete with each other, so that we can deliver the most expensive and high-tech care whether it benefits people�s health or not, and we then do not have any money left to do the things that would really enhance health: expanding education, creating jobs, decreasing poverty, ensuring that people had homes and enough to eat.

Not to mention the guns.

Integrating health systems must be to improve quality, not increase cost

The February 13, 2014 article in the New York Times by Elisabeth Rosenthal, �Apprehensive, many doctors shift to jobs with salaries�, more or less just presents the facts. It notes that the medical placement firm, Merritt Hawkins, says that 64% of jobs this year are salaried as opposed to 11% in 2004, and that it expects it to go up to 75% in the next two years. She cites AMA figures that ��about 60 percent of family doctors and pediatricians, 50 percent of surgeons and 25 percent of surgical subspecialists � such as ophthalmologists and ear, nose and throat surgeons � are employees rather than independent.� In some places it is more dramatic; in Kansas City, there are no longer any cardiologists (a type of internal medicine subspecialist) who are not employed by hospital systems, and oncologists (cancer specialists) are not far behind.

So, is this a good thing? The article suggests yes, but maybe not entirely. It states that �Health economists are nearly unanimous that the United States should move away from fee-for-service payments to doctors, the traditional system where private physicians are paid for each procedure and test,� and I agree, and that �When hospitals gather the right mix of salaried front-line doctors and specialists under one roof, it can yield cost-efficient and coordinated patient care. The Kaiser system in California and Intermountain Healthcare in Utah are considered models for how this can work,� with which I also agree. However, not all health systems are Kaiser or Intermountain Healthcare. The article continues: �But many of the new salaried arrangements have evolved from hospitals looking for new revenues, and could have the opposite effect. For example, when doctors� practices are bought by a hospital, a colonoscopy or stress test performed in the office can suddenly cost far more because a hospital �facility fee� is tacked on.�

Rosenthal has written about facility fees before, as has Alan Bavley of the Kansas City Star in his �Doctors, Inc.� series (��Facility fees� add billions to medical bills�, Dec 29, 2013), and I have commented on it in Changing the structure of health care delivery systems: to benefit the patient, the providers, or the insurers?, January 14, 2014. The new arrangements promise more money, or at least stable incomes, to physicians, and continue to pay the currently-most-highly-paid specialists the most money, with primary care doctors getting less. This is not because hospital systems have anything against primary care, but rather that they are following the money, and these acquisitions have occurred precisely while we are still under fee-for-service reimbursement in most locations. If cardiology or orthopedic or radiologic or neurosurgical procedures bring in great amounts of money to the hospital (�technical fees�) the hospitals like this, and are willing to share some of that money with the doctors to ensure that they keep their patients in their hospital or health system. Primary care does not generate such largesse. Relatively intelligent systems recognize that they need a locked-in �primary care base� to create referrals to their subspecialists, but will pay as little as they can, and demand �high productivity� (which could be seen as �patient churning�), and it is not just primary care: �many doctors on salary are offered bonuses tied to how much billing they generate, which could encourage physicians to order more X-rays and tests.�

Bloomberg News has a more direct take on this phenomenon, stating firmly in an article by Shannon Brownlee and Vikas Saini that �Bigger hospitals mean higher prices, not better care�, February 18, 2014. They cite data from sources such as the Dartmouth Atlas of Health Care, a recent article in Health Affairs[1] which demonstrated that �On average, higher-priced hospitals are bigger, but offer no better quality of care,� and a variety of lawsuits by public agencies (such as the Massachusetts Attorney General) to demonstrate that hospital acquisitions are about market share and control of practices and, ultimately, about money, not quality. �If you think of value as some combination of needed services delivered for the right price, large hospitals are no better than small hospitals on both counts.� As I have written about before, doctors control a lot of costs in the health system, by choosing the tests that they order, deciding whether to admit to the hospital or not, and where they refer. By employing the physicians, hospitals can not only control the latter, but can set criteria requiring physicians to abide by hospital policies on the others. The doctors then become, in the words of this article,  ��another cog in the corporate machine, and many physicians have told us they feel they must skew their medical judgment to keep their jobs.�

This is the nonsense that occurs when things are done piecemeal. Intermountain Health Care and Kaiser are not perfect, but they have used their status as integrated health systems to control costs and increase efficiencies. To the extent that they are also the insurer, it is in their interest to do so. Efforts by the federal government to have others emulate these models through the creation of Accountable Care Organizations (ACOs), without changing the manner of reimbursement, are bound to fail. As Paul Baladian is credited with saying �every system is perfectly designed to get the results that it gets.� If we are getting a system in which hospitals are buying up physician practices so that they can charge insurers, from Medicare to Blue Cross, more; if we are getting a system in which medical decisions are being made in the best financial interests of hospitals rather than the best health interests of patients; if we are getting a system in which we continue to favor some patient over others based upon their income, insurance status, or their type of disease (middle-aged well-insured person who needs a single joint replacement = �good�, older person with multiple chronic medical conditions and �just� Medicare or worse yet uninsured because they are under 65 or undocumented = �bad�), it is because we have perfectly designed it to be so.

Brownlee and Saini offer some suggestions for solutions. They suggest that Medicare expand its �Advance Payment Model,� a program that provides capital to small or rural physician groups, and also particularly about forming multispecialty Accountable Care Organizations driven by primary care.

�Until we give primary-care groups control over what happens to patients, large hospital systems and specialist-dominated groups -- those with greatest access to capital -- will be able to keep raising prices, even as they issue press releases about their plans to control costs and improve care.�

Sounds like a good idea to me. Combine that with a single-payer system that covers everyone, �everybody in, nobody out!� and we may be able to reverse the trend toward higher profit at the expense of lower quality.

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[1]White C, Rechovsky JD, Bond AM, �Understanding Differences Between High- And Low-Price Hospitals: Implications For Efforts To Rein In Costs�, Health Affairs, January 2014 10.1377/hlthaff.2013.0747.

Changing the structure of health care delivery systems: to benefit the patient, the providers, or the insurers?

In an important series of 3 articles beginning on the Sunday before the New Year, �Doctors Inc.�, Alan Bavley of the Kansas City Star looked at the increasing acquisition of physician practices by hospitals, and the impact this has on access to, quality of, and cost of health care for patients. The first article, �Medicine goes corporate as more physicians join hospital payrolls�, describes the �what�, that:

�Since 2000, the number of doctors on hospital payrolls nationwide has risen by one-third, according to the American Hospital Association. In the Kansas City area, fully 55 percent of physicians are now employed by hospitals, Blue Cross and Blue Shield of Kansas City estimates. That includes virtually all cardiologists and most cancer specialists.� 

These changes are not limited to the KC area; he cites both national data and that from disparate regions such as Spartanburg, SC and Phoenix, AZ. Part of the reason, the "financial model", which is described in this first article, is that such �integrated� practices generate internal referrals, keeping patients within the system, as well as generating lucrative procedures. Physicians get a piece of the action; they get guaranteed salaries paid in part by the hospital or health system which is getting downstream revenue for their referrals.

And it makes these hospitals and health systems a lot of money, because they can now charge a lot more money. Bavley quotes �Robert Zirkelbach, vice president of America�s Health Insurance Plans, the industry�s trade association. �When a hospital buys a practice, its rates will increase in the following year�s contract. Increases of 20, 30 or 40 percent are not uncommon. It�s not 3 or 4 percent, that is for sure.�� 

It is also not always good for patients, as Bavley illustrates with examples of people who were referred internally and had delayed diagnosis. (One story discusses a woman discouraged from going to the academic medical center at which I work � full disclosure � for a second opinion regarding her lung cancer; the "reasons" given were both that she �didn�t have time�, and because she would see �young doctors still in training�.) Sometimes it is fine to see doctors within the system, and certainly this can be, and is, encouraged, but discouraging people from seeking outside referrals can also be hazardous to their health.

The Affordable Care Act (ACA) encourages the creation of �Accountable Care Organizations� (ACOs), which would be responsible (at least hopefully, in the best of scenarios) for the health of a population. At a minimum, they would seek to decrease the degree to which the delivery of health care is a series of episodic events paid for individually, instead taking on a global responsibility including inpatient, outpatient, and long-term care. This would, in theory, change the usual patient experience from seeing one (or many) doctors or having one (or many) ER visits, each charged and paid separately, culminating in a hospitalization, and then discharge to one (or many) doctors, or a long-term care facility (paid separately), and failure of care resulting in readmission to the hospital (paid again). The idea is that all levels would be coordinated to provide the best care at the most appropriate (inpatient, outpatient, long-term, home based) level.  In some settings, particularly for fully-integrated plans (where the providers of care are also the insurers) such as Kaiser, this works relatively well.

However, as Bavley makes clear in his series, written as part of a yearlong Reporting Fellowship on Health Care Performance sponsored by the Association of Health Care Journalists and supported by The Commonwealth Fund, particularly in the second article, ��Facility fees� add billions to medical bills�, there is often a great cost to those who are paying, the patient and their insurer (including Medicare and Medicaid). This is because Medicare (and, following their lead, private insurers) pays an additional fee (the "facility fee") for services, and especially procedures, done in a hospital outpatient facility beyond what they would pay for it to be done in a doctor�s office. (This is also addressed in the series by Elisabeth Rosenthal, "The $2.7 Trillion Medical Bill" in the New York Times.) 

Why? The original intent (as is often the case) was good, intended to both save money and improve care, by having many procedures done in outpatient rather than inpatient settings, where the cost would be even higher. And (as also so often is the case) the providers realized that this system could be gamed as well. The physician fee for a visit or procedure done in an office is greater than that done in a hospital clinic, but is expected to include all the overhead. In a hospital-based clinic (which just has to be owned by the hospital or health system; it doesn�t have to be on the campus and can be in the same doctor�s office that used to be separate) there is a somewhat lower doctor's fee, but there is also a facility fee that, together with the doctor�s fee, is much higher in total than the office-based reimbursement; indeed, the facility fee can be far higher than the physician fee. Thus, the hospital makes money, and can share some of that with the physician, allowing the physician to make a lot more money without the overhead and risk. Voil�! Physicians are incented to become employed by hospitals!

I am a doctor and work in a medical center, so I understand the impetus for this from the point of view of providers, both doctors and hospitals. Medicare is ratcheting down its reimbursement, and a particular form of support for hospitals caring for a disproportionate share of uninsured is being cut back, and operating margins for many hospitals are getting thin or negative. Doctors are making less money (arguably some of them were making far too much, but they still don�t like making less) and will thus endorse efforts to have hospitals support them and maintain their incomes. The problem is that the cost to consumers goes up, especially when co-pays and co-insurances that come out of patients� pockets, even when they are insured, go ever upward. 

Medicare is, sadly, responsible for much of this situation, as illustrated by the following: seeking to reduce costs for unnecessary admissions, Medicare has empowered bounty hunters (called �RACs�) to go after Medicare �fraud� by reviewing admissions to hospitals for patients who could have been care for in the hospital on �observation� status, which will save Medicare money. Hospitals are thus very careful to only officially �admit� people who meet very strict criteria. However, because �observation� status is officially �outpatient�, while Medicare saves money the patient pays more out of pocket, because this is under Medicare Part B, not the Part A that covers hospitalization. Complicated, but what it comes down to is what is financially good for Medicare is financially bad for the patient. Is this what we want?

I hope not. Yes, some of the fault is Medicare, and the fault is also providers (hospitals and doctors) seeking to maximize profit (even if �not-for-profit�) by manipulating the rules of the system. The fault is that we have Rube Goldberg-type complex constructs put in place to encourage behavior by providers, and providers are figuring out ways to work the system to their benefit. The real problem is that we do not have a straightforward system to deliver the highest-quality, necessary, health care to all people but a mess of conflicting incentives where gain to one component (i.e., insurers) is a loss to another (i.e., providers) and that they then take actions that benefit them and the overall loser is the patient. Bavley quotes an email from a board member of a hospital system to the Chief Financial Officer that said �Let�s be realistic. Employing physicians is not achieving better cost, it�s achieving better profit.�

That is not what our national health policy should be doing. A health system that did not permit gaming but straightforwardly paid for health care,  and eliminated the profit motive, would solve these problems. The answer is to put everyone in Medicare, in a single-payer system, so some patients are not �more desirable� than others. And to have Medicare, which is now covering everyone, pay for the appropriate level of care for every patient, where doctors and hospitals have no incentive to label a person�s hospitalization as �admission� or �observation�, or an outpatient visit as �hospital based� or �office based� because there is a difference in the reimbursement.

It can be done. It is done in Canada. It is done in some fashion in every other developed country. If we decide that the health of our people is more important than the profit of the health care industry, we can do it also.