Category Archives: Health care

Changing health care’s business model

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

On Tuesday, the CEO of a major Arkansas employer announced a new offering that could cost it a lot of business someday.

Troy Wells, president and CEO of Baptist Health, announced his hospital system had received a grant from Verizon Wireless for a yearlong diabetes study. The study will provide 125 Pulaski County patients with tech tools such as wireless glucometers that will transmit glucose levels to medical staff when patients test themselves at home. The patients also will be given cell phones so health professionals can coach them up on taking care of their health. Another group will be given more old-fashioned equipment, and the results will be compared.

The technology will help medical staff keep an eye on their patients to spot problems early and help them stay healthy. All of the patients will be “medically underserved,” meaning they face barriers to health care. In other words, they’re probably poor, they’re often aged, and they need help managing their diabetes.

This kind of preventive telemedicine holds great promise for society. Aside from the human factor, it costs the health care system much less to keep a patient’s blood sugar levels stable than it does to intervene after the disease has begun to take its toll.

The problem is, what’s good for patients, and for their families, and for the health care system, and for society, is not necessarily good for Baptist Health’s bottom line.

Of all the problems with health care reform, the biggest is that not nearly enough has been done to address the system’s perverse financial incentives. Baptist Health, like most medical providers, makes its money by treating patients, not by curing them and not by helping them stay healthy in the first place. About the only time health care providers have a meaningful financial incentive to promote good health is when they’ll otherwise have to provide uncompensated or inadequately compensated care – which is probably the case with some of the patients in this study.

The health care payment system operates under a “fee for service” model. Medical providers bill insurance companies or the government for each procedure, regardless of the results and regardless of how efficiently they perform. Therefore, promoting a healthy population cost-efficiently is about the worst thing a medical provider can do for itself, financially speaking.

That’s not to say that doctors and hospitals don’t try to cure us. Frankly, they deserve credit for acting against their self-interest. But, like all humans, they respond to incentives. As a writer, when I’m paid by the word, I’m not going to cut the story short – and no, I’m not paid by the word for this column. Likewise, incentives shape how medical providers decide priorities, in how they invest resources, and in what interventions they recommend. The reason there’s no cure for the common cold is because it hasn’t been financially viable to invent one. For cold medicine, it has been, which is why pharmacies and grocery store aisles are stocked full of multiple varieties.

Reforms are occurring. For example, the state has been engaged in a years long effort, the Arkansas Payment Improvement Initiative, which is replacing the fee for service model with one based on “episodes of care” in some situations. Medical providers, state agencies and insurance companies together have determined appropriate costs for various health events. If medical providers’ costs over time are lower than that range, they receive a financial reward. If costs are higher, they’re penalized. The federal Medicare system is doing something similar.

After the Arkansas initiative began and the incentives changed, unnecessary antibiotic prescriptions for unspecified respiratory infections dropped 19 percent. As former Arkansas Surgeon General Dr. Joe Thompson, a pediatrician, told me, it had been easier for him to prescribe the medication than it had been to spend 10 minutes telling a mother why it wouldn’t help her child. Now that those unnecessary prescriptions could cut into doctors’ bottom lines, they might take the time to explain.

To create a healthier society and save on health care costs, the system must provide a higher profit for the good folks at Baptist Health when they prevent disease, or quickly cure it, or cheaply manage it, than it does when they treat it or operate on it. Doctors and hospitals often nobly act against their own financial self-interest, and thank goodness they do. But it’s hard to build a lasting business model that way.

Tough task for health care task force

Jim Hendren is one of the chairmen of the health care task force.

Jim Hendren is one of the chairmen of the health care task force.

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

Sixteen legislators will spend the next 22 months trying to figure out how to do what no one has been able to figure out so far – cost-effectively provide health care to lower-income people without growing government and making more people dependent upon it.

Also, they must try to produce a proposal that would be supported by 75 percent of the Legislature and the governor. Meanwhile, the Supreme Court this year will issue a ruling on Obamacare that could throw the entire health care system into disarray.

The group is called the Arkansas Health Care Reform Legislative Task Force. Tough task, huh?

The task force was created earlier this legislative session as Gov. Asa Hutchinson’s way of resolving the impasse over the private option. He doesn’t want it simply to go away without a replacement.

The private option was Arkansas’ response to the Affordable Care Act’s requirement that states expand their Medicaid populations, and the Supreme Court’s subsequent ruling that it had to be only optional. Many Republican-leaning states turned down federal money rather than grow Medicaid. Arkansas used that money to buy private insurance for 200,000 people, and counting.

Now Arkansas is leading the nation in the reduction of its uninsured population. According to a recent Gallup poll, the percentage of Arkansans without insurance dropped in one year from 22.5 to 11.4 percent. The private option will bring $1.3 billion in federal funds to the state in 2015. Without it, rural hospitals would probably close, as they have in states that turned down the money.

But the private option is rightfully controversial. It has roots in Obamacare. While the federal government is paying for almost all of it now, the state’s share grows over time – supposedly to 10 percent, but who knows with the federal government these days? Legislative opponents say this is how the $18 trillion national debt keeps growing. Everyone always has a hand out.

Because the private option involves spending money, it must pass with 75 percent majorities each year, and it’s barely done that twice. This year did not look promising, so Hutchinson asked legislators to form the task force to consider not only how to change (and surely rename) the private option, but also to consider broader Medicaid reforms.

The 16-member task force by design is split between legislators who have consistently voted for and against it. If this were Washington, it would accomplish nothing, but Little Rock is not Washington. The sponsor of the legislation creating the task force, Sen. Jim Hendren, R-Sulphur Springs, expects it to make progress “because we’re going to act like grown-ups.”

Hendren has been a private option opponent because he believes it’s unsustainable at both the state and federal levels. However, he recognizes that the old system – lots of uninsured people getting charity care in emergency rooms – wasn’t working. Plus, you can’t just yank insurance away from 200,000 people. Plus, he’s Hutchinson’s nephew. So what now? Ideally, he said, the task force will create something that will “meet the needs of those people that need it and encourage them to improve their station in life, and we also do it in a financially sustainable way.”

For many reasons, the culture in Little Rock is much more collaborative than in Washington, D.C. Unlike in our nation’s capital, state legislators tend to meet somewhere in the middle. Moreover, the lines between private option supporters and opponents can be somewhat blurred, Hendren said. “Obviously we’re not going to have a society in Arkansas where people can’t get health care at all. It’s just a question of how we deliver that in an affordable way,” he said.

The task force’s other Senate members are Sens. David Sanders, R-Little Rock; Jason Rapert, R-Conway; Linda Chesterfield, D-Little Rock; Keith Ingram, D-West Memphis; Terry Rice, R-Waldron; John Cooper, R-Jonesboro; and Cecile Bledsoe, R-Rogers. House members are Reps. David Meeks, R-Conway; Joe Farrer, R-Austin; Justin Boyd, R-Fort Smith; Michelle Gray, R-Melbourne; Charlie Collins, R-Fayetteville; David Murdock, D-Marianna; Deborah Ferguson, D-West Memphis; and Kim Hammer, R-Benton.

They must produce their first report by the end of the year. They won’t “solve” health care, but they will produce something useful. No one will get everything they want, and they’ll accept that, like grown-ups.

Is America governable?

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

U.S. Capitol for blogThe American republic has limped past being dysfunctional and stumbled into being ungovernable. Even if you hate the government, this situation should concern you because it means big problems aren’t being addressed, while new ones are being created.

Two current legislative fights illustrate this reality – No Child Left Behind and the broken immigration system.

Congress has yet again stalled on its long overdue reauthorization of No Child Left Behind. That’s bad, because this law is completely unworkable. Signed by President George W. Bush in 2002 and passed with bipartisan support, it required that 100 percent of American students in grades 3-12 test at their grade level by the end of the 2014 school year, or the federal government would punish the schools where they didn’t. That’s every single child, regardless of language difficulty or intellectual challenge – a requirement so ridiculous that Congress ought to fix it, but it can’t. As a result, the Obama administration has been granting waivers to states telling them how they can disobey the law.

The president is supposed to enforce the law, and Congress is supposed to write laws that make sense, right?

The same applies to immigration. The president wants to ignore the laws Congress has passed, and Congress can’t agree on how to fund the Department of Homeland Security in response. Meanwhile, the border remains porous, and millions of people live in the shadows among us. Children brought here by their parents basically have no home country. Meanwhile, the United States quite effectively limits the influx of skilled overseas workers – exactly the people we need.

If these two issues were outliers, we could deal with them. Unfortunately, they’re the norm. A few other examples …

The national debt. Uncle Sam now owes $18 trillion, or the equivalent of $57,000 for each American. The debt has doubled since 2007 and tripled since 2001, and it’s still rising. The only possible solution is to reduce spending substantially while collecting more revenues somehow. There’s not a remote possibility that Republicans and Democrats in Washington will agree to do that.

Health care. Prior to the Obama administration, the United States already had the world’s most expensive health care system. It denied insurance because of pre-existing conditions and stopped paying for patient claims if they became too expensive. Then the Affordable Care Act was rushed through Congress, causing its own problems and leading to who-knows-what. Now the act faces a serious Supreme Court challenge over its wording regarding federal exchange subsidies. Pulling this leg from the stool could cause Obamacare to collapse. Lots of people would be happy about that, but … what’s the plan after that?

Infrastructure. The gas tax, which funds highways, has not been raised at the federal level since 1993. It is destined to produce less and less revenue because cars are becoming more fuel efficient through both market and government demands. Everybody knows the model is unsustainable, but there’s no agreement on its replacement.

It won’t be enough to vote for different people in 2016. Washington simply doesn’t work any more, regardless of who is in office.

That’s because Washington reflects American society, which itself is marked by contradictions and divisions. We simply don’t agree on how to solve problems, or even about what the problems are. We’re deeply divided culturally, morally, about what we want this place to look like, and about what we think it once was. That lack of consensus makes it very hard to solve difficult issues. Moreover, Americans say they don’t trust government but then choose to be profoundly dependent upon it, rarely recognizing the irony. The result is that we grow government without paying for it.

This is a depressing column, so let’s close with solutions. Congressional term limits? A balanced budget amendment? Campaign finance reform? All could help.

Meanwhile, many decisions should be returned to the state level, where democracy still manages to work sometimes. Red, blue and purple states could solve problems in their own ways, often learning from each other. Americans would be free to settle in states where they felt most comfortable.

This could cause its own problems, including irreconcilable legal definitions of discrimination and a race to the bottom on environmental regulations. A poor state like Arkansas might find its niche, or it might just get poorer.

Something big has to happen – bigger than the next election. When a country becomes ungovernable, problems can’t be solved simply by electing different people to that government.

Asa’s state of the private option address

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

Gov. Asa Hutchinson’s health care reform speech last Thursday was what the State of the Union address ought to be but rarely is – an accurate definition of a problem respecting both sides, followed by a solution that actually has a chance of being enacted.

Hutchinson spoke last week at UAMS before an auditorium full of legislators, health care policymakers, and other interested listeners. The atmosphere was serious and expectant.

Hutchinson started his speech with a history lesson. One of the provisions of the Affordable Care Act (Obamacare) expanded Medicaid in the states, but the Supreme Court had made that provision optional. Arkansas had created what Hutchinson called an “innovative” approach: using federal dollars to buy private health insurance instead of just pouring more money into Medicaid.

Hutchinson then accurately defined the two opposing viewpoints on the issue. Because of the private option, 200,000 Arkansans have health insurance, and hospitals are providing far less uncompensated care. However, the state will soon be responsible for up to 10 percent of the costs, which could equal $200 million by 2021. Opponents, he said, are “wise” to be concerned about this.

As he pointed out, the private option has paralyzed Arkansas politics. The votes in the two previous legislative sessions have been close enough that health care providers can’t completely rely on it. So many legislators campaigned this past election on ending the private option that its future is very much in doubt, but what about the 200,000 people?

Now for the solution. Hutchinson asked legislators to broaden the debate. Pointing to a single chart beside him, he said most Medicaid spending has nothing to do with the private option, so why argue over one slice of the pie? He asked legislators to approve the private option for two years, and to create a task force that will study health care reform in general for one year. The task force will produce recommendations based on principles such as minimizing the need for more revenues and increasing recipients’ accountability and work requirements.

It will be interesting where this goes. Arkansas is already involved in a promising health care reform process, the Arkansas Health Care Payment Improvement Initiative. Will the task force build on that, produce a different idea, or just tie a pretty ribbon on the private option and rename it so certain legislators can vote yes? We’ll know in a year, assuming the Legislature passes the bill that would create it.

At the end of the speech, Hutchinson remarked good-naturedly that he had not been interrupted by applause, so the audience clapped. The reason that had been the case was that audience members were listening intently – in order to learn important information, not for cues that would tell them to stand or sit in order to make a political point.

Contrast that with the State of the Union address, delivered two days earlier. President Obama’s speech had some good points in that it had a clear theme (middle-class economics) and a call for civil debate. But as is usually the case, it was marked by a list of proposals that had little chance of being enacted. Members of Congress played their expected parts. It was theater, not policymaking. Much of it will be ignored.

Not that there wasn’t some theater in the UAMS auditorium. Part of what Hutchinson was doing was buying time. He’s willing to change the private option, even significantly. But he wants neither to take health insurance from 200,000 people, nor to turn away the $1.3 billion in federal funds the private option will provide the state this fiscal year. After the speech, some legislators opposed to the private option expressed at least mild support because they said Hutchinson’s plan would end the private option in two years. That was not what he said.

But all that’s to be expected. This is politics. Hutchinson’s address changed the tone of the debate and offered a way forward. The legislation to create the task force has been filed, and there are good reasons for it to pass: Supporters don’t want the private option to fail, and Republicans opposed to the private option want their party’s governor to succeed.

Some still will oppose the plan, but what Hutchinson said won’t be ignored. Good speech.

Passing health care reform – and a kidney stone

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

It was Saturday morning, March 29, and the pain in my lower back was growing more intense. I knew what was happening. It was not my first kidney stone.

If you’ve ever had one, you know the drill: the writhing, the fruitless shifting of positions hoping to find relief, the heaving. When I could take the pain no more, I shakily told my wife to wake the kids and drive me to the emergency room. When we arrived, I begged the admittance clerk to hurry. I underwent a CT scan and was given drugs that, blessedly, took away most of the pain. Surgery removed the stone a week later.

I’m grateful for modern health care, but no consumer product is free. The total out-of-pocket cost for that episode so far is nearing $6,000, including a big hospital bill that recently arrived – six months after the surgery. I’m hoping there will be no more surprises. My insurance company was billed more than $12,000 for the surgery alone and paid about $10,000 of that.

Ask me about health care reform, and I’ll generally say the system doesn’t function enough like a free market. Patients don’t act like consumers, and medical providers don’t act like a business. We must encourage patients to be more price-conscious so they’ll shop around and refuse unnecessary care. That kind of behavior will force medical providers to become more efficient and cheaper.

That’s Steve the political philosopher talking, and I’m not saying it’s wrong. But what did Steve the kidney stone patient do? Certainly not call the various emergency rooms at 6 a.m. on a Saturday looking for the best combo deal. I went to the only one in my hometown. There I was at the provider’s mercy not only as a patient but also as a consumer. I would have bought whatever service the hospital was selling in order to take away that pain.

Over the course of a week, my kidney was scanned numerous times, including the day before the surgery and the day of. At the hospital, already wearing my gown, I finally asked if it was really necessary to do it again. I was told the doctor liked to see if the stone had moved overnight. What would you do – refuse the scan? Of course I did what the doctor, who is also the seller, told me to do. I had no buying power in that situation.

Health care reform – that’s a hard one. Try as one might, it doesn’t fit neatly into any political ideology, including my fuzzy one. The mandate by the Affordable Care Act (Obamacare) that all Americans must have insurance, which conservatives argue is an unconstitutional edict – it once was a conservative idea. A major issue in this year’s legislative races is the private option, which uses federal dollars to buy private insurance for poor people who make too much money for Medicaid. It was created by Republican legislators and Democrat Gov. Mike Beebe’s administration and now provides insurance to 200,000 people. Other Republicans say it’s just Obamacare by another name.

OK, it is more government, at least on the front end. But uninsured people generally wait until they are very sick to seek care, and then they go to the emergency room, and they can’t afford to pay for their care, so the rest of us pick up the tab. So what’s the easy answer on that one?

No matter how health care is reformed, there will be winners and losers. During Monday’s AETN debate, Sen. Mark Pryor described a church meeting with a diabetic constituent thanking him for voting for the Affordable Care Act. Because it made it illegal for insurance companies to reject his pre-existing condition, the diabetic has coverage for the first time in 15 years. On the other hand, Pryor’s opponent, Rep. Tom Cotton, had his own story: a dentist and his wife lost their insurance because it didn’t comply with all of the act’s mandates. Libertarian Nathan LaFrance said doctors are telling him their attention is now focused on entering computer codes instead of caring for patients.

Take the words “Obama” and “Obamacare” out of the picture. Whose story is more compelling? The diabetic’s, the dentist’s, or the doctors’?

Aren’t they all? Health care reform – that’s a hard one. I don’t know the right answer, but anyone who tells you there’s an easy one is probably wrong.