Posts Tagged ‘Medicare

26
Feb
10

feel good, look good, and live forever!

I spent almost all day yesterday listening to the health care reform summit. It triggered some recdollections.

Years ago — was it 15 or 20? — I attended a couple of conferences at Berkeley about managed care, the solution du jour for relentlessly rising health care expenditures. On one panel was Leonard Schaeffer, former president and CEO of WellPoint. (I emphasize “former” to insulate him from the heat the company has taken recently for double-digit premium increases to some customers.) He mentioned that he was often asked at meetings, “What to people want?” with respect to healthcare. His standard reply was: “They want to feel good, to look good, and to live forever.”

He said this only partly in jest. As the CEO of a major payer company he had seen that there was heavy demand by customers to pay not only for treatments alleviating physical ailments but also for treatment to relieve their distress, to make them look more like they thought they should, and to forestall the ravages of age and the ultimate insult, death. The boundaries of the three categories were so ill-defined that it was possible to expand what people wanted reimbursement for indefinitely. This resulted in the administrators dilemma: satisfying the customer’s expectations without utterly exhausting the bank.

Apparently not much has changed. Our expectations for medical relief remain largely unbounded. Perhaps it’s because after WWII we came to expect medical miracles: antibiotics that knocked down infections, vaccines that eliminated polio and communicable diseases, surgery that seemingly made anything possible. I recall watching open heart surgery on fuzzy black and white nationwide TV broadcasts because it was such an astonishing development. After that we sent men to the moon.

When I went to work in the cancer field we had an organizational slogan: “We want to wipe out cancer in your lifetime.” “Wipe out” as in totally eradicate. Seriously! It wasn’t a disingenuous promise; it only reflected the limits of what we knew about the complexity of the disease at the time. People in the cancer field had to let that notion go by the wayside as we began to see that terms like “cure” and “eliminate” were perhaps over-statements when dealing with a disease that stemmed from malfunctions of the most basic biological processes of living things.

The aim of much of the cancer community today is to shift more cancer cases into chronic conditions (as opposed to acute, lethal episodes). Well, that’s progress and perhaps an inevitable step in greater mastery of the disease; but one of the most serious problems we have in health care today is the rising cost of chronic diseases. A study published in Health Affairs a week ago indicated that half of the increase in Medicare spending 1997-2006 was due to increases in prevalence of cases of 10 diseases or to increased cost of treating cases. Cancer isn’t even in the top 5 of the chronic disease list…yet.  One of the biggest surprises of my career was that the financial barriers to state-of-the-art treatment would become a challenge nearly as serious as the intricacy of the disease itself.

We have a difficult time in America discussing pragmatic matters like to cost of protracted care in the same conversation with the good of “saving lives.” Extending life is taken as an unalloyed good. You can become a pariah for mixing the two (i.e., examining comparative effectiveness becomes “death panels” or “pulling the plug on grandma”). I don’t know how many times over the years I’ve listened to well-meaning people advocate efforts requiring a lot of resources with the argument that, “If we can save just one life it will be worth it.” Have I just become too callous when I react: “Uhm…maybe some good can be  done putting the resources elsewhere”? In my entire 40 years in public health I never heard a serious discussion about the unintended or down-side effects of doing whatever it takes to retard illness.

But it’s not a discussion that can be avoided much longer. During the health care debate yesterday everybody seemed to agree on a couple of things: 1) we needed reform for humanitarian reasons, and 2) the continued relentless rise in costs will bankrupt us. One of the Republican senators said something like (I’m paraphrasing), “In a perfect world we’d want everybody to have everything, but we can’t afford this.” I’m a lifelong, unrepentant liberal, but I thought that was a pretty straight statement, one that resonated with me. The truth of  that specific assertion can be argued either way, but it is a matter we have to address. It’s bigger than just the price of the the current health fix. We need to have some frank talk about allocating our less than infinite resources for many benefits that might be achieved. I’m hoping that the baby boomers — of which I’m one — currently heading into the nexus of this issue can bring forth some of the brashness with which we’ve talked about many things in our time (drugs, sex and rock ‘n roll, etc.) and break down the taboo about discussing the realities of life, death, and the price of peanuts.

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05
Feb
10

Taking the measure of healthcare “elephant in the room”

I called this blog The Vortex because it seems to me we’re in the midst of some really big forces that’ll send us spinning. One of those — here in the US and elsewhere — is demographics. Specifically, the denoument of the Baby Boom generation — of which I am a member — is going to cause perhaps even more turbulence than our advent.

I seldom read George Will’s column in the WashPo because I almost never agree with his perspective on things, but the one he published yesterday brings up the issue of the cost of care of the elderly and its impact in the next couple of decades. I think the situation is of great concern even if I don’t agree with Will’s conclusions about what to do.

The column quotes data about the increase cost of care with age from “Forecasting the cost of US Healthcare” in  the American Enterprise Institute’s newsletter.  The author, Robert Fogel, cites what I think is pretty compelling data about the cost of the end-of-life and, by implication, the possible total cost of the expiration of my generation.

Figure 1

…In this figure, the burden of per capita healthcare costs, which is based on U.S. data, is standardized at 100 for ages 50–54. Figure 1 shows that the financial burden of healthcare per capita rises slowly in the 50s, accelerates in the 60s, accelerates again in the 70s, and accelerates even more rapidly after the mid-80s. The financial per capita burden at age 85 and older is nearly six times as high as the burden at ages 50–54. Notice that the financial burden of healthcare for ages 85 and older is over 75 percent higher per capita than at ages 75–79. However, the physiological prevalence rates (number of conditions per person) is roughly constant at ages 80 and over.

Costs rise, even though the number of conditions (comorbidities) per person remains constant, because the severity of the conditions increases or because the cost of preventing further deterioration (or even partially reversing deterioration) increases with age. It should be kept in mind that standard prevalence rates merely count the number of conditions, neglecting both the increasing physiological deterioration with age and the rising cost of treatment per condition.

Mr. Fogel goes on to discuss various ways the curve could play out over the next couple of decades and ends with what I think is an amazingly optimistic forecast that rising US incomes is going to inspire greater use of biotechnology that results in longer life, fewer chronic conditions and — by some calculus unclear to me — less than devastating total health care cost. In other words, not to worry about the hockey-stick graphs of huge long-term costs, and healthcare is a great business to be in. Read it for yourself and see what conclusion you reach.

This information is cited by George Will as part of a point I think is worth considering. The health care data sets up a contrast between the health care expenditures ahead for the US versus the very large expenditures being made for education in China as a stride toward having by the world’s largest economy by 2040. Will cites another article by Fogel in Foreign Policy titled: “$123,000,000,000,000*” — Fogel’s estimate of the total GDP of China in 2040. That’s a number intended to rock your world that will put China at 40% of world GDP while the US produces only 14%. So China replaces the US as the world’s economic hegemon less than 30 years from now.

The idea doesn’t make me shudder as badly as it would some other poeple, but I think the conundrum identified is valid: how is the US to allocate it’s resources? How much is going to be allocated to health care for us Baby Boomers versus how much is to be allocated to development of the next generations in a highly competitive world? That dilemma faces indivicual families as well. If grandma doesn’t have the money for things not covered by Medicare like long-term-care (which can run thousands of dollars per month), are you doing to wipe out the kids’ college funds?

During the recent health care reform debate calls for evidence-based treatment or comparative effectiveness were greeted by the demagogic  charge of “death panels.” Nevertheless, decisions about resources will be made, even if they’re only the path of least confrontation. This elephant-in-the-room isn’t going away, and it’s big.

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04
Feb
10

Tipping-point to government as #1 health payer is at hand

Today a burst of news about the cost of health care in the US, now and in the future, has hit the front pages. An AP report in PhysOrg.org says that yesterday Medicare’s Office of the Actuary released estimates indicating that by 2012 half of the health care in the nation will be paid for by federal and state government though Medicare and Medicaid. Earlier projections put the crossover in 2016.

There are two main reasons for this: 1) Baby Boomers will start hitting the Medicare system in 2011, and 2) the recession. The recession has thrown people out of work and out of health care plans onto Medicaid.

The report estimated that in 2009, the United States spent $2.5 trillion for health care, with government programs – mainly Medicare and Medicaid – paying $1.2 trillion. Employer health insurance and various private sources covered the other $1.3 trillion. Even as the economy shrank because of the downturn, health care spending grew by 5.7 percent from 2008. Spending by government grew nearly three times faster than private spending, closing in to overtake it.

In other data reported in Health Affairs looks at a little differently.

In 2009 the health share of gross domestic product (GDP) is expected to have increased 1.1 percentage points to 17.3 percent—the largest single-year increase since 1960. Average public spending growth rates for hospital, physician and clinical services, and prescription drugs are expected to exceed private spending growth in the first four years of the projections. As a result, public spending is projected to account for more than half of all U.S. health care spending by 2012.

So…government in one form or another is set to become the biggest payer of all in health care, ready or not.

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