Health Care Access, Cost, and Quality What we dont know can hurt us Doug Hall NH Center for Public P

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Health Care Access, Cost, and Quality(What we
dont know can hurt us) Doug Hall NH Center
for Public Policy Studies
New Hampshire Public Health Association October
29, 2004
With generous support from
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All of our reportsare available on the
webwww.nhpolicy.org
New Hampshire Center for Public Policy Studies
Board of Directors Martin L. Gross, Chair John B.
Andrews Cotton M. Cleveland John D. Crosier Todd
I. Selig Donna Sytek Georgie A. Thomas James E.
Tibbetts Kimon S. Zachos Co-Directors Douglas E.
Hall Richard A. Minard, Jr.
to raise new ideas and improve policy debates
through quality information and analysis on
issues shaping New Hampshires future.
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HYPOTHESIS The employment-based health insurance
system that has been relatively stable for
decades, is approaching a tipping point, where
it may become unstable and could collapse.

• Rising costs of care lead to rising insurance
  premiums
• Unable to pay increased premiums, employers
  increase of premiums to be paid by employees or
  substitute high deductible plans. Some employers
  may drop coverage altogether.
• Younger, healthier employees with low medical
  costs opt out of offered insurance coverage,
  knowing they are at low risk.
• Through this adverse selection, older, less
  healthy employees constitute a larger part of the
  risk pool, causing average claims/person to rise
  yet further.
• Back to step 1. (The positive feedback loop
  results in rapidly accelerating premiums and
  numbers of uninsured.)

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Do you agree ?

• There is already sufficient money in the health
  care system to provide quality health care for
  all.
• Less medical care can mean better quality.
• Currently in health care, neither supply nor
  demand are subject to the market force of price.

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Access, Cost, and Quality are Interrelated, but
How?
We dont have all the pieces to the puzzle!
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Access
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Common View
Insured
Uninsured
Realistic View

• Insured for what? drug rehab, prescription drugs,
  mental health, experimental procedures, dental,
  
• How much annual deductible and out-of-pocket?
• Pre-existing conditions

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In NH, About 120,000 are Uninsured
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6 chronically uninsured13 transitionally
insured
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This slide from Financial Assistance
Application StudySeptember 2002
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Who are Disproportionately Uninsured in NH ?

• Those between ages 18 and 30
• Those who have household incomes of less than
  30,000
• Renters
• Self-employed persons
• Employees of small businesses (fewer than 50
  employees)
• Workers in retail, food, or construction
  industries
• Workers who are unemployed, employed only part
  time, or employed seasonally
• African-Americans and those of Hispanic origin
• Adults who are not registered to vote
• Singles, living alone
• Residents of Coos, Grafton, Carroll, and Sullivan
  counties
• Those with no education beyond high school or who
  did not complete high school

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What We Dont Know Can Hurt Us1

• If the number of people who are uninsured or
  underinsured begins to grow, how will we know it?
• What is our early warning system?
• What health effects will occur and how will we
  measure them?
• What will be the impact on those still insured
  through additional cost-shifting?

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Cost
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Source Audited financial statements of the
hospitals for 2001 and 2002 as provided in
spreadsheet form by NH Hospital Association 4th
Quarter, 2002 Trending Report, NH Hospital
Association
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Cost-Shifting

• The allocation of unpaid costs of care delivered
  to one patient population through above-cost
  revenue collected from other patient populations.
• For hospitals, nursing facilities and physicians,
  the historical cause of cost shifting has been
  below-cost reimbursement rates paid by public
  programs and uncompensated care losses due to
  charity care and bad debt.

Source Cost Shifting An Integral Aspect of
U.S. Health Care Finance, The Lewin Group,
November 2002
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Quantifying the 2001 Cost-Shiftin 26 New
Hampshire Hospitals
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Rough estimate of the cost to provide the
missing health care to those who are currently
uninsured

• 2004 health care costs in NH 7,000 million
• Uninsured are 10 of the population
• Their need gap is mostly for physicians,
  hospitals, and prescription drugs (75 of all
  services)
• They are disproportionately younger than the
  insured/Medicare population with costs about 67
  of the average.
• Uninsured currently receive 60 of the health
  care of those who are fully insured (self-pay,
  cost-shifted, and subsidized).

140 million additional cost (By way of
comparison, the State obtained 205 million net
Medicaid enhancement revenue and recoveries in
2003.)
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Missing Pieces of the Cost Puzzle
1
Amounts paid in claims for different service
types by employers self-insured health benefit
plans.
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Missing Pieces of the Cost Puzzle
2
List prices of all providers, including
hospitals, physician practices, laboratories,
outpatient clinics, surgery centers.
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Missing Pieces of the Cost Puzzle
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Actual payment amounts made by insurers to all
types of providers under negotiated discounts and
contracts.
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Missing Pieces of the Cost Puzzle
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Aggregate costs of private medical practices
broken down by standard line item costs and
numbers of units of various codes billed that
generate offsetting revenue.
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Quality
From work by Elliott Fisher, MD, MPH, and
others. See a series of articles in Annals of
Internal Medicine, Vol. 138, 4, February 18,
2003 and another series in Health Affairs, Web
exclusive edition, October 7, 2004.
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If all regions of the US could adopt the Medicare
medical care practice patterns of the lowest
spending 1/5 of the US hospital catchment areas,
which of the following statements would apply?

• U.S. health care spending would decline by over
  30.
• The projected deficit in the Medicare Trust fund
  would be postponed by at least 25 years.
• We could send 30 of the U.S. health care
  workforce to Africa and -- in theory -- improve
  the health of both continents.

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In a Veterans Administration study, less care
was consistent with both better care and better
outcomes

• Followed individuals with serious chronic
  diseases(6 medical conditions, 3 psychiatric
  conditions)
• Constrained VA hospital use to 50 of previous
  level
• Clinic visits increased 10
• Visits for urgent care declined
• No compensating use of private hospitals resulted
• Survival rates not adversely affected(for 5
  conditions improved significantly, for 4
  conditions remained unchanged)

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Physicians control or direct about70 of all
health care spending

• How soon will a patient return for follow-up?
• What drugs will be prescribed?
• What imaging should be performed?
• When is discharge from a hospital stay ordered?
• What diagnostic tests and procedures are ordered?
• What specialists are consulted and how often?
• Is the ICU required?

For similar conditions across different regions,
practice patterns appear to be driven by supply,
not inherent need.
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Supply-Sensitive Care Highest vs Lowest
Spending Regions
Physician Visits
Office Visits
Inpatient Visits
Initial Inpatient Specialist Consultations
Tests and Procedures
Electrocardiogram
CT / MRI Brain
Pulmonary Function Test
Electroencephelogram (EEG)
Procedures -- Last 6 months of life
Feeding Tube Placement
Emergency Intubation
Lower in High Spending Regions
Higher in High Spending Regions
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What do higher spending hospital catchment areas
of the country get compared to lower spending?

• Additional resources 60 more spending per
  capita
• Content of care Less effective
  care No additional major
  surgery More supply-sensitive services
• Access to care, satisfaction Slightly worse
  access No greater satisfaction
• Health outcomes No gain in function Mo
  rtality slightly higher
• Physician perceptions Quality
  worse Lower career satisfaction

This comparison is after having controlled for
inherent regional price differences, average
levels of illness, age, sex, race, and
socioeconomic conditions.
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Is spending more likely to make things better?
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Law of Diminishing Returns
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What We Dont Know Can Hurt Us2

• Are these results regarding quality measures
  unique to the Medicare population or do they hold
  true for those with private insurance as well?
• What are the uniform quality-of-care measures and
  cost-of-care measures that are available for all
  providers in NH and where can I get them?

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What We Dont Know Can Hurt Us3

• What is the cost of this care/service? Is the
  potential benefit worth the cost?
• What is the quality of this care/service? Is the
  potential benefit worth the risk?
• What are the quality and cost of
  alternatives? Can I go elsewhere and get higher
  quality or lower cost?

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The Important Link Between Policy Practice
Information

• What are the costs and what is driving them?
• For whom is access limited, why, and what are the
  results?
• What prevention services and patterns of care are
  most effective?
• How are the answers to these questions related?

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Potentially Misleading !!
Is a hospitals shortfall caused by reimbursement
that is low or by a cost structure that is
high? We dont know!