Wednesday, April 23, 2014

Fwd: qotd: Health spending expected to accelerate again

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Health spending expected to accelerate again
Date: Wed, 23 Apr 2014 08:38:52 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

The New York Times
April 22, 2014
Acceleration Is Forecast for Spending on Health
By Eduardo Porter

The Affordable Care Act may well be on track to meeting its primary goal
of providing coverage for most uninsured Americans and protecting
everyone against the risk of losing their insurance. But for all its
innovative proposals to flush waste out of the system, reining in health
care spending still appears well beyond the grasp of Obamacare.

"We have been consistently bending the cost curve over the last 20
years, but the kinds of things that we do don't tend to be permanent,"
said Charles Roehrig, who runs the Center for Sustainable Health
Spending at the Altarum Institute, a nonprofit based in Washington. "It
will take a lot of work just to stay on the same curve we have been on
for a while."

The evolution of the American medical-industrial complex has been driven
by two critical dynamics. The first is the development of new
technologies. The second is our willingness to pay for them.

Most health care economists agree that the Affordable Care Act, along
with other forces, will help reduce waste, pushing the industry to drop
the "fee for service" model that encourages doctors and hospitals to
spend more whether it is useful or not.

Last November, President Obama's Council of Economic Advisers issued a
hopeful analysis, which posited that structural changes flowing from the
act were helping push the growth in health care spending to its slowest
on record.

David Cutler of Harvard points to studies that suggest that
straightforward changes, such as improving the dismal management of
American hospitals, could cut health care costs by 25 to 50 percent.
"Getting better is not rocket science," he said.

But that optimism might be premature. Mr. Roehrig argues that the
decade-long slowdown in spending growth reflects a response to the two
recessions that provided the economic bookends to the first decade of
the new century; not a fundamental shift in the way the system operates.

During that period, employers pushed workers to take insurance with
higher out-of-pocket payments, which discouraged use. Medicaid in
financially troubled states has cut provider fees and limited access to
high-cost services. And, of course, many unemployed workers who lost
their company health insurance cut back on visits to the doctor.

These effects, Mr. Roehrig noted, have by now mostly petered out. As the
economy recovers, spending growth will resume its climb, reinforced even
more by the understandable demands from the eight million newly insured
Americans under the health law for services they couldn't afford
previously. He forecasts that health spending will grow substantially
faster than G.D.P. in the near future, but expects the gap to shrink
gradually to below one percentage point over time. In the long run, he
projects that health care spending could consume 30 percent of G.D.P.

Mark McClellan, a former administrator for the Centers on Medicare and
Medicaid Services under George W. Bush, and Alice Rivlin, a former vice
chairwoman of the Federal Reserve, point out that innovations that
improve health or reduce the cost of medical services may also increase

"It would be a mistake to assume that slow growth in health care
spending will continue," they wrote, "or that spending reflects
high-value care and therefore, health care delivery reform is no longer
an urgent priority."

Over the last 40 years or so, health care spending has been growing 2.4
percentage points faster than the economy, on average.

But that slowdown still isn't good enough. By 2032, health care will
consume almost a quarter of the nation's economic production, taking an
even bigger bite from workers' wages and either forcing taxes up to pay
the government's share, adding more to the national debt, or squeezing
other important public services.

So, if Americans really want to win the health care spending war, it may
take more than reform. It may still take a revolution.


Comment by Don McCanne

There has been much speculation about the causes of the recent slowdown
in health care spending, but, more importantly, about whether the more
recent uptick indicates a return to greater health care inflation and,
even more importantly, whether new innovations - especially those in the
Affordable Care Act (ACA) will be capable of slowing the increases in

Nobody can reliably predict the future. But the policy community can
take a careful look at the facts we do have on hand and make decisions
that would improve the odds of achieving a goal of more efficient
spending in health care.

Almost every article supportive of the cost containment measures in ACA
mentions vague concepts such as no longer paying for volume in health
care services but paying for quality instead. If they make an attempt to
explain how we might do that, they often invoke accountable care
organizations, which, at best, seem to be more loosely designed managed
care organizations that so far have failed the tests of greater
efficiency and higher quality, other than a few reports of positive but
negligible impacts that could never "bend the cost curve" nor truly
improve quality.

What we do know is that our administrative waste is profound and that
the excesses are readily recoverable - a crucial point that was omitted
from this and most other current articles on the causes of our high
health care costs. A single payer system would have a major impact on
reducing waste in health care spending. We also know that health care
prices in the United States are outrageous, and public administration
through a single payer system would bring prices down to a level that
pays legitimate costs plus fair margins.

We do know that there are excesses in high tech medicine. Again, a
single payer system could use objective data, such as comparative
effectiveness studies, to make decisions on eliminating payment for
useless or harmful services. Also, capital planning can reduce excess
capacity which would ameliorate its supply side-driven overutilization.
The savings may be offset by improving access to beneficial services for
underserved populations, but that spending would increase the overall
quality of care provided by the health care delivery system - quality
meaning getting the right care to the right people at the right time.

So, as far as predicting health care cost containment in the future we
know that a single payer system would have a dramatic effect. But we can
also predict quite reliably that dinking around with the meager
wish-list policies of ACA will only distract us from moving forward with
single payer policies that would really work.

Eduardo Porter writes that it may take a revolution to win the health
care spending war. The battle would be between the American people and
the economic elite that drive policy (Gilens and Page) and concentrate
wealth (Piketty). Obviously non-violent civil action through the
democratic process would be vastly preferable to a violent coup, but
people are going to have to get off their duffs and initiate citizen action.

Tuesday, April 22, 2014

Fwd: qotd: ACO patients receive two-thirds of their specialized care outside of their assigned ACO

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: ACO patients receive two-thirds of their specialized
care outside of their assigned ACO
Date: Tue, 22 Apr 2014 08:26:50 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

JAMA Internal Medicine
April 21, 2014
Outpatient Care Patterns and Organizational Accountability in Medicare
By J. Michael McWilliams, MD, PhD; Michael E. Chernew, PhD; Jesse B.
Dalton, MA; Bruce E. Landon, MD, MBA, MSS

In this study of 145 organizations participating in the Medicare ACO
programs, over one-third of beneficiaries attributed to an ACO in 2010
or 2011 was not assigned to the same ACO in both years. Thus, in any
given year, a substantial share of patients for whom an ACO is held
accountable may be newly or transiently assigned. Although healthy
beneficiaries using little primary care contributed to this instability,
unstably assigned beneficiaries were more likely than stably assigned
beneficiaries to be in several high-cost groups that may be targeted for
care management, including the top decile of total spending.

Much of the outpatient specialty care for patients assigned to ACOs,
particularly higher-cost patients with more office visits and chronic
conditions, was provided by specialists outside of patients' assigned
organizations, even among more specialty-oriented ACOs. In contrast,
leakage of office visits with PCPs for ACO-assigned patients was
minimal. In addition, less than 40% of outpatient Medicare spending
billed by ACO physicians was for care provided to beneficiaries assigned
to the billing ACO. This percentage was much lower for
specialty-oriented than for primary care–oriented organizations,
suggesting that ACOs currently provide substantial amounts of specialty
care to patients receiving primary care elsewhere. Thus, at least
initially, incentives in traditional Medicare for organizations
participating in ACO programs may continue to be largely fee-for-service
in nature, particularly for outpatient specialty care.


Comment by Don McCanne

In this study of Medicare Accountable Care Organizations (ACO), 66.7% of
office visits with specialists were provided outside of the assigned
ACO, especially for higher-cost patients with more office visits and
chronic conditions. That hardly represents a model designed to control

Some suggest that tighter relationships need to be established between
Medicare patients and ACOs, but that already exists in the Medicare
Advantage plans - a model proven to increase costs. It is clear that the
nebulous ACO concept has only been a wish on the part of policymakers
that physicians and hospitals could somehow organize themselves to
provide better, cheaper care. But we now have enough evidence to state
that ACOs also are a failure.

The vested interests have indicated that they are going to continue to
try to improve the model when it really needs to be replaced. The
direction that they are headed is towards more managed care. What we
need instead is a financing model that is already proven to reduce waste
and improve quality - a single payer national health program. The ACO
advocates need a strong dose of disruption, or they will continue
leading us down the wrong path.

Monday, April 21, 2014

Fwd: qotd: Gilens and Page: Average citizens have little impact on public policy

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Gilens and Page: Average citizens have little impact on
public policy
Date: Mon, 21 Apr 2014 06:42:38 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Perspectives on Politics
forthcoming Fall 2014

April 9, 2014
Testing Theories of American Politics: Elites, Interest Groups, and
Average Citizens
By Martin Gilens and Benjamin I. Page


Each of four theoretical traditions in the study of American politics –
which can be characterized as theories of Majoritarian Electoral
Democracy, Economic Elite Domination, and two types of interest group
pluralism, Majoritarian Pluralism and Biased Pluralism – offers
different predictions about which sets of actors have how much influence
over public policy: average citizens; economic elites; and organized
interest groups, mass-based or business-oriented.

A great deal of empirical research speaks to the policy influence of one
or another set of actors, but until recently it has not been possible to
test these contrasting theoretical predictions against each other within
a single statistical model. This paper reports on an effort to do so,
using a unique data set that includes measures of the key variables for
1,779 policy issues.

Multivariate analysis indicates that economic elites and organized
groups representing business interests have substantial independent
impacts on U.S. government policy, while average citizens and mass-based
interest groups have little or no independent influence. The results
provide substantial support for theories of Economic Elite Domination
and for theories of Biased Pluralism, but not for theories of
Majoritarian Electoral Democracy or Majoritarian Pluralism.

American Democracy?

Each of our four theoretical traditions (Majoritarian Electoral
Democracy, Economic Elite Domination, Majoritarian Interest Group
Pluralism, and Biased Pluralism) emphasizes different sets of actors as
critical in determining U.S. policy outcomes, and each tradition has
engendered a large empirical literature that seems to show a particular
set of actors to be highly influential. Yet nearly all the empirical
evidence has been essentially bivariate. Until very recently it has not
been possible to test these theories against each other in a systematic,
quantitative fashion.

By directly pitting the predictions of ideal-type theories against each
other within a single statistical model (using a unique data set that
includes imperfect but useful measures of the key independent variables
for nearly two thousand policy issues), we have been able to produce
some striking findings. One is the nearly total failure of "median
voter" and other Majoritarian Electoral Democracy theories. When the
preferences of economic elites and the stands of organized interest
groups are controlled for, the preferences of the average American
appear to have only a minuscule, near-zero, statistically
non-significant impact upon public policy.

Interest groups do have substantial independent impacts on policy, and a
few groups (particularly labor unions) represent average citizens' views
reasonably well. But the interest group system as a whole does not.
Over-all, net interest group alignments are not significantly related to
the preferences of average citizens. The net alignments of the most
influential, business oriented groups are negatively related to the
average citizen's wishes. So existing interest groups do not serve
effectively as transmission belts for the wishes of the populace as a whole.

Furthermore, the preferences of economic elites (as measured by our
proxy, the preferences of "affluent" citizens) have far more independent
impact upon policy change than the preferences of average citizens do.
To be sure, this does not mean that ordinary citizens always lose out;
they fairly often get the policies they favor, but only because those
policies happen also to be preferred by the economically elite citizens
who wield the actual influence.

What do our findings say about democracy in America? They certainly
constitute troubling news for advocates of "populistic" democracy, who
want governments to respond primarily or exclusively to the policy
preferences of their citizens. In the United States, our findings
indicate, the majority does not rule -- at least not in the causal sense
of actually determining policy outcomes. When a majority of citizens
disagrees with economic elites and/or with organized interests, they
generally lose. Moreover, because of the strong status quo bias built
into the U.S. political system, even when fairly large majorities of
Americans favor policy change, they generally do not get it.

A possible objection to populistic democracy is that average citizens
are inattentive to politics and ignorant about public policy; why should
we worry if their poorly informed preferences do not influence policy
making? Perhaps economic elites and interest group leaders enjoy greater
policy expertise than the average citizen does. Perhaps they know better
which policies will benefit everyone, and perhaps they seek the common
good, rather than selfish ends, when deciding which policies to support.

But we tend to doubt it. We believe instead that – collectively –
ordinary citizens generally know their own values and interests pretty
well, and that their expressed policy preferences are worthy of respect.
Moreover, we are not so sure about the informational advantages of
elites. Yes, detailed policy knowledge tends to rise with income and
status. Surely wealthy Americans and corporate executives tend to know a
lot about tax and regulatory policies that directly affect them. But how
much do they know about the human impact of Social Security, Medicare,
Food Stamps, or unemployment insurance, none of which is likely to be
crucial to their own well-being? Most important, we see no reason to
think that informational expertise is always accompanied by an
inclination to transcend one's own interests or a determination to work
for the common good.

Despite the seemingly strong empirical support in previous studies for
theories of majoritarian democracy, our analyses suggest that majorities
of the American public actually have little influence over the policies
our government adopts. Americans do enjoy many features central to
democratic governance, such as regular elections, freedom of speech and
association, and a widespread (if still contested) franchise. But we
believe that if policymaking is dominated by powerful business
organizations and a small number of affluent Americans, then America's
claims to being a democratic society are seriously threatened.


Comment by Don McCanne

Martin Gilens and Benjamin Page present historical data that show that
average Americans, even when represented by majoritarian interest
groups, have negligible influence in shaping public policy. In sharp
contrast, the economic elites and their business-oriented interest
groups wield tremendous influence in public policy.

Thomas Piketty and Emmanuel Saez have shown that the flow of income to
the top has resulted in a concentration of wealth that is not only
self-sustaining but likely to perpetuate the transfer of more wealth to
the wealthiest, at a cost to everyone else.

This combination - a concentration of wealth at the top with the
domination of policymaking by the economic elite, does not bode well for
new policies that would be established for the common good.

In health care reform, the common good would have been served by
improving coverage through the removal of financial barriers to care and
by expanding coverage to everyone. Instead, the interests of the
economic elite were served by increasing the market for private
insurance products that, for the majority, increased financial barriers
to care and reduced choice of providers, while leaving tens of millions
of the most vulnerable without any coverage. More wealth moves to the
passive investors at the top, while the deterioration in coverage
requires average Americans to spend more out-of-pocket through higher

We desperately need a well-designed single payer system if we want
everyone to have the health care that they should have. At this point it
appears that the economic elites are not going to allow single payer,
and we will have no say.

Even though our Constitution laid the plans for a democracy, by fiat we
now have a plutarchy (plutocratic oligarchy). Although Gilens and Page
have shown that our Majoritarian Electoral Democracy has "only a
minuscule, near-zero, statistically non-significant impact upon public
policy," perhaps the people can still change that. Although recent
history demonstrates citizen inertia, that does not necessarily lock in
the future. Think of Social Security, Medicare, and the Civil Rights Act.

A decade ago, in a book review for the NEJM on "Universal Coverage: The
Elusive Quest for National Health Insurance" by Rick Mayes, I wrote the
following: "Mayes does give us hope. Although he acknowledges that
critical junctures are rare, he notes that they do occur, especially in
response to unmet social needs. Perhaps the deterioration in insurance
coverage that has taken place may have brought us much closer to our
next critical juncture than most of us realize."

So what can we do to reverse the process under which "policymaking is
dominated by powerful business organizations and a small number of
affluent Americans"? Will citizen action through education, coalitions
and grassroots efforts be adequate? In spite of such ongoing efforts, we
have certainly fallen short so far.

History has taken us to a point wherein the economic elite rules. Can
the people revitalize democracy, or is the wealthy ruling class too
powerful? If the elite are not responsive to our needs, will our nation
be ripe for civil unrest? At the moment, citizen inertia continues to
empower the economic elite.