How to conquer health care challenges
Health care economist Glenn Melnick talks with Kai Ryssdal about challenges to reforming the health care system, how to get it done, and the costs of making changes.
Glenn Melnick, health care economist with the RAND corporation and USC professor (usc.edu)
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TEXT OF INTERVIEW
Kai Ryssdal: How much doctors and hospitals and the rest of the health-care industry are compensated for their work is only one of many problems that any system-wide fix is going to have to cover. And those problems are interrelated. They're constantly changing. And they are intensely personal. I asked health-care economist Glenn Melnick why the president is tackling such a difficult topic now, when he's got so many other things on his plate.
Glenn Melnick: The reason the administration is pushing so hard is because the numbers show that health-care spending by the government, if something isn't done, will consume the federal budget sometime around 2030. And so between Medicare, Medicaid, and Social Security, that will take a 100 percent of the federal budget, leaving nothing left over for defense or anything else. Then the question is, how do you get a control of health-care spending, and at the same time, add potentially another 50 million people into the health-care system, a large fraction of whom will have to be subsidized by the government.
Ryssdal: Think for a second about all the places where savings could come. Where are we going to be able to save those tens of millions of dollars that are going to make any kind of health-care change real?
MELNICK: A centerpiece of the plan is this idea of information technology. And I certainly, the health-care system certainly is a ripe candidate to become more computerized and digitized. So that will save some money, because there's lots of duplications, lots of paperwork and things like that. But even if we digitize and computerize the entire system, administrative costs are not going to go to zero. There is still going to be some administrative costs. And that's going to be a one-time savings. We get those costs out of the system. But the rate of growth is really what the government needs to slow down through government regulation, controlling the prices that are paid for providers.
Ryssdal: If you assume that the American Medical Association and doctors' groups and hospitals in this country are going to have to go along with any health-care change and reform, how do you do it and convince them that what they're doing has to become less expensive to the rest of us? That is, that some of the costs have to come from them, some of those savings?
MELNICK: Well, I think that's going to be a very difficult sell in my opinion. I think when the president talks about cost efficiencies and helping doctors to do what they do better, more cost effectively, I think they're for that. The real problem, though, is that in order for the administration to generate savings to pay for these programs, it's going to have to pay doctors and hospitals less. And as time goes on, a lot less than they are being paid now. And I think that's going to be a very difficult sell.
Ryssdal: Well, let me make sure I understand that. If doctors and hospitals are making less money, what is that do for the quality of care? I'm just trying to think about the argument that's going to come up on Capitol Hill on this one.
MELNICK: Quality will have to suffer in some way. Whether it's through reduced access, whether it's through slower development of new technology. There are a number of economists who feel that health-care is expensive for good reason. And the reason is that it's valuable. That new innovation and new technology, while it may add to the cost of the health-care system, also brings with it tremendous benefits. The real challenge is can we develop a system to do the research to identify those things that are going to be high value in the first place, and to screen out those things that are low value and not adopt them as quickly as we have in the past. And that will be a challenge, but I think there's potential savings there. I don't know any country that has done it very well so far, because new innovation is just so complex and hard to predict.
Ryssdal: Glenn Melnick is a health-care economist with the Rand Corporation, also at the University of Southern California. Glenn, thanks a lot.
MELNICK: My pleasure, Kai.
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From Palo Alto, CA, 06/16/2009
In Kai Ryssal's interview of Glenn Melnick, he asked how quality would be affected if doctors and hospitals are making less money. Mr Melnick replied, "Quality will have to suffer in some way." Then he went on to say that the rate of new technology development will slow. Health care is a complex subject, but we must get the facts straight. Today our health care is the costliest in the world. And, what do we get for it as a nation? Nothing more than mediocre results. If we Americans want to live longer, than we should move. There are over fifty countries in the world that do a better job than we do here in the US for less money. Having a baby? You have a better chance of your baby living to its first birthday in about forty-four other countries. The truth is great technology development comes from great minds and creative thinkers. The truth is that what we lack in our country is affordable, accessible healthcare for all with a focus on prevention and healthy living.
From Mobile, AL, 06/16/2009
In your story with Mr. Melnick about Health Crae Reform, the "MOST" important variable was left out of the equation: THE PATIENT! Society has told "healthcare" to deliver the best possible care possible, whatever the cost! Unfortunately, the patient has done everything possible to make this an almost impossible task. Society ( the patients) have supersized themselves into medical disasters. Type II Diabetes (non-insulin dependent), which usually leads to Type 1 (Insulin Sependent) and systemic hypertension (high blood pressure) are running rampant in our society. Go to any mall and look at how "supersized" are physiques have become. Unfortunately, the vast majority of patients would rather take a pill than change eating or life style habits. Oh, and let's not forget our friends in the tobacco industry. Ask any cancer specialist how many of their patients are long term smokers. What a double standard, the government with it's cozy relationship with the tobacco industry now blames the doctors for out of control health care. If patients (society) could only "get-it" that diabetes and high blood pressure have consequences that ARE
truly expensive ( diabetic retinopathy, kidney disease, cardio-vsacular disease and on), hell yes health care is expensive. Think of the Billions or Trillions in dollars saved if we would make smarter "life-style" changes involving our eating habits, start exercising and stopping smoking their wouldn't be a crisis, but a manageable health care system. You want to save MORE money, than realize that no matter how much you educate someone, there must be a penalty to all these women (and men) who have turned themselves into birthing machines for the sake of welfare income. These children are at high risk will in utero, are high risk deliveries and are high risk infants and children to raise. How much are we spending there? Telling doctors that we must be "digital" with EMR's (electronic medical records)might save some money, but nothing as compared to the savings described above. Furthermore, telling doctors we must ensure the "safety" of these electronic files is a joke. After 31 years in practice NO ONE has stolen a record from my office. How many times has the government acknowledged (not to mention the number of times we don't hear about) that their systems have been compromised!
Don't mandate to health care what needs to be saved, tell the American people to "get in shape" and the savings will come pouring in.
Thank you,
Dr. Murray Glusman
Medical Director and CEO
Glusman Vision Center
From Hudson, NY, 06/16/2009
Acknowledge the basic facts about how the healthcare system is working today.
Yesterday in a radio interview, “How to conquer health care challenges”, with Professor Glenn Melnick from the Rand Corporation and USC, we were again offered up “expert” opinion that does not even acknowledge the basic facts about how the healthcare system is working today.
Here are a couple of examples from the interview lead by Kai Ryssdal:
“RYSSDAL: Well, let me make sure I understand that. If doctors and hospitals are making less money, what is that do for the quality of care? I’m just trying to think about the argument that’s going to come up on Capitol Hill on this one.
MELNICK: Quality will have to suffer in some way. Whether it’s through reduced access, whether it’s through slower development of new technology…….”
The US spends nearly 50% more on healthcare than the next closest country (Switzerland) and more than twice most developed nations. Yet our basic outcomes of infant mortality and longevity remain at near third world performance. These are the facts of our situation. Money is not the problem. It is what we spend our money on that is the problem. To say that quality will inevitably decline as a result of spending less money is just nonsense. This flies in the face of the facts of the performance of all of the developed countries in the world, except us.
Within the current US performance there are clear demonstrations of how superior performance is not driven by spending more money
Even within the current US performance there are clear demonstrations of how superior performance is not driven by spending more money. Just read “THE COST CONUNDRUM: What a Texas town can teach us about health care.“ by Atul Gawande in the New Yorker. Here is part of Gwande’s discussion of this point:
Americans like to believe that, with most things, more is better. But research suggests that where medicine is concerned it may actually be worse. For example, Rochester, Minnesota, where the Mayo Clinic dominates the scene, has fantastically high levels of technological capability and quality, but its Medicare spending is in the lowest fifteen per cent of the country—$6,688 per enrollee in 2006, which is eight thousand dollars less than the figure for McAllen. Two economists working at Dartmouth, Katherine Baicker and Amitabh Chandra, found that the more money Medicare spent per person in a given state the lower that state’s quality ranking tended to be. In fact, the four states with the highest levels of spending—Louisiana, Texas, California, and Florida—were near the bottom of the national rankings on the quality of patient care.
Melnick is not done demonstrating his lack of awareness of further basics about how healthcare works in the US.
There are a number of economists who feel that health-care is expensive for good reason. And the reason is that it’s valuable. That new innovation and new technology, while it may add to the cost of the health-care system, also brings with it tremendous benefits. The real challenge is can we develop a system to do the research to identify those things that are going to be high value in the first place, and to screen out those things that are low value and not adopt them as quickly as we have in the past. And that will be a challenge, but I think there’s potential savings there. I don’t know any country that has done it very well so far, because new innovation is just so complex and hard to predict.
One of the well reported facts about “innovation” in American medicine is that there is no requirement for new technologies, new procedures, new medical devices, or even new drugs to prove their efficacy. This is well known and examples of the consequences are abundant. If we only knew which of all these “innovations” really provided improvements in healthcare outcomes we would all be better of and probably at a lower cost.
I am not sure who Professor Melnick is, but, based on his performance during this interview, he would appear to be another example of that alternative text for PhD.
06/16/2009
Unfortunately, no one has mentioned the cost of billing and how this is a problem. Medicare and Medicaid are problems when it comes to reimbursment and credentinaling providers.
Medicare has a habit of changing a billing rule and then making it retro active, thus enabling them to recoup money from prior dates of service. Appeals just bring the response that they are Medicare and can do what they want. They also only update their system every quarter. If they discover an internal problem, it doesn't get fixed until the next quarter and then they will not do a mass adjustment. It is up to the doctor's office to go back and pick out the bad denials and then refile them and hope that late filing fees aren't applied. This is despite the fact that Medicare admits that it was their program at fault. Also, they have three customer service phone lines. One for an automated system, on for a person who can help you figure out a problem with a claim but can't help you fix it, and one for a person who might help you fix the problem claim but won't take the time to help you figure it out. The doctor has to pay his employees to work through this stuff month after month.
Medicaid's credentialing problem (in Kentucky at least) is incredible. They are 6-9 months out and change their application form constantly. We have had entire applications returned for failing to write "USA" after Texas. Of course, that was 3 months after we turned it in and since then the application had been changed and we had to start over.
These are just a few of the problems we have with government payors. This is why I, personally, am completely against another government payor. There are no checks and they can make up their own rules. The other insurance payors follow along like ducklings with any changes that are made.
From Bethel, CT, 06/15/2009
The data underlying the New Yorker article cited by Rose Reis comes from studies conducted by Dartmouth researchers over the last couple of decades; accessible at http://www.dartmouthatlas.org/
Marketplace: There is more data out there than is dreamt of in your philosophy. Please give us more facts and fewer unsupported opinions of economists.
Another thing that is wearing on me is the constant repetition of the notion that advanced technology makes medicine more expensive. Why? Advanced technology makes everything else cheaper. I'm writing this on a computer orders of magnitude more powerful than the ones that the Apollo astronauts had, and it cost less than $1000 a few years ago. I could replace it with a new one with another order of magnitude more power at half that amount. I can buy a TV with a big, high-definition color picture for less in _nominal_ dollars than a tiny black-and-white set used to cost. Why is medicine different? Maybe there are good reasons, but no one has ever stated any. People just keep repeating the idea, and never question it. You're the journalists, ask the question! Why?
From austin, TX, 06/15/2009
I would have liked some mention of the rate increases hospitals have instituted. This is a quote from Dr. Melnick in a 2004 "Self" article, "But the biggest chunk of expenses is hospital costs, which have risen 10 percent per year since 1999, far outpacing inflation, says Glenn Melnick, Ph.D., professor of health economics at the University of Southern California in Los Angeles. Melnick's research found that last year, hospitals charged, on average, 211 percent more for services than it cost to provide them. In extreme cases, the markup can be 1,000 percent" I understand that many of these markups pay for the uninsured, but couldn't these increases have been mentioned in the interview. No mention of insurance companies, pharmaceutical companies (no drug price bargaining in Medicare), or how hospital costs have increased so much? I would have liked some coverage of how these could factor into cutting costs.
From Columbus, OH, 06/15/2009
@Cathy Adams is part right. A free market system where patients comparison shopped for doctors and services without middle-men would be the most effective (with care for the poor through charities).
Insurance companies that make their money by denying coverage soon go out of business - they are paid to manage risk. Insurance companies that have better actuaries are able to offer the best service at the best profit - for example offering expensive proceedures that only the richest could otherwise afford. The problem comes when people use insurance for routine predictable services - and not infrequent calamities.
The worst choice of all is to put politicians (controlled by wealthy special interests - not the public good) in charge. Then you get ideas like Obama's "price control" scheme that is proven to result in shortages (Canada's shortages were deemed a "human rights violation" against their people by the Supreme Court of Canada). http://en.wikipedia.org/wiki/Price_ceiling
Until we remove middle-men; corporate, government, or otherwise - our system cannot truly offer the best service at the best price.
From NC, 06/15/2009
I had to re-read the beginning of the interview, since I wasn't sure when listening that I caught it right. Mr. Melnick was talking strictly about GOVERNMENT spending, right? Not private insurers (I agree with Ms. Adams that health insurers are a big part of overall costs). My Mother, at the end, was on Medicare/Medicaid. One thing I noticed, as her spokesperson/advocate and paper shuffler, was that the latest and greatest drugs were always prescribed, she was afforded every test, every procedure, some of which I believe were marginal, at best. While I appreciate that she had this option, I have wondered often how many of my mother are out there, being treated to the nth degree, when they are at end of life? And not with things that add to their quality of life? Big Pharma makes a ton of money off Medicare and Medicaid. Perhaps we need to rethink the idiocy of not letting Medicare negotiate drug costs, as does the VA and any other sane system. And one more question for Mr. Melnick. If the rest of the industrialized world can give their citizens single payer, universal coverage, what is wrong with the US? Aren't we supposed to be the greatest nation on earth? I wonder what the percentage of people in poverty is in Germany, France, England, Canada? Is it possible we have more poor who are not contributing to GDP, but are, instead, a drag on it? (Not throwing off on the poor - we have a system designed, I think, to keep them that way)
From Sparks, MD, 06/15/2009
Mr. Melnick forgot to mention the greatest wasters of health care dollars - the health insurance corporations. Multiple studies by the General Accounting Office, Congressional Budget Office and Lewin Group and Mathematica have already demonstrated that changing to a publicly funded and privately delivered health care system (often called Single Payer) would not only provide health care for everybody in this country but would also save money by removing the $400 billion wasted because we use private insurance corporations to finance health care. The insurers generate huge profits at the expense of our health (by denying and restricting care and making it so complicated to get care). The U.S. spends twice as much as other nations on health care and we have worse health outcomes. If we create a national health system, not only will be save money, but we will have full choice of provider and hospital (no more networks to worry about), patients and their health care providers will be the ones making medical decisions (instead of insurance administrators) and businesses will no longer be burdened by the cost of health care. Single payer is a win-win for everybody except the health insurers. But the health insurers have had decades to make profits for themselves. It's time for that to end.
From Arlington, TX, 06/15/2009
Your guest (and several other experts that I've heard lately) said that controllling the growth of health care costs is most important.
I think that meaningful change will not come unless we greatly REDUCE the cost of health care. That 2.3 trillion that we spend every year should be much less. Reducing it will mean somebody is going to make a lot less money. So insurance companies, hospitals, drug companies and everybody else will call on their bought Congressmen to oppose any change actually lowering costs.
From Baltimore, MD, 06/15/2009
Apparently Glenn Melnick didn't listen to Obama's speech to the AMA in its entirety. The president has done his homework: Contrary to what Melnick asserts, that cost = quality, Obama pointed to a city in Texas to illustrate that although we have the most expensive health care system in the world, we are not healthier for it, and in fact we may be sicker (and more bankrupt) for it. Obama pointed to a fascinating, well investigated article by a doctor in the New Yorker called "The Cost Conundrum" that is a must read. The image accompanying the article is a human ATM. Obama said, "McAllen, Texas is spending twice as much as El Paso County—not because people in McAllen are sicker and not because they are getting better care. They are simply using more treatments, treatments they don't need..." Let's hear it for real reform: a long-awaited public plan.
From Loveland, OH, 06/15/2009
According to Mr. Melnick, everyone should feel the pain of reforming our health care system, medical professionals and patients alike. Everyone, that is, except the elephant in the room: the for-profit insurance companies whose only contribution is blizzard of paperwork.
I object to them for two reasons. One, they're expensive, with highly compensated management. Two, they have a fundamental conflict of interest. They make their money by denying coverage, something I find immoral; they profit by compromising people's health and well-being. Doctors take an oath to do no harm to their patients. Insurance executives take no such oath; their fiduciary duty is to their shareholders.
Insurance companies contribute nothing but expensive inefficiencies to the health care system. Gem 'em out.
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