Personal

February 2006

What's the State of Healthcare in the US? Can HSAs, restricted liability rights, P4P, and CPOE save us? An essay that strays outside the laboratory.

• State of the Union
• State of the Budget
• Health Savings Accounts and Personal Insurances
• The new technology solution
• What are we left with?
• What's the point?
• References

[Editor's Note: This essay contains commentary on US domestic politics. For those who prefer to keep their healthcare and politics separate, this essay may not be appropriate reading.]

The January 28th 2006 issue of The Economist contained a lead editorial on “America’s headache: How to start fixing the world’s costliest health-care system,” plus an accompanying news report, “Desperate measures: The world’s biggest and most expensive health-care system is beginning to fall apart. Can George Bush mend it?”[1] The Economist stated that “health-care reform will loom large when Mr. Bush gives his annual state-of-the-union address” and that there would be a focus on “ideas that control costs, boost access and improve quality.”

The Economist points out that 174 million Americans (53.5% of the population) depend on their employers for healthcare and another 27 million (8.3%) buy their own healthcare insurance. The government picks up the costs of healthcare for 40 million elderly and disabled through Medicare (12.3%) and another 38 million through Medicaid (11.7%). Another 46 million Americans (14.1%) have no insurance and mainly have access to emergency care.

The Economist also pointed out that the government actually pays for close to 60% of the healthcare bill when tax subsidies are included. That makes for some interesting math: 60% of the costs to cover less than 40% of the population, with some 14.1% of that population getting only minimal emergency care. The Economist noted that in any other country, the current amount of government expenditure would cover healthcare costs for everyone. But, that would smack of “socialized medicine,” which is widely opposed by the healthcare industry and many politicians.

State of the Union, January 31 2006

Sure enough, the President addressed healthcare. It was very brief, consisting of one paragraph, less than a quarter of a page in the 9 page transcript. Here are the complete remedies for todays’ healthcare problems:

“Keeping America competitive requires affordable health care. Our government has a responsibility to help provide health care for the poor and the elderly, and we are meeting that responsibility. For all Americans, we must confront the rising cost of care, strengthen the doctor-patient relationship, and help people afford the insurance coverage they need. We will make wider use of electronic records and other health information technology, to help control costs and reduce dangerous medical errors. We will strengthen Health Savings Accounts – by making sure individuals and small business employees can buy insurance with the same advantages that people working for big businesses now get. We will do more to make this coverage portable, so workers can switch jobs without having to worry about losing their health insurance. And because lawsuits are driving many good doctors out of practice 0 leaving women in nearly 1,500 American counties without a single OB-GYN – I ask Congress to pass medical liability reform this year.”

State of the budget, February 1, 2006

The day after the state-of-the-union address, Congress passed a budget bill that will reduce the deficit by $40 Billion by cutting programs including Medicaid, welfare, child support, and student lending.[2] . In a very close vote along party lines, the bill passed by 216 to 214. Healthcare costs will increase for 13 Million poor recipients and insurance coverage will be ended for another 65,000 who have been covered by Medicaid.

Excuse me! Isn’t this a direct contradiction of the announced solution to our healthcare problems. Didn’t someone just say: “Our government has a responsibility to help provide health care for the poor and the elderly, and we are meeting that responsibility. For all Americans, we must… help people afford the insurance coverage they need.”

And on February 2, the government said it will ask Congress for another $120 billion for the wars in Iraq and Afghanistan. Let’s see, cut $40B on public services to reduce the deficit, add $120B for war spending, increase the deficit by a total of $80B - that seems pretty irresponsible in more ways than just healthcare!

Health Savings Accounts and Personal Insurance

The authorization of HSAs was part of the earlier Medicare drug benefit legislation. Individuals can set up an HSA to set aside pre-tax dollars to pay for healthcare and insurance. The insurance that must be purchased requires a large deductible, at least $2100. The idea is that the consumer with an HSA will avoid unnecessary healthcare because of the out-of-pocket expenses due to the high deductible. The assumption is that healthcare is consumer-driven and subject to market forces that will control costs.

The Economist questions whether this is really true because patients have a difficult time making cost-vs-quality assessments when it comes to healthcare services. However, conservative columnist George F. Will, says “there is evidence that HSAs reduce healthcare costs by making patients more judicious in their use of physician visits, and inpatient and lab services. In a study of one HAS plan, 50 percent of the participants had some funds left over at the end of the year to roll over into the next year’s account.” [3] My question is “what about the other 50%?”

After the recent debacle with privatizing Social Security, one would think that there might be a more careful analysis of the proposal for HSAs. But it is pro-business, a lot of money can be made by the people in the right places at the right times (i.e., Wall Street brokers, bankers, and insurance companies) and politicians are terribly dependent on support from businesses and their lobbyist.

Didn’t we also just witness a complete fiasco with the new Medicare drug coverage, where the insurance industry completely botched the privatization of drug benefits? The only beneficiaries seem to be the pharmaceutical companies (who have a clause in the legislation that prevents the government from bargaining over prices), congressmen (such as Billy Tauzin who became head of PHARMA after he wrote the legislation), and government officials (such as Thomas Scully, who joined a law-firm that lobbies for healthcare companies, including pharmaceuticals, but as head of CMS threatened to fire one of the accountants if he revealed the true cost of the Medicare Drug program).

The new technology solution

Electronic patient records would be nice, but this will not solve the problems of access and quality, and may not even reduce costs. It is terribly expensive to implement an electronic medical record and a big investment must be made before any cost savings or quality improvement will occur. Here at UWHC, a decision has been made to invest in the electronic record. When I asked what this will cost, the administrator said it was a major project, much like the construction of a new Children’s Hospital. What he didn’t expect was that I had just seen other materials that discussed the cost of this building, which was budgeted at about $50 million. Who’s going to pay that extra $50 million? That would be the US citizens and consumers.

New technology has been a driving force for increased costs in healthcare. Sure, there may be efficiencies and hopefully improvements in quality, but the costs have definitely gone up, not down. So now computer technology is going to reduce costs and improve quality. Not likely! Costs will certainly increase, hopefully quality won’t be left too far behind.

Computer technology has an especially bad history. Computers are always identified as the solution to problems with complexity, but they seldom actually reduce complexity; if anything, they will add to the complexity of the healthcare system and become an impediment to making changes in the future. And complexity causes problems with quality. Furthermore, since quality improvement requires changes in processes, such changes become much more difficult as more and more computer systems are put into place. Then there are those inevitable bugs which add to the variability (and unquality) of the operations.

In the February 2006 issue of Clinical Laboratory News, the article "The Push for Patient Safety" makes reference to recent research on the impact of computerized physician order entry (CPOE) on patient safety. It certainly makes sense that getting the right orders right for medications and lab tests would be critical for patient safety, but here are the preliminary results:

"And while robust information technology systems, including CPOE programs and electronic medical records (EMR), have been touted as key elements of improving health care in the U.S., recent ressearch published in the December 2005 issue of Pediatrics found that the overall mortality rate increased from 2.8% to 6.6% following CPOE implementation. These findings suggest that improved computer technology alone will not improve efficiency and patient safety."[4]

What are we left with?

Do you really think that tort reform can solve the problems? Didn’t we just do this? Wasn’t tort reform one of the accomplishments of the previous year? Maybe it's like tax reform, you just keep doing it again and again as long as it plays politically. That seems to be all that’s left and eliminating lawsuits, which is one of the costs of poor quality, is not going to stimulate improvements in quality.

The Economist summarized the situation this way:

“Mr. Bush’s health-care philosophy has a certain political appeal. It suggests incremental change rather than a comprehensive solution. It reinforces existing industry trends. And it promises to be pain-free. Unfortunately it will not work. The Bush agenda may speed the reform of American health care, but only by hastening the day the current system falls apart.”[1, emphasis added]

I’m more hopeful, particularly after hearing that we are now transforming from an ownership society (last year’s theme) to a more hopeful society (this year’s theme). Hopeful healthcare! You better hope things go well because there’s no assurance of quality in today’s healthcare system. And people are predicting it will get worse before it gets better.

Such is the state of US healthcare today! Some will say that I’m cynical, but I resolve to be more hopeful!

What’s the point?

Quality has a lot to do with leadership from top management! Remember Deming and his famous 14 points:

• #1. Create constancy of purpose toward improvement of product and service with the aim to become competitive and to stay in business, and to provide jobs.
• #2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
• #7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.
• #8. Drive out fear so that everyone may work effectively for the company.

The principles of quality management are also the principle of good management! Quality starts at the top of an organization. Commitment to quality is a prerequisite to achievement of quality. The workers in the trenches, at the laboratory bench, anywhere in the healthcare process, are essential in the process of achieving quality, but will not be successful unless top management provides the leadership, commitment, and example.

How can we instill the hope of solving serious problems when so much of the message in the State of the Union was about fear. How do you get a polarized and fearful society to pull together to solve serious national problems? Saying the right words is not sufficient. Telling others to do better won’t help. Being more hopeful doesn’t by itself make things better. Top management must walk the talk, rather than wag the dog!

Houston, we have a problem!

References

1. "America's Headache", The Economist, January 28th - February 23rd 2006, p.12. "Desperate Measures", The Economist, January 28th - February 23rd 2006, pp. 24-26.
2. Weisman, J, "Budget Cuts Pass By a Slim Margin: Poor, Elderly and Students to Feel Pinch" Washington Post, Thursday, February 2, 2006, Page A01. http://www.washingtonpost.com/wp-dyn/content/article/2006/02/01/AR2006020100329.html, Accessed February 7th, 2006.
3. Will, George F, "Back to Basics", Washington Post, Thursday, February 2, 2006, page A21. http://www.washingtonpost.com/wp-dyn/content/article/2006/02/01/AR2006020101835.html, Accessed February 7th, 2006.
4. J. McDowell. "The Push for Patient Safety: Laboratory Data Key to Measuring Pay for Performance." Clin Lab News 2006;32(Feb):1,3-4.

James O. Westgard, PhD, is a professor of pathology and laboratory medicine at the University of Wisconsin Medical School, Madison. He also is president of Westgard QC, Inc., (Madison, Wis.) which provides tools, technology, and training for laboratory quality management.