There are many reasons for the high cost of care in America; Exhibit 12.1 lists the key offenders. The Wall Street Journal offers an
Chapters 12 and 13 basically go hand and hand because almost all health policy is driven by the key concerns of our system: cost; quality and access. Throughout your entire curriculum, you will be concerned with these three issues, either directly or indirectly. I will not belabor policy too much since you will have this course next semester if you have not already had it. When we refer to the cost of health, we are usually examining it from three different perspectives.
First, and the most visible, is the amount of out of pocket (OOP) spending the consumer is feeling. As you well know, you can have health insurance, but there are deductibles, co-pays, coinsurance and OOP expenditures. From the national perspective, it is the percentage of GDP that health care is consuming that we are concerned about. I will not give you one source in particular as there are many https://www.commonwealthfund.org/publications/journal-article/2018/mar/health-care-spending-united-states-and-other-high-income but the latest estimate is healthcare is consuming about 17% of the GDP.
The US has topped the chart in the lineup of OECD countries for years with approximately 10K per capita in health care spending. https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/#item-start In terms of the providers, they are concerned about the high cost associated with the delivery of care: salaries, equipment, capital costs and other costs of production.
There are many reasons for the high cost of care in America; Exhibit 12.1 lists the key offenders. The Wall Street Journal offers an interesting timeline explanation, associating financial factors in our economy that have impacted the healthcare GDP percentage. https://www.wsj.com/articles/why-americans-spend-so-much-on-health-carein-12-charts-1533047243
Administrative cost has been accused of being the #1 perpetrator in health costs. Think about all the steps in the value based programs we have today to measure and report on quality. How about coordination of care? In efforts to streamline, we have sometimes made situations more complex and expensive! See an interesting read on administrative costs https://www.nytimes.com/2018/07/16/upshot/costs-health-care-us.html
Just as we have many contributing factors to cost, we have as many strategies to contain them. The key reason the US has been unable to control costs is because we are a piecemeal multi-payer system. Thus, any attempts to contain cost is fragmented, unlike a single payer system who can exert control from a central source. The multi-payer model has also allowed for cost-shifting; what we don’t get from one payor, we will ultimately collect from another. Your book notes many strategies to control costs from health planning (ie. Certificates of Need aka CONs) to price controls, with perhaps, the most notorious, Medicare DRGs. Other strategies include provider competition (although some would argue that); peer review and chronic disease management, which has shown some positive outcomes for certain populations.
We talked a little about health and social determinants early in the course, so I will not rehash, however, it is worth your time to review Figure 12.1, which depicts the determinants of access. Access can mean different things to different people. It can be in terms of availability of services, the actual utilization of services or the acceptability of services. If you consider vulnerable populations, you can see a double whammy effect if they encounter barriers in any of the variables identified in the diagram. Quality. A very elusive of term at best. Alike access, it can have a different meaning for each of us. From a HSO point of view, it is usually dictated by government standards and best practices. We examine quality at the individual (ie patient experience, medical errors) and population levels (health outcomes/quality vs cost). One of the most frequently used models of quality is Donabedian. Figure 12.2 depicts his structure, process, outcome concept. This model has been used as an underlying framework for more contemporary CQI models such as Six Sigma and Lean. Clinical approaches include practice guidelines which set research-based standards for physician decisions as well as the use of clinical pathways for certain diseases, again based upon research evidence. An example of how Lean principles and clinical innovation can improve cost/quality is demonstrated in this article: https://www.blueoceanstrategy.com/blog/blue-ocean-health/ Lastly, other strategies include data reporting initiatives by CMS and the ACA in effort to monitor outcomes and pay according to performance. Health policy is predominantly initiated to address the issues encountered by populations in accessing care as well as controlling cost (although the latter is often a determinant of the former), but it is also implemented to improve or expand existing law as well. You will learn about the pubic policymaking cycle of Longest in MHA 725, which has three distinct but interrelated phases (formulation, implementation and modification) and the key players whom I will briefly describe in this lecture. There are two types of policy; regulatory and allocative. We like to complain about each, but without them, we might confront bigger issues, namely, self-regulation and free for all spending. As their names suggest, regulatory law is concerned with controlling behaviors and setting/enforcing standards to improve care. Allocative laws is concerned with the provision of $$, services or goods to individuals, organizations or communities to improve health outcomes. Otherwise, getting a piece of the federal pie. I would like to address some key features of US policy that will provide a foundation for further investigation in MHA 725. As you are no doubt aware, we are an individualistic society vs one of unity that is often found in other OECD countries. If you can recall the first chapter/website, there were some comparisons between countries in terms of structure and organization. From this comparative analysis, you should have been able to determine that the US would rather see the government take a backseat in healthcare and allow the private sector to drive the bus (and this is being reflective at this moment with the COVID-19). As a result, govt. often takes baby steps to introduce change to the public. Your readings about health reform refers to this as incrementalism. A perfect example is the ACA; it did not rollout in one year, but over several years. As you can see from the timeline I supplied for you in Course Documents, it was implemented slowly to gain acceptance and leave room for modification before taking the next step, resulting in piecemeal reform. This incrementalism and piecemeal reform is the result of the public not putting trust in the government due to perceived problems associated with the government, such as escalating costs; red tape bureaucracy, fraud; denial of claims; lack of empathy/insensitivity and the interpretation that money is being used for those who do not truly deserve it just to name a few. Another significant feature of our system is that we are pluralistic and have influential interest groups. As the Presidential election moves this year (hopefully), Trump and Biden, will go city to city to gain support. We also have powerful professional organizations such as AARP; AMA; AHA and even the NRA who will spend a lot of money to promote their interests, in addition to the paid political ads that attempt to influence voting decisions. Other very important parties in policymaking include employers and of course, the consumer. Since the enactment of the ACA, employers, including small organizations must comply with strict guidelines or may be subject to fines or restricted from any subsidies. Consumers alone, especially the disadvantaged, can rarely make the impact an interest group can, however, the groups that represent them are gaining representation as diversity grows in our country. Lastly, we have manufacturers of technology such as pharmaceuticals and medical equipment/supplies. Although we can be appreciative of what technology has done for health, it has been at a cost to the payors and consumers. Also of concern is self-interest… the profits associated with technology. Think of the costs associated with COVID-19, the new vaccine…when will this trickle down to the consumer? In addition to federal involvement in health care, we have the states’ decentralized role. Perhaps, the biggest role for the States is oversight for the Medicaid and CHIP programs. States have a vested responsibility as they put up about 45% of the money for this program. One opportunity for States is that they can serve as innovators for the rest of the nation by introducing programs that may improve quality, access and affordability. On the other hand, we have those who argue the states have too much power and any authority granted to them for innovative programs makes it more difficult to attain a unified approach to the nation’s health care delivery challenges. In addition, we may have people flock to states that have better programs resulting in further deficits in states with none. Ie Medicaid expansion. Lastly, the influence of the Executive Office, namely the President of the US, cabinet, and heads of the federal offices. As briefly discussed in Chapter 3 and also in your ACA 2019 course pack, we have had several presidents who have effectively used their executive power to set forth a platform for health care reform, most recently, President Obama. President Trump set forth 4 pre-election executive orders to reduce pharmaceutical costs.in July 2020, https://www.forbes.com/sites/joshuacohen/2020/07/25/trumps-executive-orders-on-drug-pricing-contain-caveats-and-limitations/#6a23a6d15001 . See update on plans for the finalized rule. https://www.hhs.gov/about/news/2020/11/20/fact-sheet-trump-administration-finalizes-proposal-to-lower-drug-costs.html Your book discusses the development of health policy and notes the five components of issue raising; policy design; building of public support; legislative decision making and building of policy support and legislative decision making and policy implementation. The best way to envision this process is through Longest’ Public Policymaking model. Longest Policymaking Process.docx Chapter 13 closes by highlighting the critical issues you will address throughout your entire curriculum as well as every day in the health care industry. These include disparities in access among certain populations including minorities, elderly, and those residing in rural communities. In addition to access, cost and quality continue to remain in the forefront, especially in our age of value based payment, post-ACA. An analogy to the critical health issues in our country and the need for health policy can be envisioned as a table with legs. If one leg becomes wobbly, it is only a matter of time before the other legs start to give out. As the table becomes at risk for collapse, it becomes more difficult or impossible to meet health needs. For many years, the table was a three legged corner table. Each leg had a name starting with A: accessible; available; and affordable. As the years passed, the forth leg was added in attempt to make it sturdier and stand strong; this leg was named acceptable. We discussed the patient experience a few weeks ago. Along this vein, but in its own category is the term acceptable. For years, the paternalistic role of the physician was to steer the patient with decision-making. This role slowly evolved into a physician/patient partnership where patient values/preferences were incorporated into decision-making to promote patient autonomy. This can be credited to various factors, including the Patient’ Bill of Rights and the ACA, ie. the establishment of ACOs and PCMHs. We also have the influence of two other powerful sources: the internet and word of mouth. Armed with information, patients have become “informed” consumers in the physician-patient relationship. Thus, we now have patients who question their treatment/delivery of care and who may voice concern if it is unacceptable in meeting their true needs. You will find in literally all physician-patient relationships (unless the patient is a physician themselves, and that is not a guarantee) an information asymmetry. If you have already had MHA 730 Health Economics, you probably learned about this concept. Asymmetry in health care occurs when the physician has relevant information that the patient lacks. Asymmetry exists in all markets where there is an information exchange between buyers and sellers. Consumers in the general market may wish to trade price for quality, but that can be risky business when it comes to health. Ideally, we want to create markets that allow consumers to choose the best fit and encourage competition that will lead to higher quality and lower prices. That was the goal of the ACA’s insurance exchanges. However, for this to be accomplished, patients need transparent information about the quality and cost of each health plan. This is one reason why we have insurance exchange navigators to help with this process for those who are not covered by employers or federal programs. Regardless, whether it be the physician-patient relationship or patient-insurance relationship, one party always has more information, and it is not usually the patient-consumer. Some states (ie. NY, CA) have legislation in place to ensure transparency of health care cost information for consumers. In late 2019, President Trump put forth an executive order for federal legislation to address competition and prices for consumers by mandating all states make health care pricing transparent by Jan 1, 2021. https://www.hhs.gov/about/news/2019/11/15/trump-administration-announces-historic-price-transparency-and-lower-healthcare-costs-for-all-americans.html Patient autonomy is a fundamental principle of professional medical ethics, yet it remains a challenge. Some might argue the consumer “does not need all that information…they won’t understand it anyway”. This leads to the question of what is “too much” or “too little”. We have all received informed consent and signed consent forms for medical interventions at some point in our lives. Do you take the time to read it or truly understand everything that is in it? Or did you just want to know the basics as long as something was being proposed to fix whatever your problem was? Thus, we move on to the next related term that adds to the complexity of acceptable; health literacy. The Institute of Medicine (IOM) defines this term as “the degree to which individuals have the capacity to obtain, process, and understand basic health information and services needed to make appropriate health decisions.” Thus, not all patients may understand what is being conveyed about his/her care, despite how many degrees they have. For example, not long ago, I visited my lawyer and since he knew I was a nurse, he began talking about someone he knew who has cancer. It was very obvious that despite his education, he knew very little about cancer. However, since he has a law degree, I am confident he has the capacity to learn about it. A person with a 3rd grade reading level may not be able to understand basic health information and may turn to the physician to guide their decisions. Due to this complexity of variables, one can see why it is difficult for the consumer to make a truly informed decision without guidance from the sellers.
For this question, I want you to share your experiences and thoughts on the acceptable leg and some of the factors I mentioned that influence a person being acceptive or approving of his/her proposed or actual health services. Keeping in mind that policy is not just legislation, but can include guidelines, a strategy, statement, procedure or plan, how can your workplace/the industry improve in making health care services/delivery more acceptable for the patient/consumer? Note: Acceptable does not necessarily mean compliant. This question is not to be focused on affordable (or cost), a different leg of the table
Answer preview for There are many reasons for the high cost of care in America; Exhibit 12.1 lists the key offenders. The Wall Street Journal offers an
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