Top ten health policy myths and how to debunk them
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Top Ten Health Policy Myths… and How to Debunk Them!. Cantankerous Grumblings of a Jaded Health Care Consultant February 15, 2006 By: David Allen (952/835-2009, [email protected]). Myth #10: The Grass is Greener Somewhere Else. Other Countries are having problems, too.

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Top Ten Health Policy Myths… and How to Debunk Them!

Cantankerous Grumblings of a Jaded Health Care Consultant

February 15, 2006

By: David Allen (952/835-2009, [email protected])



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Other Countries are having problems, too

  • Canada: Government financed health system being challenged

  • Great Britain: Efforts to improve quality and service by spending more is instead resulting in increased waste

  • China: Employer sponsored health coverage is leaving big gaps




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Capitalism Works for All Income Levels Wealthy

  • CMS “Independence Plus” Initiative

    • The Self-Determination project (19 states)

    • The Cash and Counseling project(3 states)

  • Research shows the poor benefit more from managing responsibility rather than simply being given handouts




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Medicare Part D: A Response to a Major Gap in Medicare Coverage for Drugs

  • Insurance lobby made sure that everything went through them, so they could take their cut

  • Pharmaceutical lobby made sure that the government didn’t allow price negotiations

  • Then, the government cobbled together Medicare Part D


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Truth #8: Medicare Part D was Designed to Protect Insurance Companies and Pharmaceutical Companies (while also give Medicare eligibles drug coverage)



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Administrative Expenses are HUGE “Only” 8% to 10%

  • What Minnesota health plans report as administrative expenses are incomplete

  • Contributions to reserves, insurance agent commissions and costs, disease management, case management clearly excluded

  • Health education, utilization review, quality assurance are supposed to be counted as administrative, but ambiguities allow much to be excluded

  • Hospitals and physicians have huge costs associated with billing, complying with rules and waiting for payment – not counted


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Truth #7: More than 30% of Health Care Expenditures are for Bureaucracy and Health Plans are More to Blame than Anyone



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Quality Varies Quality

  • Hernia surgery, recurrence rates:

    • 5% mode

    • 10% for some surgeons

    • 0.2% for some surgeons

  • Treatable colon cancer, 10-year survival varies from 20% to 63%, depending on surgeon

  • Cardiac bypass surgery, risk-adjusted death rates vary from 5% to <1%, depending on hospital and surgeon


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Quality Varies Quality

  • Anecdotally:

    • Tremendous differences in quality of hospitals

    • Substantial differences in the quality of physicians




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Pay-for-Performance is Hot, but Unproven Health Care

  • Health Plans and Government identify PFP as key strategy for rewarding quality

  • Problems with PFP:

    • Controlling costs is a higher priority

    • Quality can’t be measured statistically

    • Quality varies by individual

    • Health plans don’t want informed patients




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The Drug Industry is Sick Innovation

  • Pharmaceutical industry historically one of America’s most profitable

  • Research and Development

    • Number of new drugs declining

    • Many new drugs are “me too”

  • Marketing

    • Distorts demand

    • Corrupts physicians and researchers




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Group Insurance is the Premise of Health Care Today Buying Leverage

  • Big group insurance plans drive cost-shifting, not economy

    • Discounting payments to providers lead to provider consolidation

    • Profitability of big groups shift costs to small groups

  • Pawlenty’s “Smart Buy” Alliance



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Myth #2: Consumer-Driven Health Care won’t work because 80% of health care costs are incurred by sickest 10% of patients


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Shouldn’t Group all Health Care Expenditures Together 80% of health care costs are incurred by sickest 10% of patients

  • Predictable and Affordable (e.g. primary care)

  • Unpredictable and Affordable (e.g. minor trauma)

  • Predictable and Unaffordable (e.g. chronic conditions)

  • Unpredictable and Unaffordable (e.g. major trauma)




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Examples of Misallocations health care

  • Physicians: RVU-based reimbursement distorts appropriate care

  • Hospitals: Reimbursement rewards high tech and patient volume, penalizes value

  • Health care coverage: disincentives for young and healthy




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Principle #1: Insurance is optimal financing mechanism only if two conditions are met

  • Risk is unpredictable

  • Risk is unaffordable


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Principle #2: Capitalism works better than socialism if two conditions are met

  • Lack of free competition:

    • Distorts the health care market

    • Drives up costs

  • Capitalism also has negatives

    • Forces people to make choices

    • As Churchill said about Democracy…


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Principle #3: The market must come before special interests if two conditions are met

  • Our government is the hostage of special interests

    • Lobbyists have disproportionate influence

    • Campaign financing takes precedence over the best interests of the nation

    • The “establishment” naturally fights for the status quo


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Principle #3: The market must come before special interests if two conditions are met

  • Physicians need to be vocal and community leaders

    • Put competence ahead of ideology (“Not right, not left, but forward”)

    • Demand campaign finance reform


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