Uwe Reinhardt

Reconciling Anat Schenker-Osorio, Mariana Mazzucato, Jonah Berger, Dan Ariely, Anand Giridharadas, and me.

I have been following the work of Anat Schenker-Osorio, hereafter ASO, for quite some time. But lately I’ve become more of a fan. I found an interview with her from “The Zero Hour with RJ Eskow” podcast from about three years ago. It covered a fair amount of territory for a short interview, and I thought it be worth summarizing and commenting on to help with my own clarity of thinking as I try to synthesize lots of cognitive psychology material around persuasion and changing peoples’ minds. So here we go!

First, Anat Shenker-Osorio is the author of the book “Don’t Buy It: The Trouble with Talking Nonsense About the Economy.” She is also a consultant and advisor in the field of communication and strategic communications, and the host of the podcast that was called “Brave New Words,” and is now called “Words to Win By.”

As has been said many times by many people, our choice of words when making our persuasive arguments matters. It matters a lot. She gives the example here of the difference between talking about the price of a prescription drug versus the cost of a prescription drug. She points that cost implies inherent value while price is simply an arbitrary number assigned by typically, someone trying to sell the item. Cost implies an inherent value and perhaps the cost of producing something. (She later mentions talking about insurance corporations rather than insurance companies as another example.)

This argument ties into another discussion I have recently become interested in from Prof. Mariana Mazzucato, who argues that without a clear understanding of value creation, we risk allowing value extraction to masquerade as value creation, leading to a distorted perception of productivity and value in the economy. In other words, in the same pharmacy example, there is value creation, but it lies with the underlying research, typically done in federally funded institutions, and with the actual whitecoat scientists in the pharmaceutical companies. Contrarily, the value extraction in the industry comes from the administrative and executive overload of trying to name prices that are extraordinarily out of step with the actual cost and value of a product.

ASO argues that the “way we describe these policies makes a measurable difference in terms of both who is persuaded to understand and support them, and equally, if not more importantly, how we galvanize are base to repetition so that our version of the story is the one that’s actually able to dominate” in public discourse. If there is one thing the Democrats are bad at, it’s staying on message and repeating the message ad nauseum. We have a lot to learn from our political opponents on this!

She continues that it’s not simply about convincing people that our ideas are better, but it is contending with the cynicism of the public, particularly in healthcare, that change is even possible. She notes that they are also scared to death of getting rid of the devil they know.

She then makes two arguments about this:

Describing policy and making cogent arguments will never overcome the fear of uncertainty.
Arguing for the financial and economic benefits for something that is essentially an argument about our morality as a nation is never going to work.

The uncertainty argument is critically important. Jonah Berger, in The Catalyst, Chapter 4, reviews the literature on loss or risk aversion. People really dislike uncertainty. Uncertainty undermines actively making changes and can halt the decision-making process entirely. “[W]hile uncertainty is great for the status quo, or whatever people were doing before, it’s terrible for changing minds.” “Status quo bias” or favoring something simply because it’s this certain thing that we already know and have is powerful. As Uwe Reinhardt put it long ago, “everybody’s second choice is the status quo!” Therefore, it wins. More here.

The second part of her argument is an echo of a chapter in Dan Ariely’s book, Predictably Irrational. In Chapter 4, “The Cost of Social Norms,” he describes how differently we process decisions based on whether the appeal is to “market norms” or “social norms.” He gives the example of asking a lawyer to do pro bono work for a good cause versus asking a lawyer to do work at discounted rate for good cause. They will nearly always do the former and almost never the latter. Once a rate of exchange is applied to the transaction, it becomes a market transaction and the appeal of doing something as a social good is out the window.

So ASO’s point about not making the typical liberal nitty-gritty detailed policy argument about the market benefits of universal healthcare is spot on. The argument has to turn on social justice and moral norms.

She further emphasizes that point by noting, as would George Lakoff and Drew Westen, that when you make the arguments as financial and economic you activate the parts of the brain, the neurologic pathways that favor conservative arguments of fear of the unknown. And besides, as far as energizing the progressive base, it really isn’t about the economic arguments, even as persuasive as they are, it really is about the moral argument. I know it is for me.

She gives three examples of progressive campaigns that she participated in including the fight for abortion rights in Ireland, the campaign for prime minister in New Zealand, and an anti-racism campaign in Minnesota. She points out that messaging around being against things really doesn’t work well. Progressives need to figure out how to forcefully state what we are in favor of. “Abolish ICE,” for example. It is better as an argument to “create fair immigration process that respects all families.”

One of her central points tying these three campaigns together is the idea of the inevitability of change. Rather than trying to convince people that change was necessary, argue that change is necessary and inevitable. In the abortion example particularly, this was about getting the change over with, because it painted Ireland as backwards and out of step with the modern world. I think the same argument applies directly to America and universal healthcare. We will eventually do this, what are we waiting for? It makes us look bad: selfish, uncaring and backwards. We should lean into that.

Anand Giridharadas in an appearance promoting his new book, The Persuaders, makes a good case for reframing Medicare-For-All as “FreedomCare” in a recent “Off-Line with John Favreau” podcast:

Let’s help people see themselves in Medicare for all. I would call it FreedomCare. I think it’s ridiculous that it’s that it’s called Medicare for all. Why is it named after a government program instead of a widely held American value that would be an example of sticking to the ambitious demand, but saying what are some other ways of talking about it, right?

A language of freedom is a much more resonant language in this country. Healthcare is a human right is something that people – progressives – often say about Medicare for all well that’s actually not a particularly resonant frame in America because it’s not like the people who don’t like universal healthcare also don’t like human rights, right?

What I think universal healthcare would be in truth would be a massive expansion of human freedom in this country. Like I don’t want my boss dictating whether my kid gets care if, heaven forbid, my kid gets cancer. Did you want your boss having that decision over you, right? Yeah, like I don’t want to not pursue my business idea because I have to stick to a stupid job for healthcare.

It’s amazing to me how little progressives speak in this kind of language of personal Liberty around the stuff. That’s the kind of persuasion that I think the characters I’m writing about are interested in.

But let me tell you where she really made me a fan: she wants us to name the villains! This is something I have been pushing in my circles for quite some time, so it is great to hear it validated! She talks about the positive messaging and to say what we are for, but she doesn’t discount the importance of name checking the problem and deliberately naming the villains! She uses the example of the 2009 housing crisis: people didn’t lose their homes, their homes were taken from them by Jamie Dimon and J.P. Morgan Chase and all their collaborators. We have to lose the passive construction of our arguments and assign deliberate causation to the actions of the “malefactors of great wealth.”

There are hundreds of ways that this will work in healthcare. In fact, if you ask Chat GPT who the five highest-paid health ~~plan~~ insurance corporation executives are, it’ll tell you.

1. Bruce Broussard, Humana – $17.3 million

2. Joseph Swedish, Anthem – $13.1 million

3. Stephen Hemsley, UnitedHealth Group – $12.4 million

4. Kenneth Burdick, Cigna – $11.6 million

5. Andrew Slavitt, Optum – $10.8 million

Her final point is based on a quote from Keith Ellison, Atty. Gen. of Minnesota who said, “power knows exactly what it’s doing.” The argument is that speaking truth to power is not enough. The goal is to achieve enough power and force change. FDR allegedly said to a group of activists, “You’ve convinced me. Now go out and make me do it.”

Let’s do that.

Three Books: A Summary of a Doctors for America Session held at the National Leadership Conference

Three Books: A Summary of a Doctors for America Session held at the National Leadership Conference on November 9, 2019

I recently did a workshop session at the Doctors for America National Leadership Conference in Baltimore. The session was titled Prospect Theory, Medical Industrial Complex and Social Justice in Health Care: 3 Important Books. I have recently had the opportunity to be able to devote some time to thinking about healthcare reform in general, and the distressing lack of progress toward universal healthcare in America spanning my entire career and beyond.

I came across the late Uwe Reinhardt’s last book, Priced Out, which was a summary of his life’s work: the ludicrousness of “America’s Healthcare Wonderland,” as he calls it, and the ineffectiveness of any moral arguments to persuade the American political class to move towards universal healthcare. I had the opportunity to exchange a few emails with Prof. Reinhardt about 5 years ago. At that time, he seemed quite pessimistic about the opportunity of America moving forward. In his book, however, his life partner, Prof. Cheng, in her epilogue, makes it clear that he remained optimistic about America’s chances for universal healthcare. He thought, she said, that we would probably stumble towards it and not actually make a cultural or societal decision, but that we would eventually get there in fits and starts.

Prof. Reinhardt’s chief concern is that we never have the moral discussion required to propel us towards a universal healthcare ethic. Without the ethic, he argues, there can be no successful transition to a universal system. He has said that during healthcare debates, we have an incantation, “’we all want the same thing; we merely disagree on how best to get there.’ That is rubbish.”

He is right. We do not agree. We agree on the left that universal healthcare is an imperative, and those on the right agree that healthcare is a market commodity and should be treated like any other good or service. Of course, progress is made by convincing enough people in the middle that one’s policy proposals or political arguments are worthy of implementation. One need not win over everyone. Medicare, Social Security, civil rights, and so much of America’s progress in the past century was not unanimous. Given the opportunity, many conservatives would still reverse the New Deal, the Great Society, and of course, the Affordable Care Act.

Progressives have failed to win the moral and political arguments in favor of universal healthcare. As Wendell Potter has pointed out, the methodology of the entrenched and well-funded interests opposing progress are simple: fear, uncertainty, and doubt. Simple and devastatingly effective.

The Undoing Project: A Friendship That Changed Our Minds by Michael Lewis holds many of the answers as to why it is so effective. The book tells the story of the two psychologists who developed Prospect Theory. Prospect Theory was the basis of what we now call behavioral economics. It is the exploration of why we make the decisions we make. It is about why we make the irrational decisions that we make.

Briefly, our brains are fooled in a variety of manners. We have fast, intuitive thinking. This thinking is swayed by a variety of biases. Gains and losses are perceived from specific reference points. The fear of loss, risk aversion, is far more powerful than the lure of gain. Things that come to our mind easily, either through recency or frequency (availability) greatly impact our decision-making. The fast, intuitive mind is influenced heavily by these biases. And unfortunately, the fast, intuitive mind is very confident.

Our more logical, slow thinking brain is analytic. It is also unsure of itself because of its self-critical analysis. That is why a plausible and emotionally resonant feeling, as Mark Twain might say, is halfway around the world before a detailed policy proposal gets its pants on. Or, as Stephen Colbert might say, truthiness works.

There are many lessons to be gained from Prospect Theory, but the key insight from Daniel Kahneman is that “We don’t choose between things, we choose between descriptions of things.”

After reading The Undoing Project I was somewhat optimistic and excited about the possibility of using some of these techniques to combat the campaign of fear and uncertainty and doubt that is awaiting us as we march into an election year with healthcare reform as a major point of contention.

Unfortunately, I then read An American Sickness: How Healthcare Became Big Business and How You Can Take It Back, by Elisabeth Rosenthal. Dr. Rosenthal provides a discouragingly comprehensive evaluation of the medical industrial complex and how it has come to dominate every aspect of the provision of healthcare. The chapters catalog the breadth: health insurance plans, hospitals, physicians, the pharmaceutical industry, the medical device industry, testing, laboratory, and all other manner of ancillary services, contractors, billers, coders, collections agency, researchers, not-for-profit organizations, and of course the rise of the massive healthcare conglomerates, euphemistically known as “integrated delivery systems.”

As Don Berwick recently wrote, there is $1 trillion of waste in the healthcare system. And one man’s waste is another man’s revenue. Dr. Rosenthal details all that waste and in doing so, lays down the markers on the battlefield. One side is well-funded and is fighting for its very existence. Or at least fighting for the very upscale version of its current existence, and desperate to avoid a comparatively spartan OECD-like existence.

As Upton Sinclair once said, “It is difficult to get a man to understand something if his livelihood depends upon his not understanding it.” As Wendell Potter more recently said, “Health insurers have been successful at two things, making money and getting the American people to believe they’re essential.”

I finished my remarks, and opened up the floor for discussion. We spent a fair amount of time reviewing the concepts above. I specifically asked for help in developing framing and arguments that might help us in our advocacy work. Several themes emerged, and I have highlighted them here.

1. Talk about the moral case for health care. We discussed the deserving-undeserving framing, the puritanical streak in American politics, and the fear of others “getting over on us.” I told the story of having gone to a progressive conference after the 2018 election. I had the opportunity to hear from four progressive candidates who lost their races in conservative districts. All four of these candidates said they were surprised that so many of the conservative voters were afraid, almost exactly as I had phrased it to you, of having others ‘get over on them.” That these others would get free healthcare when they were going to have to pay for it, for “those people” to be freeloaders that they would have to subsidize, etc.

2. Talk about work arounds and hassles. I pointed out that the second half of Dr. Rosenthal’s book was a guide for those who are trying to deal with the Wonderland of American healthcare. While quite useful in the here and now, it amounts to a series of workarounds of the system as it exists. Useful, to be sure, but it is not a prescription for ending the need for workarounds. As Teresa Brown recently put it in a New York Times piece, American healthcare system is one giant workaround.

3. Talk about student debt, medical school tuition and physician income. We had a discussion about the rabbit holes, as I call them, of excruciatingly detailed policy points surrounding any healthcare reform. As Uwe notes, whenever this happens, we then engage in protracted and useless arguments over the value of quarter hour of an anesthesiologist time, or other some such parochial detail of concern. It was pointed out that these concerns arise out of the value of medical school education and residency training, the heady medical school costs and student debt, as well as physician income. The group argued to take these issues head-on. Have a discussion about subsidizing medical school and have a discussion about the relative value of the various specialties. Have a discussion about work hours and on-call time, medical liability, and the many other practical issues moving towards universal healthcare system.

4. Talk about price control and administrative simplification. There is no love lost between physicians and the rest of the healthcare industry. There is also no love lost between consumers of healthcare services and the healthcare industry. The group felt that it was well worthwhile to point to alternative methods of controlling costs in the healthcare system. We discussed Prof. Reinhardt’s maxim that “It’s the prices, stupid!” We discussed the unconscionable waste of time and money spent dealing with health plans, from in-hospital utilization management to outpatient prior authorization for everything from procedures to medicines to wheelchairs. These issues potentially put us on the same side with the public and politicians.

While driving home from the conference, I began listening to Daniel Ariely’s Predictably Irrational. Prof. Ariely spends a significant amount of time discussing the difference between market norms and social norms. The way we behave around wages, prices, rents, and other payments are our market norms. The way we behave around doing each other favors, helping one another and other activities that do not involve financial exchanges, are our social norms. He provides many examples showing that things one might do unhesitatingly under the structure of social norms, are out of bounds under market norms. For example, lawyers asked to do work for a nonprofit company at a very low rate reject the proposal. Lawyers asked to do pro bono work readily agree. Injecting finance into a situation that normally operates on social norms profoundly alters the perception.

It occurs to me that this is at the center of Prof. Reinhardt’s assertion in his book. We will endlessly and vociferously debate on the number of and reimbursement for, angels dancing on the head of a pin, and always avoid the underlying discussion of whether we, as Americans should be the keepers of our less fortunate brothers and sisters for their healthcare needs.

Priced Out The Economic and Ethical Costs of American Health Care Uwe E. Reinhardt; Reviewed by Christopher M. Hughes, MD

Priced Out

The Economic and Ethical Costs of American Health Care

by Uwe E. Reinhardt

Epilogue by Tsung-Mei Cheng

Forewords by Paul Krugman & Sen. William H. Frist

Reviewed by Christopher M. Hughes, MD

If you are a novice to the subject of health care policy, the first few chapters of Priced Out will leave you dumbfounded at the absolute mess we have made of healthcare in the United States. Professor Reinhardt calls it a “wonderland,” and not in the pleasant sense. The wonderland is the morass of payment schemes that allow a multitude of administrators (insurers, pharmacy benefits managers, etc.) to skim just a few cents off each health care dollar spent before the remainder makes its way to those actually providing services to patients. Example after example highlight the mess we have created at the altar of “the market” or “competition” or the illusion of “choice.”

If you are in the morass, as a physician or nurse or student of health policy, you will sigh in recognition of the things you may have already known, but you will see more clearly with Prof. Reinhardt’s great ability to make the complex comprehensible. For example, the highly “popular” Health Savings Accounts, are known to be a sop to high income households, especially healthy households, but Uwe points out that they have also sprouted a cottage industry of administering these accounts, taking just a little “haircut,” as he likes to say, of the billions of dollars that flow through their accounts each year.

For me, as someone in the morass as a physician, a physician currently working in the health insurance industry and someone who teaches health policy, I was aware of most of the accretions and detritus that make our health delivery system a mess, but Uwe always manages to add this kind of level of detail to, well, just infuriate me! Other examples are the “categories” of human beings we have in the US, from the poor to the near poor to the wealthy, to those covered by Medicare or Medicaid or both or neither or those covered by employer-based insurance to those in the Affordable Care Act Marketplace – or not. He jokes that in most nations, there is only one category of human beings. We have made micro-categories a high art.

Chapters on the outrageously complex mechanisms we use to price services and how we pay the bills are head slapping. Even as one in the middle of the morass, I am still shocked to see the insane specifics of how we have passively allowed this all to go on under the banner of “competition” and “market freedom” and other euphemisms for greed. Convoluted methodologies to “control costs” by external administrative mechanisms rather than evidence-based practice infuriate physicians and have spawned the multitude of staff in doctor’s offices and hospitals to obtain “prior authorization” to prescribe medications or perform surgeries or even to determine if one is sick enough to be in the hospital.

The second half of the book focusses on the social ethic of our health care system. Uwe states it plainly: “To what extent should the better off members of society be made to be their poorer and sick brothers’ and sisters’ keepers in healthcare?”

This is clearly more troubling to Uwe than the economics or health care and how deranged our system has become. After the failure of the Clinton Health Plan in the 90’s, he wrote a powerful article in the Journal of the American Medical Association (JAMA) called, Wanted: A Clearly Articulated Social Ethic for American Health Care. In it, he asked the precursor to the above question: “should the child of a poor American family have the same chance of avoiding preventable illness or of being cured from a given illness as does the child of a rich American family?” He was clearly stung by the idea that his adopted countrymen rejected this solidarity, in contrast to every other nation’s resounding “yes” to the question.

He explains that our tendency in American political life is to pretend that our disagreements on health care are due to the details and howto get to universal health care. So rather than have the broader ethical discourse that could answer the two extremely important questions he has posed, we camouflage and misdirect and devolve our discussions to the best way to bring market forces to bear or how to properly fund Medicaid in the states. We never answer the basic question of whether we should strive for universal healthcare.

He has said elsewhere, “A common incantation during debates on health reform, for example, is ‘that we all want the same thing; we merely disagree on how best to get there.’ That is rubbish.”

He spends a significant section of the book exploring his framing for this fundamental disagreement among conservatives and liberal. But he does not have an answer for us on how to get where he clearly wants us to go – as explicitly stated by his widow, TM Cheng in her epilogue – “he passionately believed in universal healthcare.”

In an exchange I had with him a few years ago, he wrote, “the problem in America is that the elite does not share a consensus on what the social ethic governing American health care should be. I am not sure it ever will reach such a consensus.”

In the epilogue by Dr. Cheng, she documents his hopes and thoughts and, surprising to me, his optimism in America. We would hobble along, he thought, and continue to figure things out as we went, and perhaps technology can improve our lot.

The book left me less optimistic about our chances to reach consensus, but more committed to trying to make it so. Profs. Reinhardt and Cheng spent decades trying to advance American healthcare and continually try to engage on the ultimate questions of our social ethic, paraphrased by Michael Moore in Sicko as, “Are we about me, or we?”

The glimmer of hope I still have rests on two foundations. Uwe’s clear-eyed articulation of the questions we have before us and their obvious answers and my faith in the doctors and nurses who provide healthcare in the trenches, as we like to say, and who have long ago had enough.

In 2002, “Medical Professionalism in the New Millennium: A Physician Charter,” was published as a Project of the ABIM Foundation, the ACP–ASIM Foundation, and the European Federation of Internal Medicine. In the Charter are calls around the Principle of social justice, Commitment to improving access to care, and Commitment to a just distribution of finite resources. It specifically charged the medical profession to “promote justice in the health care system, including the fair distribution of health care resources. Physicians should work actively to eliminate discrimination in health care, whether based on race, gender, socioeconomic status, ethnicity, religion, or any other social category.”

The Charter argues that “Medical professionalism demands that the objective of all health care systems be the availability of a uniform and adequate standard of care. Physicians must individually and collectively strive to reduce barriers to equitable health care. Within each system, the physician should work to eliminate barriers to access based on education, laws, finances, geography, and social discrimination. A commitment to equity entails the promotion of public health and preventive medicine, as well as public advocacy on the part of each physician, without concern for the self-interest of the physician or the profession.”

This Charter has been endorsed by virtually every group within organized medicine, from the American Medical Association to the American Board of Radiology to the American Nurses Association. While it is not explicitly a call for universal healthcare in America, it is hard to view the principles and not see this as the logical conclusion. And in fact, at the time of its publication, there were quite a few dissenting commentators who saw it as just that, and so rejected it.

I am taking Prof. Reinhardt’s last book as the plainspoken economic and practical case to shake ourselves free from this embarrassment of a “system” we have watched become a more hideous monster than we ever contemplated. I am also taking it as the simple moral argument for whywe need to change. We must stop allowing ourselves to be pulled into discussions about what flavor of health care reform we like best, and have that knock-down, drag-out fight about who we are as a nation. Are we the nation that cheers when one of us gets struck by a car and is left to die because they chose to forego health insurance? Or are we the nation that sees ourselves in the suffering of others and wants to help?

‘Ground Control to John Goodman’ – A Uwe Reinhardt Appeal | A “HealthTweep” Pulse Check

This is a couple years old, but I just found it and since it has some Uwe “gold,” it’s worth reading!

John Goodman of the conservative Dallas based think tank National Center for Policy Analysis (NCPA) issued a “William Wallace-esque’ FREEDOM pitch today on his blog entitled Reforming Health Care the Right Way.
This is a man who previously claimed that there are ‘no uninsured’ (from a health insurance point of view) in America; after all Goodman posits that everyone has access to the ER, so what are you complaining about? (paraphrased).
In his blog post today one day after the historic Senate vote to advance the health care bill, Goodman opines on the ‘right’ and ‘wrong’ way to reform US healthcare.
What I find most insightful is his post is the rebuttal comment proferred by Uwe Reinhardt as to the fantasy world this man, and unfortunately many other ideological predisposed converts, apparently inhabit. The health care industry defies over simplification, yet ‘sound byte’ disingenuous over-simplification is the prima facie basis on which the ‘anti-reform crowd has stimulated emotive misunderstanding of the nature of the malady as well as it’s appropriate and quite comprehensive remedies.

Uwe Reinhardt Says:
December 21st, 2009 at 1:12 pm
I hear Richard Branson of Virgin Air is seriously exploring space travel as a commercially feasible project.
Once he has that done, I shall be able to book a flight to the distant planet on which John Goodman lives.
It is the planet on which all physicians always are purely the agent of their patients and do not have any economic conficts of interest — such as making money on tests they prescribe to anxious patients or from referring patients to imaging centers in which they have a state or to collegues with whom they play gold, and so on. Such conflicts of interest do not crop up on John’s planet, not because government forbinds them (there is no government on that planet), but because such conflicts of interest just don’t exist there somehow. Remember: it’s another planet!
On John’s planet it is also easy to have price competition among physicians, because all ill health on that planet can be cured with just one standard, well defined “unit of health care.” What that is I do not know, but John does, because he lives there. He’s probable consumed some, rationally, I wouold assume.
Contrast that with an earthbound hospital charge master with 20,000 itsems in it or the physician fee schedule with 7,000 items in it. How would one make diffenetials in the elements of those huge vectors understandable to patients?
John took on a new religion on that planet to where he actually immigrated — he once lived on earth. On earth he always boldly talked for decades about “Consumer Directed Health Care,” but neither he nor his entire think tanks (the NCPA) every did a stitch of work to help develop the user-friendly price information that patients as “consumers” would need to make rational choices in health care ex ante.
Once on the new planet, John realized that he sinned on earth and swore to do better there. Of course, on his new planet it’s easy: there is only one type of health care and one price. The redemption was a piece of cake.
All people on John’s planet have the same income — in fact, they all have John’s high income and all also have Ph.D.’s. or M.D.s So the problem with poor people not being able to afford high deductibles and therefore stiffing doctors and hospitals for it does not exist on John’s planet. Nor is there a problem with health illiteracry, because everyone on John’s planet has a Ph.D. or M.D. Every patient on John’s planet knows exactly what he or she needs before going to a doctor and simple shops around for a low price.
For the most part, an individual’s need for health care in a coming year on John’s planet is certain and predictable and thus not really insurable. Only the need for about 20% of all health care is stochastic and hence insurable.
On John’s planet, 50% of any large group of people account for 50% of all health spending — 80% of the people account for 80% of all health spending. Here on earth, 20% of the sickest account for 80% of all health spending, and much of that 80% will also be insured. It will be managed by some insurance clerk coming between doctor and patient.
Oh how I long to go to the planet where John Goodman lives, where life is so easy and so simple. I am so tired of the mess here on our planet. Aren’t we all?
Small wonder that John just up and left Mother Earth for a planet where all his theories actually work.

‘Premium Shock’ and ‘Premium Joy’ Under the Affordable Care Act – NYTimes.com Uwe Reinhardt

Community Rating Under the Affordable Care Act
Under the law, an individual health plan selling policies in the small-group and nongroup market — whether it sells policies through the state’s exchange or not — will be free to set its own premium for a given policy. But within a given age group, it must apply the same premium to all comers, regardless of their health and their gender. Furthermore, the health plan cannot reject any applicant willing to pay that premium, a provision called “guaranteed issue,” or cancel existing policies.
In other words, the X_i based on the individual’s health status in the equation above will be replaced by the average expected health spending per insured, with the average calculated over the insurer’s entire anticipated risk pool of insured members of a given age. To calculate the average, the insurer must consider as one single risk pool all enrollees in all health plans offered by the insurer, whether or not they are offered on the exchange.
This form of premium setting is known as “community rating.” Because it forces healthier individuals to subsidize sicker individuals through the community-rated premiums, it has been much debated.
Community rating invites “cherry-picking” by insurers — i.e., attempts to attract mainly low-risk applicants. To limit the profit potential from cherry-picking, there will be post-enrollment risk adjustments through which funds are transferred from insurers ending up with relatively healthier risk pools to those ending up with relatively higher risk pools.
The community rating under the law is not the pure version found in the social insurance systems of Europe (e.g., Switzerland, the Netherlands and Germany) or Asia, where even age is not considered in setting premiums. Rather, the American version is called adjusted community rating, because it does allow insurers to adjust the community-rated premium for the age of the applicant.
Age-adjusting is done by multiplying the community-rated premium for the youngest members in the expected risk pool by a standard, multiplicative age ratio to be used by all insurers. Thus the quoted premium can increase step by step with age, but only up to a multiplicative factor of 3. At a given age, smokers can be charged up to 1.5 times the regular premium.
The change from what was in place before the Affordable Care Act to post-law arrangements in the nongroup market can be illustrated graphically. In the chart below, we assume initially that all members of a given population are covered by either medically underwritten or community-rated health insurance, with a given package of covered health benefits. The white line represents the premium individuals would have to pay under medical underwriting. The dashed segment of that line is meant to show the actuarial cost and the premium range in which insurers in the real world would reject applicants outright. The green line shows the community-rated premium for this same population. We assume here that age is either not factored into the premium or the population in question is all of the same age, which is why the green line is horizontal.

Premium Shock
As the chart illustrates, a switch from medically underwritten premiums to community-rated ones raises the premiums for the relatively healthier members of the insurer’s risk pool. Many of them will suffer what has come to be called premium shock.
Younger and healthier members of the pool should realize that, in effect, they are buying a call option that allows them to buy coverage at a premium far below the high actuarial cost of covering them when they are sicker. The price charged the healthy for this call option is the difference between the premium they must pay and the current lower actuarial cost of covering them.
Furthermore, for Americans in households with incomes below 400 percent of the federal poverty line, the green and red lines exaggerate the impact of the law on their spending. These Americans will be granted often quite generous, income-dependent federal subsidies toward the premiums they face on the exchanges and their out-of-pocket costs for health care. This makes it well-nigh impossible to make general statements, based on averages, about the net after-subsidy impact of the law.

‘Premium Shock’ and ‘Premium Joy’ Under the Affordable Care Act – NYTimes.com

Testimony for PA Senate Democratic Appropriations Committee Public Hearing on Medicaid Expansion, March 8, 2013

Good morning. Thank you for conducting this session and for inviting me to speak. I am Dr. Chris Hughes, state director for Doctors for America, a nation-wide group of physicians advocating for high quality, affordable health care for all. I have been an intensive care physician for my entire career, now approaching 25 years, and within the past year I have also begun practicing hospice and palliative medicine. I am a former Trustee of the Pennsylvania Medical Society and Chair of the Patient Safety Committee. I have completed graduate studies in health policy at Thomas Jefferson University, and I am now teaching there, in the Graduate School of Population Health.

I tell you this to let you know that I can get down in the weeds with you about the nuts and bolts of implementation of the Affordable Care Act, and I know a fair amount about health care financing, access, cost shifting, and all the rest. But you have fine panelists assembled here today who have been doing this for you, and I know you all know your way around these topics as well. That’s why you’re here.

I am here as a physician and a representative of my profession. Every doctor you know, and every nurse and pharmacist and social worker and everyone in the front lines of health care, for that matter, can tell you stories of how our health care system has failed someone. Our system fails people regularly, and often spectacularly, and often cruelly, day in, day out.

I’ve had patients who work full time in jobs that fall far short of the American dream. They get by, but they can’t afford health insurance.

I’ll give you a few of my patients’ stories here, not just to point out the obvious- that we are mistreating our fellow human beings – but that we are misspending countless dollars on the wrong end of the system.

There’s the cabbie who recognizes his diabetes and determines to work harder and longer so he can buy insurance before he is stricken with the label even worse than diabetes: preexisting condition! He doesn’t make it and ends up in the ICU with diabetic ketoacidosis.

There’s the construction worker who has a controllable seizure disorder that goes uncontrolled because he can’t afford to go to the doctor. He ends up in the ICU, on a ventilator – life support – multiple times.

There’s the woman who stays home to care for her dying mother and loses her insurance along with her job. When her mother is gone and she finally gets to a doctor for herself, her own cancer is far advanced. She goes on hospice herself.

The laid-off engineer whose cough turns bloody for months and months before he “accesses” the health care system – through the Emergency room and my ICU with already far advanced cancer.

Shona’s attendant, of course. [Shona Eakin, Executive Director of Voices for Independence, in her earlier testimony.]

These are people who are doing the right thing – working, caring for family members – and still have to go begging for health care. How many hours does an American have to work to “deserve” health care? 40? 50? 60? We, as a society, are telling these people that their work, their lives, are not valuable enough to deserve access to health care until they meet some standard of employment in a job that has health insurance.

While doing some research on Medicare cost savings, I ran across a paper from US Sen. Tom Coburn with this quote: "Medicaid is a particular burden on states, consuming on average 22 percent of state budgets." I don’t quibble with the number, I quibble with the mindset that leads one to think that the suffering of millions is a non-factor in the decision making. And the fate of patients is not mentioned in his paper.

Not long ago, expanding access to health care was a nonpartisan goal. As recently as 2007, a bipartisan group of U.S. senators, including Republicans Jim DeMint and Trent Lott, ( let me repeat that, “Jim DeMint and Trent Lott” ) wrote a letter to then-President George W. Bush pointing out that our health care system was in urgent need of repair. "Further delay is unacceptable as costs continue to skyrocket, our population ages and chronic illness increases. In addition, our businesses are at a severe disadvantage when their competitors in the global market get health care for ‘free.’ "

Their No. 1 priority? It was to "Ensure that all Americans would have affordable, quality, private health coverage, while protecting current government programs. We believe the health care system cannot be fixed without providing solutions for everyone. Otherwise, the costs of those without insurance will continue to be shifted to those who do have coverage."

Medicaid expansion and the Affordable Care Act will get us closer to this than at any time in our history.

You will hear some physicians speak out against all of this. But what you generally will not hear is their leadership and organizations speaking out against it, except perhaps in the deep south. There is a reason for this. As leaders of our profession, we have to come to terms with the idea that we are not just in it for ourselves. We are in it for our profession as well, and that means we have to put our patients’ interests above our own, and that means we have to do our best to ensure that everyone has access to high quality, affordable health care. Don’t just take my word for it. The American Board of Internal Medicine Foundation and other organizations put together a Charter on Medical Professionalism about ten years ago, specifically making this, fair distribution of health care resources, a part of our professional responsibility. If you go to their website, you will find that virtually every physician organization you can think of has endorsed it. That means the anesthesiologists and orthopedic surgeons as well as the pediatricians and the family practitioners.

For Medicaid expansion specifically, we should note here that the major national physician organizations, including the AMA, and the organizations representing internists, family practice, pediatricians, psychiatry and more, all endorse Medicaid expansion. On the state level, all of these organizations state chapters endorse it as well, with the exception of the Pennsylvania Medical Society, which I am chagrined to say, has endorsed general terms of expansion only.

But this concept is really not controversial among physicians and health care providers. We see everything from the catastrophes to the small indignities. They are tragic, unnecessary, and we are on the road to ending them.

Some in the provider community have expressed concerns about Medicaid in particular as the way we are providing access, so I would like to take a moment to address the concerns we hear most often.

First, that Medicaid is “bad” insurance. What is bad about Medicaid is largely fixed in the ACA. Namely, it is very poorly reimbursed for providers. You’ve already heard from others why hospitals want it, why advocates want it, but for providers in primary care, the frontlines of health care, they get a major boost in reimbursement under the new law. Pennsylvania has historically had awful reimbursement in the Medicaid program, among the worst in the nation. Now, reimbursement will go to par with Medicare reimbursement, a huge incentive for providers to take on Medicaid patients whom they may have been reluctant to see previously. There are other new innovations such as Patient Centered Medical Homes, the new Medicaid Health Homes (which, by the way, we have also not begun implementing in PA – maybe another panel?), and other innovations, coming down the pike, that should really give people who previously had no chance at excellent care, a chance to avoid complications, avoid the ER and avoid the hospital. To live in good health.

I’ve also heard the strange claim that having Medicaid is worse than having no insurance. I suppose that in a vacuum where there is no good data, and where one sees, like I do, patients with no insurance or Medicaid, who don’t know how or aren’t able to access a doctor, you could look at patients who get very sick and mistake that association and attribute that to Medicaid, but we do have data now. In Oregon, due to a fairly bizarre set of circumstances a few years ago, Medicaid eligibility was determined by lottery, creating a natural experiment of haves and have-nots. In the first year, those who were enrolled were 70 percent more likely to have a usual source of care, were 55 percent more likely to see the same doctor over time, received 30 percent more hospital care and received 35 percent more outpatient care, and much more. Incidentally, I heard a cable talking head complain about the Oregon data because it didn’t examine outcomes, such as deaths and such. A fair point if we had more than a year’s worth of data! I, and most other health professionals, would argue that the results they have seen already are impressive and worthwhile in and of themselves.

People often ask me why I am so passionate about this, and I always tell them, “I blame the nuns.” Growing up Catholic, there was nothing so drilled into me as Matthew 25. We used to sing a hymn based on it, “Whatsoever you do to the least of my brothers,” on a regular basis at Mass. And we went to Mass before school every day!

It turns out this is a pretty universal sentiment. I checked. Go to the websites of every mainstream religious denomination – Anglican, Methodist, Mormon, you name it – and it will be in there somewhere: The Social Gospel and Social Justice. Dignity of the individual. Our duties to the less fortunate. It is part of our national Judeo-Christian heritage, and a component of every major religion and philosophy in the world, with one notable exception – Ayn Rand’s. And I mention Ayn Rand and her most famous book, Atlas Shrugged, because it is perennially listed as the second most influential book in America, after the Bible. A damning fact for us.

In spite of that, I am glad that social justice and a commitment to the fair distribution of our health care resources is integral to the sense of duty of my profession, the nursing profession and all health professions.

I often say that I encourage debate about how we get to universal health care, but I refuse to accept that America, alone among all modern nations, and Pennsylvania in particular, will reject the idea that we need to get there.

A final thought from health care economist Uwe Reinhardt, regarding all of the reasons given about why we cannot achieve universal health care; he says, “Go tell God why you cannot do this. He will laugh at you,”

Right now, Medicaid expansion, the Health Insurance Exchanges and many other components of the Affordable Care Act are our best hope. Let’s not squander it.

Thank You.

Uwe E. Reinhardt: How Efficient Is Private Charity? – NYTimes.com

Uwe E. Reinhardt: How Efficient Is Private Charity? – NYTimes.com: “Although in absolute dollar terms the United States ranks high in that category as well, as a percentage of G.D.P. many European nations outrank us (see Table 1, Annex A, on page 7).

Citizens of other countries may remind us that there is a trade-off between channeling dollars from citizens to charitable or civic activities through the government’s budget and channeling these funds through the budgets of private organizations that we label charitable, whether they truly support charitable or civic activities.

Many charitable or civic activities financed in the United States with private giving are financed elsewhere through government — health care, education and museums among them.

Why do Americans make so different a trade-off between private charity and government than people in most other nations?

One persuasive reason is that through private charitable giving, the donor can direct where his or her funds go. Americans do not trust their government as much as citizens elsewhere seem to. Yet it is not always clear in whose pockets private charitable donations end up.

A second reason is that many Americans have the notion that private charities are more efficient than government can ever be.

My experience is that to many Americans this notion, which is nothing more than a hypothesis, is an axiom, a statement so self-evident that it does not require proof.

The relative efficiency of private “charity” and tax-financed governmental “charity” is an empirical question. The proper criterion is what fraction of our charitable donations actually flows directly to the activities that we seek to support.”

I find it strange this article of faith that ALL private operations are inherently more efficient than ALL government ones. When I hear this, I ask the person if they’ve ever tried to question their cable bill, or, even worse, tried to change providers!

Physician Incomes Internationale

Responding to my post about doctors stepping up for health reform over at FireDogLake, wigwam linked to a couple great pieces from the NY Times. ( I have a Google Alert on “physicians salaries incomes,” so I don’t know how I missed them, but, here they are now.)

In order, Uwe Reinhardt pointed out in a post about Rationing Doctors’ Pay

When Medicare reduces its payments to doctors, it rations money to them. It does not directly ration the health care the doctors might render patients.

If physicians refuse to treat patients at the lower fees, it is they who ration health care, even if the incentive to do so came from Medicare.

While I doubt that the payments to radiologists and cardiologists actually will be cut by 21 percent soon — more on that next time — let us suppose it were so. Would there then be “few radiologists and cardiologists working” after such a fee cut?

Presumably, the afflicted physicians would withhold their services only from Medicare and Medicaid patients, assuming that private insurers pay more. But
could most radiologists and cardiologists actually earn an adequate livelihood only from privately insured patients? I have my doubts.

Like everyone else, radiologists and cardiologists certainly can claim to be sorely underpaid relative to the extraordinarily high compensation of bankers and corporate executives, which appears to have little correlation with contributions to society. But relative to their colleagues in internal medicine, pediatrics and family practice, radiologists and cardiologists actually are very well paid.

…

So even if Medicare cut fees of radiologists and cardiologists by 21 percent, the income of these specialists would still exceed that of their colleagues in primary care by 60 percent or more.

…

The only question then is whether such fee increases [for primary care] will come at the expense of taxpayers or from other parts of the health care sector, perhaps even the more highly paid medical specialties, including radiology and cardiology. That is a political call.

Reading through just a few of the comments revealed this gem:

As someone who is training to be a radiologist, I have mixed feelings about what you’re saying. While you are correct that Radiologists and Cardiologists do make more than primary care physicians, there is also a reason for that. Specifically, it is that when primary care physicians can’t figure something out, who do they turn to? SPECIALISTS. We train for MUCH longer than primary care docs (often times greater than twice as long) and this is the reason that we are paid more per RVU. We also have more responsibility; in fact, the levels of responsibility are worlds apart. While a primary care doctor can always turn to a specialist for help, we have no one to turn to… The buck stops with us, we are the final authority.

Wow. Sounds like our friend suffering amongst us “less skilled physicians” from last year.

Subsequently, CATHERINE RAMPELL cracked open the Congressional Research Service’s analysis of the OECD database to find out “How Much Do Doctors in Other Countries Make?”

As a country’s wealth rises, so should doctors’ pay. But even accounting for this trend, the United States pays doctors more than its wealth would predict.

According to this model, the 2007 report says, “The U.S. position above the trendline indicates that specialists are paid approximately $50,000 more than would be predicted by the high U.S. GDP. General practitioners are paid roughly $30,000 more than the U.S. GDP would predict, and nurses are paid $8,000 more.”

But it’s important to keep in mind, the report notes, that health care professionals in other O.E.C.D. countries pay much less (if anything) for their medical educations than do their American counterparts. In other words, doctors and nurses in the rest of the industrialized world start their medical careers with much less student loan debt compared to medical graduates in the United States.

Rampell also links to the MGMA report on American physician income, which you may find either eye opening or eye popping.

Uwe on Reform :Hits Nails on Head

“President Obama’s plan to overhaul the nation’s health care system hangs in the balance. Uwe Reinhardt, professor of economics and public affairs at Princeton University, says it won’t make much difference to most Americans if the legislation dies. But Gail Wilensky, a health care economist who served in the administration of President George H.W. Bush, says she believes there needs to be an overhaul of the system because the soaring costs are unsustainable.”

Uwe Reinhardt nails it again. You can click away when Wilensky atarts.

Lose Valerie Jarret, bring in Uwe. (And bring in Krugman for Geithner while we’re at it!)