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The Health insurance exchanges enacted by the PPACA (i.e., ‘Health Reform’) are meant to bring competition to the small group and individual markets.  These exchanges will begin in 2014.  A GAO survey of States, however, found that the current small group health insurance market is very concentrated.

• There is significant market concentration.  Twenty-seven states reported that the largest health insurer had more than 40 percent of the market whereas in only 12 states did the dominant carrier own less than 40 percent of the market.  In 23 states, the top five plans captured 90 percent of more of the small group plan market share compared to only 16 where the top five carriers captures less than 90 percent of the market share.
  
• Blue Cross/Blue Shield is the dominant player.  Of the 44 states reporting this information, BCBS was the largest carrier for small group health insurance plans for 36 of the states and was the second largest carrier for 3 states.  In only 5 of the states did BCBS non rank as one of the top-2 carriers in terms of market share.

Health exchanges may not increase competition, but instead be a boon for the established players in the individual and small group markets.

What is the Basic Health Plan (BHP)? Stan Dorn of the Urban Institute explains:

The Patient Protection and Affordable Care Act (ACA) offers states the option to implement the Basic Health Program (BHP). BHP gives states 95 percent of what the federal government would have spent on tax credits and subsidies for out-of-pocket costs for two groups:

• Adults with income between 133 and 200 percent of the federal poverty level (FPL); and
• Legally resident immigrants with incomes below 133 percent FPL whose immigration status disqualifies them from federally matched Medicaid.

If a state implements BHP, these two groups of consumers cannot receive subsidized insurance in the exchange. Instead, the state covers them by contracting with health plans or providers. Such contracts must provide at least the minimum essential benefits under ACA, and consumers may not be charged more than what they would have paid in the exchange.

Source:

• Stan Dorn, “The Basic Health Program Option under Federal Health Reform:Issues for Consumers and States” Urban Institute, March 2011.

The best diseases, from a business point of view, would be those that cause lingering illnesses. Ideally–that is, for maximum profit–the patient should either get well or die just before all of his or her money runs out. It’s a fine calculation.

• Crake, from Oryx and Crake: A Novel by Margaret Atwood.

Its has been well established that medical errors are a serious problem in modern health care.  One study found that medical errors kill between 50k and 100k annually and another found that 2.9% of people who enter the hospital are actually harmed by the care they receive.  The most recent issue of  Health Affairs, however, has found that not only is there still much work to be done, but the scale of the problem may be even larger than previously anticipated.

Some of the key findings from the press release include the following:

• Claussen et al. (2011) “…compared three methods for detecting adverse events in hospitalized patients, including the Institute’s own Global Trigger Tool. The study drew on comparable samples of patients from three leading hospitals that had undertaken quality and safety improvement efforts. Among the 795 patient records reviewed, voluntary reporting detected four events, the Agency for Healthcare Research and Quality (AHRQ) Indicators detected 35, and the Global Trigger Tool detected 354 events, ten times more than the AHRQ method.  In other words, the AHRQ indicators and voluntary reporting missed more than 90 percent of adverse events identified by the Global Trigger Tool.  If anything, the researchers say, their findings are conservative, because they rely on medical record review, which would not detect as many adverse events as direct, real-time observation would.
• Van Den Bos et al. (2011) estimate that “…the annual cost of measurable preventable medical errors that harm patients to be $17.1 billion…”
• Werner et al. (2011) examines whether P4P can help improve quality. They examine the effect of Medicare’s largest pay-for-performance hospital demonstration project, the CMS/Premier Hospital Quality Incentive Demonstration. “The findings suggest that, while hospital quality did improve under the demonstration, by the end of the experiment, other hospitals not in the demonstration had caught up.”

Most people think medical care is supposed to improve your health, not diminish it.  Reducing medical errors may be the single most important issue to improve medical quality now and in the future.

Sources:

• David C. Classen, Roger Resar, Frances Griffin, Frank Federico, Terri Frankel, Nancy Kimmel, John C. Whittington, Allan Frankel, Andrew Seger, and Brent C. James. ‘Global Trigger Tool’ Shows That Adverse Events In Hospitals May Be Ten Times Greater Than Previously Measured. Health Aff April 2011 30:4581-589.
• Jill Van Den Bos, Karan Rustagi, Travis Gray, Michael Halford, Eva Ziemkiewicz and Jonathan Shreve. The $17.1 Billion Problem: The Annual Cost Of Measurable Medical Errors.” Health Aff April 2011 vol. 30 no. 4 596-603.
• Rachel M. Werner, Jonathan T. Kolstad, Elizabeth A. Stuart and Daniel Polsky. “The Effect Of Pay-For-Performance In Hospitals: Lessons For Quality Improvement” Health Aff April 2011 vol. 30 no. 4 690-698.

The MassHealth P4P program was implemented in 2008.  The program began with a P4P incentive for pneumonia treatment and a pay-for-reporting incentive for surgical infection prevention.  In 2009, hospitals were eligible for P4P payments for both measures. Nevertheless, the effect of the MassHealth on P4P was practically non-existent. What happened? Today we review an article by Ryan and Blumstein (2011) to find out.
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An excerpt from Monocle Magazine‘s February Issue, p. 58 in which I am quoted:

“Syracuse is a healthcare hub.  A state teaching hospital and a non-profit community hospital, two of the city’s four largest employers, for a stable base of high-paying jobs in hard times.  But  having a hospital as a leading employer can often be a bad sign: the local community is overwhelmed by an ageing population.

The US healthcare overhaul will change the terrain for cities such as Syracuse, which are likely to see their hospitals forced to consolidate, economise or languish under the new rules.  Community hospitals have struggled financially for years, providing a safety net for millions of uninsured patients who could not afford care.  Hospital revenue will increase when more Americans receive insurance coverage from public exchanges from 2014.  The trade-off is that the payment system now rewards hospitals that produce better results at lower costs.

To do more with less, hospitals have to cut their bureaucracies and better coordinate and streamline care.

Even if hospitals manage to trim costs, it will be cold comfort to the local economy.  ”It’s not like a community hospital is going to become the Google of local healthcare,” says healthcare economist Jason Shafrin of research firm Acumen.  A solid reputation for good healthcare is a nice perk for a city to have but not a big draw for business.  Cities such as Syracuse have to revive other parts of their economy rather than wait for hospitals to save them.”

Source: The Curse of Care: A local economy too reliant upon the healthcare business. Monocle, February 2010, Issue 40, p. 58.

Logue: They’re idiots.
Prince: They’ve all been knighted.
Logue: Makes it official then.

• From The King’s Speech

Where do we spend our health care dollars?  A paper by Conway et al. in Health Services Research examines this question using data from the Medical Expenditure Panel Survey (MEPS) from 2007.  Typically, statistics break down health expenditures by payer (e.g., Medicare, Medicaid, private insurance) or setting (e.g., inpatient, outpatient, nursing home). “However, this is not how patients experience care. Patients have a chronic disease, pregnancy, trauma, or some other life event.”

Instead, Conway and co-authors use a “patient-centered” hierarchy to organize health care costs. The chart below gives a breakdown of costs into Conway’s 7 patient-centered categories.

It is clear that chronic conditions make up the greatest share of health spending. This finding is especially true for older individuals. In fact, fifty one percent of health spending for Americans aged 45-64 goes to treat chronic conditions and for seniors 65 and older, this figure rises to 56 percent.
Source:

• Conway, P., Goodrich, K., Machlin, S., Sasse, B. and Cohen, J. , Patient-Centered Care Categorization of U.S. Health Care Expenditures. Health Services Research, no. doi: 10.1111/j.1475-6773.2010.01212.x