Tag: Global budget

Hospital care: Three major inequities
A post in Medicine and Social Justice by Josh Freeman, MD, Chair of the Department of Family Medicine and the University of Kansas Medical Center, highlights three major inequities in the US health care system when it comes to hospital care. He argues that these inequities stem from the fact that hospitals compete for money rather than to promote the health of Americans. This needs to end.

Hospitals should have as their first priority delivering high-value health care. As it is, rural hospitals are hanging on for their lives, usually losing money. But, in big cities, where you find the majority of hospitals, doctors and patients, hospitals are focused on bringing in the revenues.

What do hospitals do to maximize revenues? They open “Cancer Centers” and “Heart Centers” and “Centers for Orthopedic Surgery.” They give the maternity ward and other primary care services short shrift.

Yes, cancer, heart and orthopedic surgery centers are good things. But, if there are a lot of hospitals in a metropolitan area, every one of them does not need these specialty care centers. Right now, there are too many of them in urban settings. There is a need for more basic, lower cost care.

Our health care system is not designed first and foremost to meet the needs of the people it serves. If it were, there wouldn’t be as many cancer centers in big cities. There would be more primary care and mental health providers.

In addition, people to often don’t receive hospital care because they can’t afford it. They are uninsured or “underinsured,” which means that they have coverage, but out-of-pocket costs are so high that they skip or delay care. Competition is not working; rather, it creates these inequities:
1. Only the well-insured and well off are able to get care. Hospitals don’t want to serve people who can’t pay for their services.
2. The emphasis is on the most profitable services. It is not easy to find hospitals that have well-funded centers for primary care, maternity and mental health services.
3. Much care is only available in major cities. Hospitals in rural America and small towns are dying, closing their doors.
In sum, when it comes to health care, we discriminate against people with poor insurance and low incomes, we discriminate against people with health care needs that don’t pay well, and we discriminate against people who don’t live in a major metropolis.

One recent study found that mortality rates increase in rural communities that lose their hospitals. Inpatient deaths increase by 8.7 percent. There is no measurable impact on mortality rates in urban settings.

The solution is simple. We should pay hospitals based on a global budget in order to change their incentives and not make profitable services their first priority. And, we should guarantee everyone in the US health care coverage.

In the meantime, we should increase the amount we pay for primary and mental health care services and decrease the amount we pay for specialty care. People should be able to get whatever care they need, regardless of the amount health care providers are paid for the care. And, if you’re donating money to a hospital, earmark it to cover primary care services or the cost of care for the uninsured.

Here’s more from Just Care:
September 9, 2020
Hospital rates out of control with private health insurance
Hospital rates are out of control for people with private health insurance. Medicare, in sharp contrast to private health insurers, has the power to rein in provider rates for its recipients, even when hospitals have monopoly power. Consequently, private insurers today pay hospitals much higher rates than Medicare, and health care costs are unsustainable for working Americans.

On average, it costs more than $2,500 a day to stay overnight in the hospital. Prices keep going up, and more people are choosing not to get care. Congress needs to rein in hospital rates to ensure Americans under 65 access to care–and, soon. The higher these rates go, the more people will forego needed care and the harder it will be to rein in hospital rates.

Higher hospital rates mean higher expenses–more staff, higher salaries, more investments. So, if Congress decides to step in to control these rates, reducing rates could mean layoffs and other stressors on health care providers. N.B. Congress has no plans to do so as of yet.

To date, hospitals have gambled on generating the revenues they need for fancy equipment and high executive salaries from private health insurers. For some time they did well. Now, it looks as if many of them made a bad calculation.

The novel coronavirus has cut into hospital revenues significantly. Even before the novel coronavirus pandemic, many hospitals–particularly rural hospitals–were closing down, and now many more hospitals are folding. If the hospitals operated on global budgets, with government guaranteed annual income, the future of hospitals would be far more secure.

How do private insurer rates compare with Medicare rates today? Kaiser Family Foundation (KFF) looked at 19 studies.

Because private health insurers and providers are able to claim their data as proprietary, there is no national data on private health insurer rates to analyze and compare with Medicare rates. Researchers have only been able to compare some private insurer rates to Medicare rates; but, hospitals generally prohibit them from disclosing the specific rates particular providers are charging particular insurers.

KFF’s key findings:
1. Overall, private insurers pay nearly 50 percent more than Medicare for physician services.
2. Private insurers pay more than two and a half times Medicare rates for outpatient hospital services (264 percent) and nearly twice as much as Medicare (189 percent) for inpatient hospital services.
3. Private insurers pay about twice Medicare (199 percent) for hospital services overall.
Allowing hospitals and doctors to keep raising rates is hurting Americans, keeping them from affording health insurance and from getting needed care. If Congress stepped in and negotiated lower hospital and doctor rates for everyone, many providers likely would claim they could not manage. But, right now, they have less incentive to operate efficiently than they would if their rates came down.

Hospital rates make no sense. Within a community and throughout the country, hospital rates vary wildly. Market power influences rates significantly. Bigger hospitals might operate more efficiently than smaller hospitals, but they also generally command higher rates from private health insurers than smaller hospitals. They have more market power. In areas where private insurers have greater market power, they are able to negotiate lower rates.

Hospitals with strong market power today deploy it to command high prices from private health insurers because they can, even if they are non-profit. Their goal is to maximize revenues. The rates they charge private health insurers are not high because of Medicare rates. They seek the highest possible rates regardless of what Medicare pays them.

Kaiser Family Foundation explains that “much of the literature suggests that providers negotiate prices with private insurers irrespective of Medicare rates, and that providers with substantial market power are best positioned to command high prices, allowing them to evade financial pressure to become more efficient.”

Hospitals that operate efficiently manage with Medicare rates. MedPAC, the independent agency that provides Congress with policy advice on Medicare, believes that hospitals that claim they lose money on Medicare could do a better job of containing costs.

The federal government could ensure the financial viability of hospitals if it enacted Medicare for all. Hospitals would be assured annual revenues through global budgets. And, they would save a huge amount in administrative expenses, largely from not engaging in hundreds of negotiations with private health insurers. Most important, health care spending would fall and everyone in the US would be guaranteed access to the health care they need.

Here’s more from Just Care:
July 9, 2020
Nine takeaways for the US from other health care systems
Dylan Scott at Vox traveled to Taiwan, Australia and the Netherlands to gain a better understanding of their health care systems and how they differ from ours. Here are his nine takeaways.

1. The US is the only developed country that is not committed to universal health care.

Unlike Taiwan, Australia, the Netherlands and the UK, policymakers in the US have not reached consensus that the federal government should guarantee everyone in the country access to health care, much less that health care should be affordable to all.

2. There’s no perfect universal health care system.

Every other developed country covers everyone, and their residents pay far less for their care than we do in the US. Still, some countries do not have enough health care providers and costs are rising.

Australia recently adopted a two-tiered system, offering everyone public health insurance and those who can afford it, private insurance. The government is investing a lot of money in the private system. As a result, there is less needed funding for the public system. Also, there are longer wait times for people in the public system.

Meanwhile, the Dutch system now relies on private insurers which has driven up health care spending. Administrative costs are higher, deductibles are now almost $500, and health care is less affordable for people.

3. Governments spend a lot to guarantee their citizens health care.

In other countries, governments negotiate health care prices, set rules for what is covered and when and how much people can be charged for copays. Private insurers are really claims processors, without the liberty to decide how care is covered, unlike in the US, where they must each negotiate their own rates and have tremendous freedom to restrict access to care and set copay amounts.

4. To ensure health care affordability, governments impose cost controls.

Some countries rely on global budgets–they set aside a fixed amount to pay for health care each year. The Australian government sets prices for doctors’ services. And, Australia has a system for evaluating whether a prescription drug offers value.

Moreover, governments tend to rely on national electronic health records databases to see what’s working and not. Governments determine what care is covered, at what price, and how much patients will pay for their care. Insurers operate more like claims processors. They cannot set their own rules.

5. Many countries are struggling to deliver and cover long-term care.

Long-term care costs for older adults and people with disabilities are growing. And, it’s not clear whether and how countries will deliver the care people need or help to cover the costs of long-term care.

The US government today spends far less on long-term care than every western European country except Portugal.

6. Private insurance is sometimes part of the health care system, but with lots of controls and challenges.

Scott sees private insurance as a political compromise in other countries, not a policy solution.

The insurance industry has a lot of financial and political power to sway policy in their favor. In Australia, private insurance gives people with means more health care choices, but it has hurt everyone else to some degree.

7. Physicians will never be completely happy with a universal health care system.

Curiously, in every country almost twice as many doctors or more are satisfied or very satisfied with their health care system than are dissatisfied or very dissatisfied. Only Germany has less doctor satisfaction (63 percent) than the US (65 percent) and more dissatisfaction (36 percent v. 34 percent). Norway had the highest doctor satisfaction (91 percent), with Australia close behind (88 percent).

8. Health insurance coverage is not the same as guaranteeing people the health care they need.

Health care delivery system reforms need to be part of the picture if you want everyone to have access to care. Coverage is not enough. For example, some underserved regions might need hospitals or specialists. Or, as in the Netherlands, doctors might be required to provide care during the evening and weekends and make home visits. To share the load, doctors formed cooperatives.

9. What works in the US might be different from what works in other countries.

The US effectively has more than 50 health care systems. It has one for people with Medicare, one for people with Medicaid, one for Vets, and one in each state. And, the US has substantial racial disparities in our health care system.

Health care in the US varies depending upon which system you are in, your race and your ability to pay. And, it is profoundly inequitable. So long as policymakers are beholden to the corporate health insurers, it’s not likely much will change.

Here’s more from Just Care:
February 19, 2020