“The Third Rail of Payment Reform”–Tackling Wide Variations in How Much Providers Charge


Why do some hospitals and doctors charge far more than others for exactly the same routine procedure?   “Because they can; it’s not any more sophisticated than that,” says Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and … Continue reading

Health Beat Hosts Health Wonk Review

Today, Health Beat is hosting Health Wonk Review, a biweekly compendium of the best of the health policy blogs. More than two dozen health policy, infrastructure, insurance, technology, and managed care bloggers participate by contributing their best recent blog postings to a roving digest, with each issue hosted at a different participant’s blog.

Thanks to all of you for your submissions. I couldn’t do justice to all of them, but here’s a sampling of some of the best posts about health care on the blogosphere:

At Health Care Policy and Marketplace Review Robert Laszewski takes on Mitt Romney’s assertion that there are “pots of money” in the states –enough to allow states to follow Massachusetts’ initiative and fund health care reform without raising taxes. Laszewski demolishes the argument, pointing out that even Massachusetts doesn’t have enough money to follow Massachusetts’s initiative. That’s why the state has had to exempt some citizens from the mandate that everyone buy insurance.

On Health Access California, Anthony Wright offers the clearest explanation I’ve seen of Governor Schwarzenegger’s plan for reforming care in California, and its merits and limitations when compared to both HRC’s proposal and the Romney plan in Massachusetts.

On Physician Executive, Zagreus Ammon’s ambitious post “Defining Universal Health Care” begins by addressing the theory that each of us is responsible  for our own health—i.e. “that people do well because they make good choices and people do poorly because of poor choices.”

Here Ammon is responding to Peter Huber of Manhattan Institute fame and his editorial in IBD (Investors’ Business Daily) arguing that universal healthcare is an idle dream because eventually, the “pocket-book healthy” (read: wealthy) will get tired of paying for the “health-careless people” who don’t “live informed, disciplined lives”(read: less well-educated and poorer.) The righteous would rather see that money funneled into products that would provide them with “better hair, skin and sex,” Stern suggests.  For a more generous synopsis of Huber’s argument, see H.G. Stern’s rave review on Insureblog

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Why Aren’t More Students Applying To Medical School?

Did you know that there are only two applicants for every place in U.S. medical schools?

In Canada, surprisingly, close to four students apply for each opening. The training in the two countries is very similar; indeed, the Association of American Medical Colleges (AAMC) accredits medical schools in both countries.  And, in the U.S., at the high-end, physicians  can hope to earn far more than Canadian doctors.

Why then do so few Americans apply to medical school?

The answer is that we have priced a medical education well beyond the reach of most middle-class students.  In 2004, tuition and fees at a public medical school averaged $16,153. Students who attended a private school paid $32,588 according to a 2005 study published in The New England Journal of Medicine. 

The author, Dr. Gail Morrison, Vice Dean for Education at University of Pennsylvania School of Medicine, tacks on $20,000 to $25,000 a year for living expenses, books and equipment to calculate that the total cost of four years of medical education comes to a heady $140,000 for public schools and $225,000 for private schools.  I’d add that, in many American cities, students would be hard-pressed to cover rent, food, clothing, utilities and transportation for $20,000 a year—let alone books and equipment.

This helps explain why 60 percent of all medical students come from the wealthiest one-fifth of all U.S. families. Another 20 percent come from families lucky enough to be on the fourth step of a five step ladder.

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The Ten Most Overused Medical Tests and Treatments

I often write about how difficult it is to evaluate the quality of health care.  There is no Consumer Reports (CR) for healthcare, I argue, because while CR can rate mid-priced refrigerators briskly and clearly, in a way that makes comparisons easy, it is often all but impossible—even for a physician—to be positive of the relative benefits of a great many medical treatments. 

But if it’s hard to sort out the “best” healthcare, it may be easier to spot both negligent and unnecessary care.  As a hospital CEO once told me, “Our patients know whether they like the food, and the views, and whether the nurses are pleasant. They really have no way of knowing whether they are getting very good care or mediocre care . . . Though,” he added, “they are more likely to be able to tell if they are getting bad care.”

With that thought in mind, it might be worth taking a look at Consumer Report’s list of the 10 most overused medical tests and treatments. Thanks to  Gary Schwitzer of the University of Minnesota’s  School of Journalism and Mass Communication for calling attention to this list on his always interesting Schwitzer Health News Blog.
As Schwitzer points out, “You can quibble with the list, but you can’t help but commend CR for raising public awareness about the medical arms race.  And this list is just part of a broader special section on overspending on overtreatment.”

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Shared Decision Making

In my last post, I talked about the uncertainties of medicine, and suggested that the relationship between doctor and patient must be built on trust.  (See “A Transaction Based On Trust”). I argued that this is why the consumer-driven model of medicine doesn’t work. It assumes that the doctor is a retailer selling his services and that as his customer the consumer must demand the best quality care at the lowest price. Immediately the relationship between buyer and seller begins to sound adversarial, just as it is in the commercial marketplace where “caveat emptor” always applies. 

But the health care market is not like other market places, and the doctor is not a retailer. He or she is a professional who has taken a pledge to put the patient’s interests ahead of his own interests.  For the transaction to go forward, the patient has to believe this. Who would go under the knife, or submit to any painful or invasive procedure if he didn’t trust the doctor? 

At the end of that post, I asked, “But what about the uncertainty of medicine. Does this mean that the patient must simply trust that his doctor has “the right answer?”

Not at all. The relationship between patient and doctor must be based on mutual trust. Just as the patient trusts the doctor to act as a professional, the doctor needs to trust the patient enough to be open with him about the uncertainties of the patient’s condition and the pros and cons of the treatments that they are considering.

Sometimes—but not always—the doctor must tell the patient: “In this particular case I can’t be sure what the best treatment would be. But here are the options and here are the risks and benefits of each.”    

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The Real Danger of Socialized Medicine by Niko Karvounis

Last week The Washington Post ran a good opinion piece by Ezekiel J. Emanuel, Director of the Clinical Bioethics Department at NIH (and brother of Congressman Rahm Emanuel) on the insidiousness of labeling any and all positions on health care apart from free market fundamentalism as being “socialized” medicine, doomed to failure.

Emanuel notes that “ ‘socialized medicine’ is when the doctors are state employees; when the hospitals, drugstores, home health agencies and other facilities are owned and controlled by the government…” As Emanuel rightly points out, none of the universal coverage proposals being debated in the U.S. today “can be characterized as socialized medicine. None calls for government ownership or control over U.S. hospitals, drugstores or home health agencies, or for making doctors employees of the federal or state governments.”

This is right on the money—maybe even more so than Emanuel intends. Opponents of “socialized” medicine are wrong three times over: not only do most reformers not want socialized medicine, but even European health care systems (often used as examples of socialized medicine) do not meet the criteria outlined above. Further, publicly-run health care carries with it some significant benefits that are evident right here in the U.S.

To dispel the myth of monolithic government-run European health care, look no further than Germany, where most of the population (88%) receives health care through “sickness funds"–non-profit, third-party pools of money devoted to health services. Sickness funds are built on the principle of “subsidized self-governance”: they receive public funding, but the funds must be financially self-sufficient (i.e. be able to govern themselves) and also allow a high degree of freedom on the part of patients and doctors (the former can choose their doctors and hospitals, and the latter have much flexibility in treatments).

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Race and Health Coverage: Medical Apartheid?

I’ve invited Niko Karvounis, a colleague at The Century Foundation, to guest-blog. Niko is currently a Program Assistant at the Foundation and an Alumnus Senior Fellow with the Roosevelt Institution. His post follows below.


Recently I was handed a report from Bronx Health Reach (BHR) entitled “Separate and Unequal: Medical Apartheid in New York City” that reveals some startling inequities right here in the so-called capital of the world.

Bronx Health Reach is a coalition formed by the Institute for Urban Family Health, with the mission of examining and addressing racial and ethnic health disparities in the southwest Bronx portion of NYC.

At the local level in the Big Apple, these disparities play out through discriminatory care tied to health coverage. Since “health insurance is a major determinant of access to medical care,” poor insurance increases the probability of “delayed care and poorer health outcomes.” And in NYC, health insurance status is closely linked to race: “52 percent of blacks, 63 percent of Latinos” and only “24 percent of whites are uninsured or publicly insured.”  This skewed distribution of health coverage ultimately “creates a de facto sorting of patients by race.”

The most compelling evidence of apartheid can be found in the records of medical institutions which reveal the characteristics of patients that they admit and discharge.

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The Hospital Building Boom: Can We Afford the Waterfalls?

In Money-Driven Medicine: The Real Reason Health Care Costs So Much I talk about the nationwide hospital building boom—and ask two questions: Can we afford it? Do we need it?

In many regions, suburban hospitals have been reaching for big-city business. “What we have to do to maintain our position in the markets is to keep adding services,” explained Westchester Medical Center CEO Ed Stolzenberg. “That’s the whole reason we went into liver transplants.”

Did the resident of Westchester Country (just outside of New York City) need a local hospital doing liver transplants? Just how many transplants would a Westchester hospital do? Would such patients be better off at a high-volume medical center in Manhattan where “practice makes perfect”?

Those questions didn’t seem to come up.  The CEO knew that transplants would raise the hospital’s image.

Across the nation, as not-for-profit hospitals set out to invest in new construction and equipment, decisions seemed to be market-driven—but  not necessarily driven by the local population’s medical needs.  Instead, they were powered by the hospital’s need for market-share.

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