The President's Town Hall Meeting

The President held a town hall meeting at the White House yesterday that was given more than an hour of time on network television. This reflects the importance of the topic at hand--health care reform. There were a number of interesting comments made, although one observer pointed out that there was really nothing new and earth shaking that was discussed.

What did catch my attention, even if it was not so new, was the statement that people who are satisfied with their current insurance and their current doctor (which, for my nursing friends, will hopefully translate into a more general term, "provider") should not have to make a change. However, the President also used the cliche about the devil you know being better than the one you don't--in other words even if we are not thrilled with our current health insurance or provider, we know the problems with what we have and we fear what we may get instead. If we combine these two ideas, despite new choices being offered to those who have no other option, those with a choice may make the choice to stay in their current insurance plan with their current providers. If so, nothing about those people's health care utilization is likely to change.

I should say--at first. We will probably need everyone's health care utilization to change in some way if we are going to control costs in the long run. One way to get around the possibility that little change will occur for people who don't change insurers or providers is to change incentives at other levels. For instance, incentives for employers, insurers, providers, and facilities could change. This would be sort of a "behind the scenes" approach to making change.

With that in mind, politicians and the public will have to figure out whether it is ultimately preferable for the public to face new incentives (whatever they may be) head on or to face similar incentives for themselves but find that they will be asking their providers why things are changing around them as providers' incentives change.

Click here for an audio version of the blog.

Prevention of Blindness

I am all for the prevention of blindness and the provision of services for those who have uncorrectable vision impairments to make individuals with this situation as self-sufficient as possible. I have been involved in estimates of the costs of vision impairment around the world and in the United States. My colleagues have done great work in Australia, in the UK, and now in Canada. A description of the recently completed work in Canada (done by an excellent set of researchers from Australia) can be found at http://www.cbc.ca/health/story/2009/06/23/vision-loss-cost.html.

The story is similar to what has been found in other countries with aging societies. The number of blind individuals or individuals with vision impairment will increase as society ages. The costs per person are high, and the costs per person are distributed between direct costs of medical care, costs of support, and costs due to lost productivity.

The news article points out that Canada made a commitment in 2003 to develop a national vision plan by 2005 and implement by 2007. Interestingly, they have not completed that task. We, in the United States, are not the only ones who take a long time to implement policy.

Finally, the report called for a plan with four criteria, the first of which is "Cost-effective preventive measures". A key thing to recognize when academic types talk about cost-effective preventive measures is that they will not always be cost saving. Certainly, for the person for whom something is prevented--it saves them costs. Certainly, for society as a whole, we'll end up paying less for costs related to a given condition. However, the costs of prevention (particularly if it is not well targeted) may exceed the cost savings.

Does this mean we should only adopt measures that save money? I don't think so. I do think that we need to be aware of whether money will be saved and whether we think that spending more money is worth the benefits. And, before you think that I am picking on vision problems, I can assure you I am not. I would ask the same question about HIV prevention, flu prevention, or vision problem prevention.

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The Health Plan No One is Debating

Today, I found a piece on the Wall Street Journal website that mentioned a health plan that we all have missed. You can read about it at http://www.cbpp.org/cms/?fa=view&id=674. It is a nice description of the proposed legislation. The proposal is bipartisan. The proposal has been estimated to be budget neutral through 2014. The plan would rely on group insurance and competition but through state level pooling rather than employers. It would even result in 99% of Americans being covered. It has a lot to offer.

However, it may be ignored for several reasons. First, neither of the sponsors are really "big name" senators. Second, it is a true overhaul of the current system. Third, despite being a real change, it is not single payer so those who are supporting that approach are not in favor. Even if this quiet little bill were "just right" for the country, it is probably "just wrong" for politics.

It shows how irrational our system of political debate can be.

Value Based Benefit Design

Here is an interesting link that describes value-based benefit design (http://www.commonwealthfund.org/Content/Newsletters/Purchasing-High-Performance/2009/June-18-2009/Feature-Articles/Its-All-About-Value-Based-Benefit-Design.aspx). In short, this means providing incentives to use specific types of care and not others. This type of benefit design could be used by a single payer or in a competitive market. in a competitive market there would be stronger incentives to find the best value-based insurance design to attract people to your plan to make the most money. If consumers understand what they are getting, this could create quite an array of choices that would make sense for different populations and allow people choices.

The interesting thing about value-based insurance design is that as we understand what really works (or doesn't work) for specific conditions we can design ever more specific benefits (inclusions and exclusions of what will be covered or what will be covered more generously) that are more specific to individuals. Some people may not find that appealing. Nevertheless, at a population level this could be very useful.

The link above gives a couple of examples. One is drug reimbursement to encourage generics. That is nothing new. Another is a set of incentives to encourage patients (and their providers who recommend procedures) to use minimally invasive surgery when the option is available. That would seem like an obvious choice for most patients. The key is that the doctors have to understand the incentives as well and review with the patients the options that they have and what each option will cost.

This example actually illustrates the value of either single payer or retention of something closer to our current system. If each plan or employer can pick and choose what it wants to encourage, that would allow lots of choice and allow people with the right information in easily understandable format to find the plan that is closest to their ideal. However, more options means more time that physicians would have to spend reviewing with each patient to make the right decision for the patient based on incentives. One set of rules might be easier.

Nevertheless, this is not something that has made the news as much but definitely something to watch for once we get beyond the debate of how many payers we will have.

Little Things Can Change the World

I was a coauthor on a paper recently published in the Bulletin of the World Health Organization (http://www.who.int/bulletin/volumes/87/6/08-055673.pdf) about the burden of uncorrected refractive error (i.e. needing glasses but not being able to get them or having an outdated prescription). The Johns Hopkins Bloomberg School of Public Health put out a press release (http://www.jhsph.edu/publichealthnews/press_releases/2009/frick_vision.html), so I don't need to restate either the whole article or the press coverage. The article described how many people around the world don't have needed glasses and projects what the loss of productivity associated with it might be.

What I do want to mention is how easy (and how relatively inexpensive) this would be to fix. Here in the United States we talk about spending $1 trillion over 10 years to insure an extra 16 million people. The team with whom I worked on the paper that in the Bulletin of the WHO has not yet done the "down to the penny" calculations of the expected cost of fixing the problem of people who do not have the glasses they need, but I'll do a back of the envelope calculation here and then update when we have real numbers.

In the United States we can get glasses for as little as $50 for a cheap pair of glasses or spend hundreds of dollars for a fancy pair with lots of bells and whistles. However, there are places around the world where people can get glasses for as little as $5 or $10 per pair--perhaps a total of $30 by the time you pay the labor to fit them. We estimated a total of 158.1 million people didn't have the right glasses--if they had any. Even if we had to spend $100 per person, this would be a total of only $16 billion. And, this would not need to be done every year. At lower costs per person it may be less than $1 billion to solve the entire problem that affects more people around the world than the total number of uninsured in the United States.

So, there are some problems that have the potential to be solved for relatively small amounts of money in comparison to what we have been discussing in the United States for the health care system. Sometimes we would do well to think about the small problems we can solve (but that may be less exciting) in addition to struggling to solve some really big problems.

"Crowd Out"

One concern with a lot of public plans for health care is referred to in health economics as "crowd out". If we look at the Congressional Budget Office's (CBO's) analysis of the Kennedy-Dodd bill, we see a great example of this.

The bill will end up spending $1 trillion over 10 years. Over 30 million people will be covered under the plan funded by the government. Only 16 million of those will be from those who are uninsured at the present time. That leaves 2/3 of the problem with the uninsured unsolved for spending $1 trillion dollars. We could give every uninsured person (and there are nearly 50 million at this point) $2,000 of care a year for 10 years and spend only $1 trillion. Maybe that would only partially solve the problem for 50 million individuals (i.e. they would still be underinsured), but it would at least provide some coverage for everyone.

However, that is not what the plan is doing. The plan solves about 1/3 of the uninsured problem and then is projected to attract people who have private insurance at present. That is the situation called crowd out. It would be one thing if the government took over all health insurance. However, having a simultaneous public and private system there is a risk that some things will be taken out of the private market's hands (which usually operates more efficiently and has those who benefit from the insurance paying for it) and shifting it to the government which often acts less efficiently and spreads the cost to the taxpayers.

A great example in the past was influenza vaccination--so this really can be said to apply not just to insurance but to health care in general. Before Medicare covered flu shots, about 50% of older adults were getting the shots and paying for it themselves. A decade and a half later we still are not vaccinating all older adults on Medicare. Thus, the majority of what has been spent by the government has been for services that would have been provided anyway.

When we have public policies that only partially solve problems, we should be very careful to look out for "crowd out", assess how much there is likely to be, and assess whether we really want our tax dollars to be used this way.

A few thoughts on the nursing labor market

In addition to having the honor of being on the radio last week, a few other health economists of my generation have been on the radio or TV lately--each locally. One of my colleagues--Joanne Spetz (you can see her faculty profile at http://nurseweb.ucsf.edu/www/ffspetj.htm) was asked to comment on the nurse labor market. I won't claim to represent exactly what she said, but I know this is a hot topic at schools of nursing and among people looking to get back into the work force. So, I'll offer a few comments building on her ideas--have to give credit where credit is due.

For the first time in a long time, some nursing students have been having a more difficult time finding a job. Does this mean the nursing shortage that we have heard about for years is over? No.

Reason #1: Health care is a normal good--excuse the economics jargon. A normal good is one for which more is purchased when incomes go up. Right, now some people are out of a job--income down. Some people are feeling like they have less discretionary income--even if their income is constant or growing a little, the prices of things like electricity and gasoline are going up--that also makes people feel like their incomes are going down. Also, even if people's incomes are constant, they are paying more for health benefits--less to spend after buying health insurance. All of this will lead to less spending on health care if people's health doesn't change. Less being spent on health means we need fewer health care providers, including nurses.

Reason #2: More people are uninsured or having their health insurance benefits cut. This makes people pay more out of pocket. When they pay more out of pocket, they purchase less medical care. Again, this leads to less demand for nurses.

Reason #3: Nurses in the labor force are staying in the workforce longer (i.e. avoiding retirement) or looking for more hours. Nurses who were out of the labor force are returning to the labor force that they were out of when times were flush. All of this leads to more nurses being in the market to provide more hours.

So, with the demand for health care and ultimately nurses going down and the supply of nursing hours going up, we have less of a shortage.

Should states then stop looking to expand nursing faculty and should those who have been planning to go into nursing pull out? Probably not. Here's why:

We expect that sooner or later the economy will turn around. That will result in incomes going up. Policy will likely lead to more people being insured--more on that in a day or two. And, eventually, even if more people were not insured and the economy did not get better, the generation before mine will create a bigger demand for health care than any that has gone away because of the economy. Sooner or later we will need all the nurses that are in the labor force, that are being trained right now, and that will be trained in the near future. While the economic situation has led to some temporary relief of the shortage, the demographic situation will change this in the near future regardless of what happens to the economy.