Keeping the “best care” option out of the health spending equation

Original Reporting | By Mike Alberti |

But both acknowledged that, in many cases, all of those procedures are extremely beneficial. “It’s very hard to think of any service in common use that doesn’t in some cases provide very high benefits,” Ho said.

Aaron has advocated, in particular, for the “Cadillac tax,” which the Center for Medicare and Medicaid Services has estimated will reduce total health care costs modestly when it goes into effect in 2018. But when asked whether he is sure that all of the procedures that will be forgone because of the policy will have been wasteful, Aaron acknowledged that he was not.

“There is always the risk that in an effort to squeeze things out generally, you’re going to squeeze out some things that should be done,” Aaron said. “We have no way [to reduce overutilization] surgically.”

Most proponents of squeezing utilization interviewed by Remapping Debate acknowledged that underutilization was a significant problem, and that most policies — like the Cadillac tax — aimed at reducing overutilization did nothing to address it.

When asked whether he believed that most Americans were receiving enough health care, Jonathan Gruber, an economist at the Massachusetts Institute of Technology and one of the leading champions of the Cadillac tax, said “Of course millions of people would benefit from more care.”

Though he said that it was important to focus on the lack of access to health care that is experienced by people with no insurance coverage, Gruber said that underutilization is “the wrong issue.” The “right issue” to focus on, he claimed, is overutilization.

In several interviews with proponents of reducing utilization, it became clear that they were beginning from an assumption that reducing utilization is an imperative because reducing costs is an imperative.

We can do it — cheaply!

Health care plans that supposedly provide “Cadillac” care have been under attack for years. Charging that users of those plans get overly generous tax subsidies (through the receipt of non-taxable health insurance benefits) for overly generous health insurance, and waving the banner of “efficiency,” those seeking to ratchet down benefits successfully pushed a “Cadillac tax” as part of the Affordable Care Act. The Cadillac tax will impose an annual excise tax of 40 percent on the value of plans that exceed a specified cap, ($10,200 for individuals and $27,500 for families in 2018) which will rise each year at a rate slightly greater than that of inflation. One hope of Cadillac tax advocates is that insurance companies will move away from providing Cadillac plans.

Jonathan Skinner is a professor of economics who is affiliated with the Dartmouth Institute for Health Policy and Clinical Practice and has written extensively about overutilization of health care. Skinner does acknowledge that under-utilization of medical services is a problem, but believes that insurance companies are “trying to figure out how to make sure that the stuff that patients really need [is given to them], and to try to discourage the stuff that they don’t need.”

But what is the evidence that insurance companies would try to save money by distinguishing between cutting fat and cutting muscle? Is there any evidence that insurance companies are perfectly rational actors? Skinner, laughing, said that “they’d like to be,” but in an answer to a follow-up email inquiry asking about an alternative system that would target waste and spare necessary care (in contrast to the more blunt tool of either a Cadillac tax or acting on the assumption that the only problem is overutilization), he wrote that “I think that accountable care organizations” — groups made up of physicians and other health care providers that don’t bill on the basis of individual services rendered, but rather receive a fixed amount of money to provide all necessary medical care to a defined number of patients — “are probably the best option.”

Would examining the costs and benefits of providing “gold standard” care to everyone enhance the debate over what direction to take in health care policy? Repeated inquiries to Skinner did not yield a direct answer.

In one email exchange, Skinner was asked about the public policy utility of estimating the cost of providing the highest quality of care to all. “I don’t understand the idea of the ‘highest possible quality,’” he responded. “Think of cars — what’s the highest possible quality of cars? I think a Camry does the job pretty well, but you might like a Lexus and someone else might like a Maserati.”

Pursuing this line of inquiry, Remapping Debate wrote Skinner back to ask, “Unlike the car analogy, each person needs the fullest available (or “luxury”) complement of valves functioning perfectly for the longest period of time, doesn’t he?”

Skinner’s response: “No — every treatment has side effects and risks, and not everyone wants Maserati healthcare — I don’t want it (again because of the risks and side-effects).”

Skinner did ultimately write in a follow-on email exchange, “What the Mayo Clinic does — I’ll define that as gold-standard care.  And that’s cheap.” 

What remains entirely unproven is whether the replication of Mayo Clinic quality care for a general population that is itself differently situated from Mayo’s patients and deals with health care providers differently situated from Mayo itself would be nearly as “cheap.”

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