Two recent news stories highlight how the hidden flow of government health dollars provides cover for public officials who slash funding for the poor while idly watching as wealthy private institutions drain the public treasury.

Faced with a mounting budget crisis, our leaders have cut hundreds of millions from Medicaid, and tens of millions more from block grants to safety net institutions like Cambridge Hospital (disclosure: I work there). As a result, thousands of patients with severe mental illness will find care unavailable, and many of the poor face unaffordable co-payments. At the same time, the Globe tells us that Partners HealthCare (disclosure: I also work there) has used its market muscle to extract higher rates – about 20% above average for the same services, and twice as much as Cambridge Hospital – from private insurers. That’s how Partners has managed to amass huge surpluses in recent years, money they’ve invested in expensive high tech facilities that drive costs ever higher, while studiously avoiding investments in facilities for the chronically mentally ill or other unprofitable patients.

The Partners story may seem disconnected from the state’s budget woes, but its not. Read more…

As the recession (?depression) unfolds, the state’s financial crisis will surely deepen. Inevitably, further health budget cuts lie ahead. Unfortunately, the first round of cuts follows the same pattern pursued by the Patrick administration in the past: loudly declare your concern for the poor, while quietly shredding the health care safety net they depend on.

A little noticed feature of the first stage of health reform shipped additional millions of Medicaid dollars to the rich and powerful teaching hospitals and drained them from primary care. In a widely trumpeted move the state upped Medicaid rates for inpatient care – a change that mainly benefited Partners and other financially healthy institutions that provide expensive tertiary care services. (In 2007, the MGH reported a surplus of $354 million, while Brigham and Women’s Hospital had a surplus of $48 million in the second quarter of 2008). But at the same time Medicaid and free care pool payments for outpatient services were shrunken, dealing a body blow to cash-strapped institutions that provide a large volume of primary care to the poor.

On top of this, the state withheld tens of millions promised in the legislation to Cambridge Health Alliance (CHA) (disclosure – that’s where I work) – the only public hospital system left in the Commonwealth. The cash shortage has already cost CHA millions in interest costs.

The latest round of cuts inflicts further wounds on CHA and Boston Medical Center – the other large safety net provider in eastern Massachusetts. Read more…

As a primary care doctor, I live with one foot in the horse and buggy era and one in the silicon age. I spend most of my time talking to patients and wielding a stethoscope, and I also use the latest high tech gadgets. But the gadgetry is getting out of hand; its overuse threatens patients and is blowing the lid off health care costs. Here’s one example. Last week, when a patient came in complaining of a cough that had lingered longer than usual, I sent him down for a chest x-ray. The x-ray was absolutely normal to my eye, a reading confirmed by the radiologist. But he added one key phrase after the word “normal.” “Consider obtaining a CT scan.”

Now the radiation from a single chest CT is equivalent to about 500 chest x-rays, which carries a real risk of causing cancer down the road. And there’s virtually no evidence that a CT would help a patient like mine. But it would certainly benefit the radiologist. Read more…

With spiraling costs threatening to derail Massachusetts’ health reform, politicians and health policy wonks are rounding up the usual cost-control suspects. Unfortunately, the tired ideas they’re trotting out have virtually no chance of success. Here’s a quick rundown of some things we know don’t work, and a few that do.

1- Computerization – In the 1960s, Lockheed marketed a hospital computing system that was first installed at the Mayo Clinic and then at El Camino Hospital. A 16mm film from that era proclaimed with great fanfare that this system would improve efficiency, eliminate paperwork, improve accuracy, speed communication etc. It proved a disappointment and was quietly abandoned at both hospitals.

Similar rosy claims for electronic medical records have appeared regularly ever since. But despite the fact that virtually all hospital billing and most physician billing is now computerized, the cost savings have never materialized. In fact, paperwork consumes a much higher proportion of health spending now than it did at the dawn of the computer age.

When it’s done right (which it usually isn’t) computerization can help improve the quality of care. But there’s no credible evidence that electronic medical records will lead to substantial cost savings.

2- Prevention – Read more…

Last week the news leaked out from the Patrick administration that public spending for the health reform plan in the coming fiscal year will be about $400 million over the original projections. This follows a $146 million cost overrun in the current year.

Why are such miscalculations the norm? Are the costs of health reform unknowable? Or did politicians (and the media) listen only to the “experts” who told them what they wanted to hear?

As I wrote here several months ago, the Census Bureau has been saying for years that there were far more uninsured in Massachusetts than state leaders cared to admit. But politicians and the economists who advised them stuck to their guns. It turns out the Census Bureau was right. The result is that many more people are eligible for the subsidized coverage than the legislature or governor planned for. And, by the way, the demand for free care from safety-net hospitals and clinics is not dropping as fast as projected, again a result of undercounting the uninsured and ignoring the large number of immigrants who are mostly ineligible for insurance under the reform. Read more…

A study co-authored by regular contributor, Dr. David Himmelstein, finds that well off patients with health insurance are more likely to receive free prescription samples than are low income uninsured patients. The study is in this month’s issue of the American Journal of Public Health.

While the health reform bill was still being debated, Blue Cross and Partners Healthcare (the parent corporation for Mass General and Brigham and Women’s hospitals, among others) teamed up in a formidable lobbying alliance. These are surely the two most powerful forces in Massachusetts healthcare, and their lobbying efforts didn’t go for naught.

Blue Cross’ gain from the law was easy to discern. The state required the uninsured to buy private insurers’ policies, opening up a large new market. Blue Cross has been making more than a million dollars a day. Partner’s influence was subtler, largely hidden from public view, but no less rewarding. In its fine print, Chapter 58 shifted tens of millions of hospital dollars from struggling safety net institutions to the large tertiary care hospitals like the MGH and Brigham and Women’ that were already flush with cash. Read more…

The Ontario Health Insurance Plan (OHIP), which covers about 12 million residents of that Canadian province, employs roughly 1500 people. The Connector has 35.6 FTEs. It helps arrange coverage for the 30,000 people with private insurance purchased through the Commonwealth Choice program; 23,000 who get partially subsidized coverage under Commonwealth Care; and 92,000 low income individuals signed up for free insurance. That’s a total of 145,000 people. In other words, the Connector employs twice as many (2.5) people per 10,000 enrollees as OHIP (1.2).
That comparison doesn’t sound too bad, until you realize that OHIP actually pays all of the bills for care in Ontario and administers virtually the entire health care financing system. The Connector merely serves as a glorified insurance broker, signing people up for coverage with plans like Blue Cross and Harvard Pilgrim. So on top of the 4% to 5% cut of every premium dollar that the Connector takes, Blue Cross and Harvard Pilgrim take their 15%. (I can’t tell you what Tufts’ share is – their annual report for 2006 left out the figures – though it does let slip that its net worth rose by $96 million even as enrollment fell). Read more…

How many people are uninsured in Massachusetts? Each year around Labor Day we get dueling answers; one from the U.S. Census Bureau and another from the Massachusetts Division of Health Care Financing and Policy. Getting the right answer is crucial to the future of health reform in The Commonwealth.

Covering 651,000 (the U.S. Census Bureau’s estimate of the uninsured in 2006) is a lot harder and more expensive than covering 355,000 (our state government’s estimate for spring, 2007; their 2006 estimate was 395,000).

So whose number is correct? The Census Bureau sends surveyors door-to-door, with interviewers available for almost every language (including Portuguese and Haitian Creole, common languages in Massachusetts). The state survey calls people on the phone (land lines only, no cell phones) and has interviewers who speak Spanish and English – but no other languages. Anyone without a land-line telephone or who spoke another language was, in effect, counted as insured.

But we know from Census surveys that 43.9% of phoneless adults are uninsured. Moreover, immigrants are often stuck in low-paying jobs that don’t bring benefits, and hence have extraordinarily high uninsurance rates. Yet only 41% of the Commonwealth’s non-English speakers are Spanish speakers; the other 59% (about 530,000 people) vanish in the state survey. In sum, the state’s figures are unreliable – a fact confirmed by a third survey, carried out by the Urban Institute for the Blue Cross Foundation. This survey – also done on the telephone, but with statistical adjustments to avoid undercounting – confirmed the Census Bureau’s findings.

Why does it matter whether the state’s estimate or the Census Bureau’s is right? According to the state, we’re almost half way to covering the uninsured. Read more…

If health spending continues to rise, Massachusetts’ health reform has no hope of long term success.

Every year, costs rise far faster than inflation, making health insurance less affordable for individuals, and tempting employers to stop offering coverage altogether. For city and town governments in the Commonwealth, health spending for public workers’ benefits rose 85% between 2001 and 2006, eating up most new tax revenues. And state government spending for Medicaid and other state health programs continues to skyrocket. Read more…