Indeed, this substantial increase in spending is pretty startling. Consider some of reports key findings:

–Spending per member on privately insured people grew 6 percent from 2007 to 2008 and another 10 percent from 2008 to 2009. This rate of growth was substantially higher than the increase in national personal health care expenditures per capita of 4.6 percent from 2008 to 2009.

–Spending by private payers also grew faster than spending by public payers. The rate of growth for spending on privately insured people from 2007 to 2008 outpaced the growth in spending for Massachusetts residents in Medicare (4.8 percent) or MassHealth (2.8 percent) during the same time period.

Why is this happening?

Well, the report says that “faster growth in spending by private payers was largely the result of increasing prices. Growth in Medicare and MassHealth spending predominately reflected increases in service use, rather than growth in prices. ”

All of these spending and price increases will presumably be addressed when the state holds “cost containment hearings” beginning June 27. In advance of the hearings, the Health Care Finance and Policy division has released several reports detailing cost trends and price disparities among hospitals.

Seven years ago, my 78-year old mother lay dying from lymphoma in her New York City hospital room. Her body was giving up its fight for life after four long years of aggressive chemotherapy treatments. With faltering vital signs, it was clear this was not just one of the many battles she had fought to stave off the encroaching disease. With her organs failing, my mother rapidly transitioned from ill at home to dying in the hospital, with no time to obtain hospice care. Gathered together, my family and I kept vigil by my mother’s bedside.

Although it was clear my mother was dying, doctors doing rounds continued to bombard my three brothers and me with offers of tests and procedures. My father, overwhelmed with emotion and fear, would have agreed to all the young residents proffered if my twin brother, an MD, had not intervened.

With my brother’s guidance, we knew to ask if there was any benefit to additional testing and if the findings would have an impact on my mother’s prognosis. The attending doctors conceded that aggressive interventions would not reverse my mother’s decline. My family and I determined to use the time remaining to keep my mother comfortable and to say goodbye.

Echoing this real life experience is a longitudinal study released in April by the Dartmouth Atlas Project on trends and variation in end-of-life care. This geographically diverse report found an increase in the intensity of care for Medicare patients that were hospitalized and chronically ill. According to the analysis, hospice care is on the rise, but so is aggressive in-hospital care. Medicare patients diagnosed with severe chronic illnesses had more physician visits, especially with specialists, and spent more time in intensive care units.

This story isn’t new. Increasingly, studies are finding that in America, we continue to accept — even push for — aggressive, technology-heavy care even though it may do nothing for our health and undermine the short time we have left.

“In addition to its effects on patients’ quality of life, unnecessarily aggressive care carries a high financial cost. About one-fourth of all Medicare spending goes to pay for the care of patients in their last years of life,” said David C. Goodman, M.D., M.S., lead author and co-principal investigator for the Dartmouth Atlas Project and director of the Center for Health Policy Research at the Dartmouth Institute for Health Policy and Clinical Practice. “It may be possible to reduce spending, while also improving the quality of care, by ensuring that patience preferences are more closely followed,” he said.

Overall, Dartmouth’s trend study, which analyzed data from 2003-2007, found that chronically ill patients were more likely to be treated by 10 or more doctors in the last six months of their life.

Another piece of evidence that points to re-examination of end-of-life care is a report released in January by the Boston-based Hebrew Senior Life’s Institute for Aging Research. The HSL study reported similar aggressive end-of-life care in nursing homes. Examining Medicare spending for 323 nursing home residents with advanced dementia – a terminal illness – in 22 Boston-area facilities, the study found that Medicare costs rose by 65 percent in the last four quarters before death due to an increase in the delivery of acute care services and hospice care.

To enhance quality of life while simultaneously controlling costs, the HSL study recommends shifting end-of-life care away from aggressive treatments in favor of high-quality palliative care that emphasizes a comfort care approach.

Dr. Susan Mitchell, a senior scientist at HSL’s Institute, said: “The strong association between the lack of a DNH (Do Not Hospitalize) order and higher acute care expenditures supports the notion that advance care planning may be a key step toward preventing aggressive (and expensive) end-of-life care.” It might also help better prepare families when end-of-life discussions begin.

Both the HSL and Dartmouth studies point to an obvious take-away: When it comes to the advanced stages of dying, our first response is an arsenal of medical weaponry to stave off the inevitable. Omitted in this scenario is when and how to let loved ones go.

The same month HSL released its report, the Obama administration, aware of studies supporting less aggressive and costly end-of-life care, tried to include a Medicare benefit for end-of-life counseling in its Health Care Reform Act. But instead of triggering a thoughtful debate, the administration was immediately pummeled by political blowback. Under a tirade of “death panel” accusations, the administration dropped the end-of-life counseling benefit.

Political pundits and the general public, often at odds, agree on one thing: Medicare costs are spiraling out of control. But no one agrees on what to do about it.

For fiscal year 2012, the budget allocation for Medicare is $468 billion. When including Medicaid, the total mandatory allocation is $793 billion, or 23 percent of the federal budget.

On a personal note, my brothers and i just moved my 86-year old father out of his New Jersey apartment. He had been living independently, as a determined widower, since my mother’s death in 2004. A recent fall precipitated a hospital stay, which led to 10 days in rehab and ultimately to his current move into an assisted living facility near where I live here in Cambridge, Mass.

Like many seniors, my father has carefully avoided discussions about end-of-life care. Death frightens him and he has not taken easily to aging. However, with each of my father’s recent moves, a Do Not Resuscitate (DNR) form has been conditional with each admission. My brothers and I may not agree on everything, but on the DNR we all agreed, as did my father. Having received our permission and our support, my father signed the form.

I wouldn’t compare signing the DNR with having a heart-to-heart about end-of-life care, but a critical decision was made that will stay in my father’s record. When the time comes, we will have a way forward that reflects my father’s wishes.

The Employers’ Campaign for Affordable Health will ensure that lawmakers, employers, doctors, hospitals and insurers seize what may be their best opportunity to restructure the financial underpinnings of the Commonwealth’s health care system. The initiative will include lobbying, grass-roots organizing and public information, along with educational programs designed to prepare employers for the difficult decisions they will have to make as part of the process of controlling their health premiums.

The campaign marks the largest single project undertaken by AIM and its thousands of member employers since the organization led the reform of workers compensation system in 1991. The close parallels between the workers compensation reform and the current health insurance crisis offer hope that the same business/government coalition that worked together to lower workers comp rates by 60 percent at the start of the Weld administration can do the same with health care at the dawn of the second Patrick administration.

“We believe that change is in the air for positive action to address the cost of health care now. Employers simply cannot wait any longer for relief.” Said Richard Lord, AIM’s president & CEO.

The complete release is here, and it’s chock-full of useful figures and analyses. But what does it mean concretely, that AIM will run a campaign? I pulled this from the bottom of the release:

The process is complex and will require involvement from everyone. Employers must become more knowledgeable insurance buyers. Consumers must develop the same acumen for comparing medical services that they use to purchase automobiles. Doctors and hospitals must look in the mirror and address the staggering price differentials among practitioners and institutions within Massachusetts. And all providers of health care and services must minimize the share of premium dollars they spend on administration.

The time is now. And the Employers’ Campaign for Affordable Health is committed to making it happen.

The campaign will move into high gear on May 13 when the AIM Annual Meeting hosts a discussion among some of the nation’s foremost health care experts on the challenges of controlling health costs. In late May and early June, AIM will conduct a series of seven seminars entitled “What’s Your Health Care Solution?” that will help employers understand what drives health costs and how to control premiums.

Save big at independent facilities. Different facilities charge vastly different prices for x-rays and tests. For example, the average in-network cost of an MRI at a hospital is $1,145, but the average in-network cost at an independent radiology facility is just $560.

Find lower-cost after-hours care. The average in-network cost of an emergency-room visit is about $933 — which you’d likely pay out of pocket with a high-deductible policy. But a visit to an urgent-care center costs only $71, on average. And a trip to a convenience-care clinic (such as Minute Clinic at CVS) averages just $33.

Switch to generic drugs. The savings can be huge. Someone who takes Glucophage, Prilosec and Zocor can save more than $4,500 per year on the total cost of the drugs by switching to generic equivalents metformin, omeprazole and simvastatin. Not only is the list price lower, but the coinsurance rates are usually lower, too — often 15% for generics, 25% for preferred brand-name drugs and 35% for nonpreferred brand-name drugs.

Find therapeutic alternatives. Some brand-name drugs don’t have a generic equivalent yet, but they may have a therapeutic equivalent, which is in the same class of drugs but is chemically a little different. For example, Mavik, an ACE inhibitor used to lower blood pressure, has a retail price of price of about $33 for a 30-day supply, but lisinopril, also an ACE inhibitor, is just $7. If your doctor lets you switch to the therapeutic equivalent, you could save more than $312 per year.

Get your drugs through the mail. Mail-order pharmacies often provide a three-month supply of drugs for the same price as a one-month supply at a local pharmacy. This strategy could save you more than $1,000 per year on the cost of Crestor, for example.

And there are 25 more where those came from…

The Lucky Genetic Variants That Protect Some People From HIV : Shots – Health News Blog : NPR (Harvard AIDS researcher Bruce) "Walker and his colleagues…pinpointed genetic variations that change amino acid building blocks in key proteins in the immune system. These differences help explain why some patients can be infected with HIV for decades, never get treatment and yet never progress to AIDS." (npr.org)

Money for Science May Be Scarce With New Congress – NYTimes.com “In the Republican platform, Pledge to America, the party vows to cut discretionary nonmilitary spending to 2008 levels. ..An analysis by the American Association for the Advancement of Science looked at what would happen if all of the agencies were cut to the 2008 amounts. The National Institutes of Health would lose $2.9 billion, or 9 percent, of its research money. The National Science Foundation would lose more than $1 billion, or almost 19 percent, of its budget, and the National Oceanic and Atmospheric Administration would lose $324 million, or 34 percent.” (The New York Times)

Obesity rate will rise to 42% of the population based on contagion – latimes.com “Obesity rates in the United States, which some health experts have suggested may be stabilizing at about 34%, will continue to rise until at least 42% of American adults are obese, according to a new model that projects the increase based on "social contagion." The social contagion hypothesis garnered widespread attention in 2007 when researchers…documented that obesity can spread through a social network — just like viruses spread — because people "infect" each other with their perceptions of weight.” (Los Angeles Times)

Can a 'liberal gene' determine political stance? Researchers say it's so – Los Angeles Times (articles.latimes.com) “[Researchers] reported that ‘it is the crucial interaction of two factors – the genetic predisposition and the environmental condition of having many friends in adolescence – that is associated with being more liberal.’

Alzheimer’s Warning Sign – Money Problems – Vanishing Mind – NYTimes.com New research shows that one of the first signs of impending dementia is an inability to understand money and credit, contracts and agreements. (The New York Times)

Health Overhaul May Bring Free Birth Control : NPR Fifty years after the pill, another birth control revolution may be on the horizon: free contraception for women in the U.S., thanks to the new health care law…A panel of experts advising the government meets in November to begin considering what kind of preventive care for women should be covered at no cost to the patient, as required under President Barack Obama's overhaul. (npr.org)

That’s just how it happened for Jeff Rice, a Nashville MD and creator of the online tool, Health Care Blue Book, which allows consumers to figure out the true cost of treatment and, armed with comparison price data, helps them negotiate better deals with providers. Dr. Rice spoke to Here and Now’s Robin Young about his own negotiating experience and why, with health insurance deductibles rising, consumers are starting to get more engaged on the issue of cost.

CommonHealth would love to hear your story about negotiating health care costs. Please share it with us.

Levy says while insurers often whine about the “underlying rise in medical costs” as the key driver of higher health insurance premiums, there is, in fact, another critical culprit: outsized administrative expenses racked up by the major health insurers, on average about 9.3 percent annually.

Levy’s Exhibit A is a February 2010 report issued by the state Division of Health Care Finance and Policy on premium levels and trends in the private insurance market:

“How can this be the case?” Levy wonders. “In other financial services industries, unit costs of transactions have gone down, not up. What is it about health care that suggests the opposite should be the case?”

Not to be outdone, the Massachusetts Association of Health Plans gave me a fairly lengthy response. Touche:

Reducing administrative expenses in health care is important and efforts are underway, but those costs are not what is driving health plan premiums. More to the point, talking about administrative costs distracts from focusing on the the major cost driver, which is escalating medical expense. There is no separating health insurance premiums and medical costs as they are inextricably linked.

Nevertheless, to address Paul’s complaint, we looked at the same numbers. While the six-year period that Paul points to showed that administrative costs increased on average 9.3%, administrative costs increased on average 2.5% and 1.4% the last two years, demonstrating that health plans have taken steps to bring down transaction costs.

At a time when health plans have been focused on addressing their administrative costs, MAHP’s locally-based commercial health plans have seen an increasing portion of the premium dollar going to pay for medical care. Consider the last four years:

2006:

–86% of the premium went towards medical costs

–11% for admin

–2% for surplus

2007:

–87% of the premium went towards medical costs

–11% for admin

–1% for surplus

2008:

–Nearly 89% of the premium went towards medical costs

–Less than 10% for admin

–1% for surplus

2009:

–More than 91% of the premium went towards medical costs

–Slightly more than 9% for admin

–.73% losses

Unlike health plans, which have experienced operating losses and have taken steps to reduce their administrative costs, many hospitals experienced an increase in total margin last year. According to the Division of Health Care Finance and Policy’s recent Key Indicators Report, the median operating margin for teaching hospitals at 5% and community hospitals at 1.5%. Those are numbers that many health plans (and Massachusetts employers) would envy.

Talking about administrative costs is a distraction from the real cost drivers. Health insurance premiums and medical costs are inextricably linked. All the objective data – report after report from various state entities – have pointed to the rising cost of medical services charged by hospitals and providers as the major contributing factor to increases in health insurance premiums. For example,

In its 2006 publication, Massachusetts Health Expenditures Accelerating, the Division of Health Care Finance and Policy (DHCFP) noted that in 2004 hospital expenditures accounted for nearly 40 percent of Massachusetts health expenditures and 47 percent of the annual increase in total health expenditures.

In 2008, the state’s Division of Insurance’s report examining the factors driving increases in health insurance noted, the total cost for medical services increased by 55 percent per insured HMO member between 2002 and 2006, which was attributed to significant annual increases in the cost of physician, hospital and pharmacy services.

· The reports by the Attorney General and Division of Health Care Finance and Policy from this past spring highlighted that the major contributing factor to the increases in premiums has been the rising cost of medical services charged by providers.

· The AG’s report pointed to provider prices and the market clout of certain providers are responsible for almost all of the increases in health care costs over the last several years.

· The DHCFP report noted that Massachusetts health care costs are 15% higher than the national average. Getting those costs in line with the national average would go a long way towards making health care affordable.

Had providers’ costs – the prices charged by hospitals and other providers – mirrored the average annual rate of increase for health plans’ administrative costs we’d be a long way towards dealing with the cost issue and providing employers, particularly small businesses, and consumers some much needed relief.

]]> 2010-10-07T13:33:04-04:00