Envisioning 2.0

Earlier this week, California’s bid to provide universal health insurance coverage fell in a lopsided legislative committee vote.  Both Republicans and Democrats voted against the plan.  Republicans nixed it for philosophical reasons.  Democrats thought the plan was not well thought out.  Most importantly, both sides were very concerned about the numbers.  According to the New York Times:

“[Governor Arnold] Schwarzenegger’s proposal was modeled largely on a Massachusetts plan, which requires individuals to have insurance, prohibits insurers from denying coverage on the basis of age or health, and uses government subsidies to make insurance affordable for low-income workers.

But last Wednesday, as the California Senate committee heard testimony on the bill, Massachusetts announced that spending on its health care plan would increase by $400 million in 2008, a cost expected to be borne largely by taxpayers.”

The Massachusetts insurance scheme is also facing financial trouble, with the state moving to cut providers’ reimbursement because of high enrollment rates.

All of this indicates that the biggest barrier to universal health coverage – whether one favors individual mandates or not – continues to be cost.  With medical inflation steadily increasing, can any plan overcome the economic gauntlet?

Fortunately, there are many efforts underway to stem costs, including value-based insurance design and price transparency.  However, these initiatives have not yet gained widespread acceptance.  If we don’t successfully tackle the cost issue, any comprehensive plan to increase coverage may be dead in the water.

I’m a little late with this, but the latest edition of the Health Wonk Review was published last week here.

Currently, Americans collectively owe hospitals $40 billion in unpaid bills.  This, combined with the fact that 47 million Americans are uninsured, is making hospitals worry about the consequences of mounting debt on their bottom lines.

Now, hospitals are looking for ways to identify which patients will be more likely to be unable to pay their medical bills.  Fair Issac Corp, which developed the FICO credit score, is investing in a company Health Analytics, which (according to news reports) is developing a scoring system that will help hospitals and providers identify financially risky patients.

MSNBC contacted Healthcare Analytics recently and the company denies it is developing a MedFICO product.  According to spokesperson Tom Hurley the tool “will be used after patients receive care and after a bill is generated to help hospitals make better financial planning decisions.”  No one will be denied care because of a low score, he says.

Consumers are not buying it.  After the story appeared on MSNBC’s Website thousands of people have weighed in to blast MedFICO as ill-advised and unethical.   I see this as another consequence of the consumerism trend.  As organizations realize that consumers will be asked to assume responsibility for their care, it is only natural that some will begin to examine patients’ ability to pay.

My major concern is that a MedFICO will lead to severe (and improper) rationing of care – i.e., turning patients away if they look like financial risks.  I’ll be interested to see whether the folks developing this product will be able to successfully manage the legal and regulatory issues associated with it.

After generating significant media attention and controversy, NitroMed announced recently that it would be ending its efforts to market BiDil, the first medication approved by the FDA for a specific racial group, African Americans.  BiDil’s sales have been less than stellar, partly because it is a combination of medications currently available in generic form.

According to a company statement:

“NitroMed . . . announced today that it has implemented a restructuring plan that will eliminate approximately 70 positions over the next month, reducing headcount from approximately 90 to 20. The Company anticipates that headcount may be further reduced over the next several months. The Company is discontinuing its sales and promotional activities for BiDil, although the Company intends to keep BiDil available and on the market for patients.”

Currently, NitroMed is developing an extended release version of BiDil that it hopes will be better accepted by physicians and patients.  However, the drug is years away from approval.  Observers also expect that NitroMed will be sold before the drug hits the market.

Although the BiDil saga is over, don’t expect race-based (or to use a more accurate term, personalized medicine) to go away.  With so many people responding to medications differently because of their genetic makeup and physiology, drug makers will have little choice but to continue efforts to tailer drugs to different populations.

Moreover, although BiDil didn’t succeed in a harsh and competitive marketplace it did lead to a valuable and wide ranging national conversation about the value (and validity) of using race in medical care and health disparities.  We’ll be debating these issues (and using BiDil as an example) for many years.

I’ve covered BiDil extensively on this blog.  Those interested in commentary about BiDil by NitroMed’s former chief medical officer Dr. Michael Sabolinski should click here.

Like many Americans, I’ve been looking at the latest developments in the presidential race with great interest.  Clearly, the narrative about “change” has taken hold and every candidate is taking turns talking about how he or she will transform Washington.

I’ve long been a student of the policymaking process and I know that affecting change is a very, very difficult and slow process.  It requires a rare combination of flexibility, charisma and knowledge. Many candidates on both sides of the aisle do not possess all of these traits, but a few come close.

Those of us who have been closely watching the contest for many months have benefited from the reams of information on the candidates’ Websites about their vision for health reform.  However, many Americans have not paid that much attention.  Unfortunately, many of those voting will be making a decision based on the superficial characteristics of the candidates (i.e., who is showing emotion or has a great stump speech).

However, effective governing is all about the details.  In addition, while experience is certainly important, judgment is equally critical.  I’ll be looking for evidence that the candidate is knowledgeable about the issues and has the judgment to know when to compromise and when to hold firm.

This is why I’m looking forward to the next series of debates.  I’m hoping that the candidates focus on substance and talk specifically about what changes they hope to make to the system.  I’m also going to look carefully to see which candidate has a realistic vision about health reform.  Relying on the market is not enough.  Nor is using tragedy to inflame emotions.

Here’s to more substance about healthcare during the weeks to come.

The first Health Wonk Review of the New Year is up.  Get your daily dose of health policy by clicking here.

Some proponents of Massachusetts’ efforts to ensure all residents have health insurance have long complained that some people will ignore the state’s requests to get covered because the “stick” is too small.  In 2007, those who could afford insurance, but opted to forgo it payed a $219 fine.  Some may have decided that this penalty was less burdensome than the annual cost of health insurance, which could reach $4,600 for a 60-year-old Boston resident.

Now public officials are tweaking the plan to make the stick much bigger.  According to the Boston Globe: “Penalties for Massachusetts residents who can afford health insurance but do not purchase it in 2008 could quadruple compared with the maximum penalty in 2007, according to draft regulations released by the Department of Revenue yesterday.
The maximum penalty for those who flout the law and do not buy health insurance would be $912 a year, compared to $219 in 2007.”

Massachusetts’ efforts are being closely watched as presidential candidates Hillary Clinton and John Edwards are proposed similar national plans that would require all citizens to sign up for insurance.

What’s most clear from this effort is that individuals are being asked to manage their health dollars in ways that were unimaginable to many in the early 1990s.  As more residents become insured and must pay for their care, look for efforts to provide them with information about healthcare cost and quality to accelerate.