Saturday, December 31, 2011

Growth Comparison: Medicare vs. Private Insurance

This piece in the Times gave me an excuse (and a source) to look at growth rates of normalized per enrollee expenditures for Medicare vs. Private Insurance.  The author uses the data to make a case against competition:
Despite competition and choice in the private insurance system, Medicare spending has grown more slowly than private insurance premiums for comparable coverage for more than 30 years.
 Below is a chart showing the annual change in cost.  At first glance it supports the contention that private insurance on average has higher growth rates.  The actual annualized rates from 1969 - 2009 are 8.2% for Medicare and 9.5% for private insurance.  That makes a big difference over 40 years.

But check out the spike in the late 80's.  Up to that point spending growth tracked fairly closely, the annualized growth rates from 1969 - 1986 are within a tenth of a percentage point.  Then from 1987 to 1991 private insurance becomes a house on fire.  What happened?  The answer is that Congress raided Medicare using the newly enacted PPS reform.  From the Incidental Economist piece:
Aggregate Medicare hospital payment-to-cost ratios fell every year from 1987-1992 because hospital did not restrain costs as quickly as payments were adjusted (Guterman, Ashby, and Greene 1996). As Medicare margins fell, private pay margins grew over this period. The effects of managed care had not yet been fully felt in the commercial market, leaving private purchasers vulnerable to hospitals’ market power...
Hospitals took back from the private insurer market what they lost from inadequate Medicare payments.  Hospitals pushed that as long as they could until employers responded by embracing managed care, initiating the age of HMO's.  Getting back to the growth rates, if private insurance had grown at the same rate as Medicare from 87 to 91 the annualized rate over 40 years drops to 8.7%.  Still half a point higher then Medicare, but a lot closer then Medicare/single payer advocates like to claim.  Especially if you think cost shifting happened in more then just those 5 years. 

More important though is that there is no fiat answer to slowing cost inflation.  From 1969 to 1986 Medicare and private insurers were equally bad at it, competition or its absence was irrelevant.  Once payers started getting tough both systems proved capable of containing costs.  PPS made a huge difference to Medicare, and managed care proved effective in private markets (look at 92 - 97). 

What it comes down to is that for cost control you don't need any particular system, you just need the backbone to stand up to providers.

Wednesday, December 28, 2011

More coverage on implants

in the NY Times.  The part they don't mention is that the cost of settling all this crap will ultimately be born by citizens, either directly by patients facing unreimbursed costs or by health insurance payers who will make everyone in the industry whole through higher prices.  Not only will we pay for direct damages to remove the implants and defragment people, but we'll pay all the legal bills incurred as doctors, hospitals, manufacturers and insurers try to pin blame on each other.  It's too bad no one tested these implants for effectiveness, assuming an average severity of  5K per recipient puts the total liability at 2.5 billion.  That would pay for a lot of effectiveness testing...

Coincidentally AP ran a story on the Patient-Centered Outcomes Research Institute (PCORI), created by the Obama health care reform.  The mission of that organization is exactly that- testing medical effectiveness.  Expect opposition from care providers and whoever will carry water for them.  When they say "death panel", think "hip shredder". 

Development and Taxes

Random statistics:  The property tax payoff for the SE 28th and Burnside condos.  An old greasy spoon Chinese restaurant on the corner of Burnside and 28th was torn down to make way for condos in 2009.  How much value did this create?

I'll use a real simple first order approximation and look at property taxes.  The figures are online at  The 32 condo units have a 2011 tax totaling $138,997 or an average of $4,344 per unit.  That's about 10% more then the average tax paid by the rest of the non tax-exempt property owners on the block, who actually own land!  To put those numbers in concrete terms, look at the map:

Now you might think there is something wrong with that block, maybe the land use is particularly ill-conceived and atypical.  So I rolled up the taxes on the block south as well.  That block had an even lower average tax, a few points below the Burnside block the condos sit on.  Here is a total view:
So that little sliver of condos pays almost as much in taxes as the rest of the two blocks combined.  To put it another way, the condo development almost doubled the tax revenue coming from the two blocks.

Who benefits from the taxes?  Pretty much everyone.  It is money for schools, the city, the county, and just about every other local municipal agency.  Even the greasy spoon came out better off.  And best of all it was accomplished without coercion, but by just staying out of the way and letting change happen.  Keep that in mind the next time you hear about a development proposal.

Saturday, December 24, 2011

Implants: An object lesson in Ineffectiveness

Via the NY Times, an Australian study shows how newer models of joint prostheses fail at higher rates then older more established models.  The failure rate may not be the worst aspect of the newer style implants.  They also pose risks due to breakdown of the metal rubbing on metal, releasing metallic particles into surrounding tissue.  Resulting inflammation can make replacement surgery "far more complex and can leave some patients with lasting complications."  Some questions:
  • What drove physicians to use the newer implant style over the old one?
  • What disclosure was made to patients about the relative risks?
  • Do we really not keep an implant registry?  Getting information second hand from Australia is the best we can do?

Tuesday, December 20, 2011

Memory and the Future

This piece by Ryan Avent displays a rare sense of humility  in admitting how difficult it is to imagine the future and how our descendants might judge us.  To participate, consider how you think about the past, and in particular the decisions made by our predecessors.  Do you lament or celebrate the widespread adoption of the automobile, or the industrial development that polluted so much of our environment, or...  anything?  The sad truth is we think little about the past at all, the world is what it is and we try to make the best of it.

This is part of what I dislike about preservationism, the idea that we should preserve structures so that future generations can enjoy them.  Who knows what future generations will enjoy or value or need?  Think about BDS shutting down the Green Castle cart pod in part because a neighborhood planning document written in 1987 didn't contemplate food carts.  1987!  That's only 24 years ago, yet I have absolutely no idea, interest, or even desire to know what people back then thought except as a purely historical concern.  How much less compelling would be the ideas and intentions of people from fifty years ago, or a hundred?

Preservation doesn't save the past so much as it foists the present whether people want it or not.   Implicit is the belief that the way things are now is the best that they could ever be, and that any change would necessarily be for the worse.  It is narcissism writ large.

Sunday, December 18, 2011

Medicare and the Development of Rate Setting

Via Incidental Economist and White Coat Notes, I found a pretty good paper on the developments that led to Medicare's Prospective Payment System (PPS) in 1982.  PPS is the price setting mechanism that specifies what price hospitals are paid for the services they render.  Under PPS they get a per diem rate set by the federal government.  Prior to the advent of PPS Medicare just paid cost- hospitals sent in the bill and Medicare paid it.

The paper describes how Medicare from inception was beset with massive price inflation, with expenditures running at 5 times what was expected a mere 8 years after full implementation.  That inflation quickly led to cost control efforts, first with Nixon in 1972.  Though ineffective at controlling prices, that reform enabled state pricing regulation such as Maryland's all payer system.  Coincidentally, they were the first state to seek out pricing regulations and they are the only state that kept them.

Carter took another bite at the apple but whiffed, with hospitals successfully killing his proposal in Congress.  Carter's efforts were not for naught however as the price hospitals paid was a commitment to voluntary cost controls.  The voluntary effort showed modest success for two years, before hospitals fell off the wagon at roughly the same time Reagan came into office.  The outcome of this combination was not what you'd expect.

Republicans had hung their hats with the hospitals against Carter and been made to look like fools.  Their antipathy for government spending overruled their hatred of regulation, with some added incentive that Social Security was bankrupt (and I mean "we don't know where next month's payments will come from" bankrupt).  This led to a monster Social Security reform bill, part of which involved robbing the Medicare trust and paying for it by using PPS to bring costs in line with the balance.  Most legislators didn't even know what a DRG was, to them it was just a Social Security bill.

Some lessons to draw from this:
  • "Single Payer" means absolutely nothing when it comes to reining in prices.  What matters is political consensus and the will to enforce it.
  • Compare how Reagan and Dole reacted to their challenges to say, George W Bush and Tom Delay.  The GOP has fallen a long, long way.
  • That said, cost control reform doesn’t happen without major bipartisan support.  72 and 82 both involved mixed leadership.  Carter's efforts failed in large measure because Republicans made hay by standing with the hospitals.
  • Major reform involves lots of actors with lots of motivations.  Republicans put aside their antipathy to regulation when it allowed them to save money.
  • Successful reform requires provider participation.  They won't come to the table unless you hit them with a really big stick first, one big enough that whatever reform you seek looks like pain relief to them.  TEFRA served this purpose with PPS.
  • All reform is temporary.  Providers will eventually subvert any cost control regime given enough time, as Medicare's current finances demonstrate.
  • Finally, crises really are opportunities.  The Social Security debacle was the backdrop for PPS and it gave everyone more backbone then they would have had otherwise.

Saturday, December 17, 2011

Hospitals are the new Drug Companies

Good:  Regulations aimed at limiting the influence of drug reps over physician behavior has led to lots of unemployed drug reps.

Bad:  Those same drug reps are now being hired by hospitals to influence physician behavior.  Some choice quotes (emphasis mine):

"While hospitals have always tried to woo doctors to refer patients to them, the institutions are growing more direct in their efforts. The hospitals mine data to see which doctors have the most profitable, well-insured patients, and then they assign those doctors to a sales rep. "

"While federal law prohibits hospitals from paying doctors to admit patients, hospitals paying sales people to influence doctors can get the same results [said a critic]."

Remember, market leverage is what allows hospitals to raise prices.  Just one more example of why it is profoundly unwise to pretend medical providers are angels.

Cumings' Korean War

I finished reading Bruce Cumings' Korean War this week.  This book is a thoughtful retrospective on what the Korean War means to Korea and the vast misconceptions that still define the conflict in the American consciousness.  It is not for the faint of heart, Cumings does not shy away from gory detail when he wants to make a point.  His views of North Korea are considerably more sympathetic than pretty much any other American author.  That was in fact why I picked up the book, dissidents may be right or wrong but they're almost always interesting.  I was not disappointed. 

Cumings describes a conflict that anticipates Iraq as much as it does Vietnam.  An ignorant and ill-prepared military occupation quickly followed by guerilla warfare, rampant atrocities against civilians committed by American troops and the Korean forces they empowered, and driving it all an arrogant belief in the inerrancy of American military power.  It is tragic that Korea is our forgotten war, there is a hell of a lot to learn in it.

Thursday, December 15, 2011

Happy Ending in Hollywood

I'm glad Creston Homes found a way around neighborhood opposition to build on the empty lot next to Hollywood Theater.  Success came from giving up early on working with the Design Commission and neighbors.  The article quotes a project manager with the developer (emphasis mine),
“It had a lot to do with the fact that anyone in the neighborhood could file an appeal of any decision (of the design commission), for a small fee,” he said.
Such appeals, [the project manager] noted, could have derailed the project.
The commission’s design review process also could have been longer, he said. And that would have made a huge difference because city building permit fees increased on July 1. Because the team applied before fees increased, [the project manager] estimates that it saved $56,000. The permit for construction was issued Nov. 17.
Anyone can appeal anything for any reason, at low cost.  Even if the appeals are eventually rejected by the Design Commission that can drag out the review process for months.  That by itself is enough to kill projects.  The net result is a regular review track heavily weighted towards preserving the status quo, even when that means keeping an empty lot at an address with a walk score of 92 in an area targeted for major transit infrastructure.  As a city with dreams of growth and density Portland needs to do better.

Tuesday, December 13, 2011

Conflicts of Interest in Medicine

Nothing good comes from thinking of doctors as angels.  That isn't to say that they are bad, just that they put pants on one leg at a time like anyone else.  And when one takes 300K in sponsorship money from a drug company, that means they have a conflict of interest just like it would for anyone else... 

The real lesson here though is that your care is ultimately your own responsibility.  Finding out whether your doctor's financial interests may conflict with your own, and what to do about it, is up to you.

(H/T White Coat Notes)

Monday, December 12, 2011

Republicans and Ineffective Medicine

Incidental Economist noted an interesting story from a few years ago by Shannon Brownlee in the Washington Monthly, it is well worth reading in its entirety.  The gist of it is that there is very little research on the comparative effectiveness of medical treatments.  So when a doctor recommends treatment x, there is a good chance there is no scientific basis for saying that x is a better choice then treatment y.  The consequences of this can be horrific:
For example, surgeons long assumed that a radical mastectomy for breast cancer, removing not just the breast but the underlying chest muscle and the lymph nodes under the arm, was the only way to get every last cancer cell. Then a massive, multimillion-dollar clinical trial launched by the NIH in the 1990s found that lumpectomy with radiation was just as effective, not to mention less traumatic for many women. Many patients and doctors also fervently believed that high-dose chemotherapy was a woman's best hope when she had advanced breast cancer. The brutal regimen was used for twenty years before clinical trials finally demonstrated that it was no more effective than standard, far less punishing doses of chemo. During those twenty years, an estimated 9,000 women were killed not by their cancer, but by the high-dose treatment.
You'll need to read the story to understand all the reasons why we do so little research in comparative effectiveness, but one cause stands out because of its intentional character.  The first Bush administration created an agency that could deal with this problem, the Agency for Health Care Policy and Research (AHCPR).
Democrats and Republicans alike hoped that the AHCPR's research would help rein in costs by giving doctors better direction, and offering payers—especially Medicare—the ammunition they needed to make evidence-based coverage decisions. More significantly, the agency promised to improve the quality of health care by helping to ensure that doctors would give patients the treatments they really needed—and refrain from giving them care that could harm them.
Unfortunately, the agency did its job and released a study on back pain in 1994 that was unfavorable to back surgeons.  The surgeons got up in arms and found a champion on capitol hill in the new Speaker of the House, Newt Gingrich.  Although he failed in his goal of eliminating the agency, he succeeded in restricting its mission.  "Now, the AHCPR would merely be a 'clearinghouse' for data, which meant it could no longer offer Medicare explicit guidance when it came time to determine which tests, treatments, and procedures to cover." 

Simply put, Newt worked to keep healthcare stupid.  The consequences of that stupidity are obvious:  rampant price inflation, unaffordable premiums and increasing numbers of uninsured, and oh yeah, a bunch of guys who were rendered impotent and/or incontinent for no good reason.

You might think that this would be an issue given Newt's front-runner status for the Republican Presidential nomination, and in a different world it would be.  But in this world making healthcare stupid isn't exceptional for the Republican party, it is the rule.  Just look at the treatment of Don Berwick, Obama's nominee to head the Centers for Medicare and Medicaid Services.  He served a year under recess appointment before being filibustered out of office by Senate Republicans.  His awful crime?  You guessed it, promoting medical effectiveness. I won't even go into IPAB.

All of this leads to a question:  What is it about ineffective medicine that so appeals to Republicans?

Saturday, December 10, 2011

How the Internet makes the world smaller

While reading comments on a post on one of the health care blogs I noticed someone named Maggie Mahar.  Her comment jumped out as it received a response from the blog author that showed obvious respect.  Later while looking for something to read on my next trip I found this, a big book by Maggie Mahar on health care financing.  Small world...

Thursday, December 8, 2011

Different stick, same horse

Beating the same horse as yesterday, here's a WW story on problems in the Portland rental market.  The elephant in the room is that most of the inner east side is reserved for single family housing.  Planners have sort of acknowledged the incongruity between their density goals and the infrastructure on hand, but the only solution they've posed is granny apartments.  They are nuts if they think that is a solution, if people don't want to live in their mom's basement why would they want to live in some other mom's basement?  And on the owner side if people can afford to buy a single family home in the city why would they take on the infrastructure cost and liability of creating a separate unit in exchange for low end rent?  Even in this puff piece they cite $1,200 per month in rent- exactly the high end niche that is already amply served.

The reality is that if Portland wants to encourage high population density it needs high density housing.  What exists  on much of the inner east side isn't it.

Wednesday, December 7, 2011

Followup on Irvington

The new issue of the Hollywood Star has further reporting on problems between the Irvington Community Association (ICA) and the city over the Historic Preservation District.  The story is worth reading in its entirety, but sadly is not available online as far as I can tell. The gist of it is that there are two issues:
  • The current fee schedule represents a "doubling" of cost per the ICA
  • The ICA is dissatisfied with what actions trigger review and what do not.
No offense, but buyer beware.  By doing what it did the ICA voluntary subjected Irvington to the whims of the city's review process and its expense.  There is no exception in the city code that says review will follow exactly what the ICA wants at exactly the price ICA thinks appropriate.  That point is obvious, and it should have been obvious to everyone involved last year.  But focusing on the ICA misses the real culprit, which is evident in a parallel story about the Buckman neighborhood's pursuit of its own historic register listing.

Per the Buckman story the only way a register listing can be opposed is if a majority of property owners send a notarized letter of opposition.  Read that twice- they aren't saying a majority of people who write in, but an absolute majority of all property owners have to send notarized letters opposing the designation to shut it down.  That burden is so insurmountable that the state doesn't even include the possibility in its process flow chart.  It's a process so slanted to produce an "approval" it would make union organizers blush.

No wonder the Irvington listing passed, there was no way it couldn't.  The process doesn't imply real consent, it is designed to provide a fig leaf of consent while passing the listing.  I'd expect to see something like that in a history of Jim Crow South, not living in the flesh in my state government.

This brings me back to a quote in the original posting on Portland Architecture,
[an architectural historian and Irvington Preservation Committee member] said the Portland currently counts 5,277 buildings either in historic districts or individual landmarks on the National Register – all of which require design review for exterior alternations.
That list could grow substantially in the future. Citizens are either gathering data for potential historic districts in the Buckman neighborhood and are investigating that option in at least two others.  Under  national historic standards, [the historian] said 85 percent of buildings in North and Northeast Portland west of 82nd Avenue could qualify as eligible for historic protection.
Much of inner Southeast Portland is basically of the same vintage, so potentially the entire inner east side could be put off limits to development.  How does that square with the urban growth boundary, which demands urban infill?  How does that square with Oregon's property tax limits, which demand redevelopment in order to sustainably fund city services?  How does that square with the premise that the Portland metro population will double in the next 30 years?  There is a serious disconnect here...

Tuesday, December 6, 2011

What we have here is, a failure to communicate...

Per Incidental Economist, a study on how well parents of overweight children understood their children were overweight...  after being told by a doctor that their children were overweight.
This study couldn’t be simpler. The parents of nearly 5000 children who were over the 85th percentile for BMI were asked if they had been told their child was overweight (they were). Know how many said yes? 22%.
Admissions to med school are ultra competitive, with selection based on MCAT scores, GPA and the like.  What if the people selected by those criteria absolutely suck at communication with the average American?  I see it as just more evidence that we have the wrong people practicing medicine.

Saturday, December 3, 2011

Kitzhaber (vs. Occupy?)

From an address by the governor yesterday to the Oregon Civics Conference (emphasis mine):
That brings me to this whole issue of civic engagement and civic literacy. It is our civic machinery, our structure of government, that gives us the capacity to resolve disputes and work in the interest of the common good. It allows us to achieve our highest aspirations as a society. We take that for granted, but it works only as well as the people who are engaged in it. So that means people have to understand it.
So let me wrap up with a quick story from my own background. I was civically illerate for the first two decades of my life. I was bored to death. I was not interested in politics. I was not interested in government. I was a 21-year-old student, a junior, at Dartmouth College in 1968, when a lot of things were going on — the civil rights movement and the war in Vietnam.
“Martin Luther King was registering black voters in the South, there were sit-ins in restaurants, where they would go into segregated restaurants and sit down at the counter and expect to get arrested. They didn’t oppose the rule of law, but they wanted to highlight a law they felt was unjust. As a result of that, we had the Civil Rights Act, the Voting Rights Act, and ultimately elected Barack Obama president.
In 1969, people were getting drafted to go to Vietnam at the age of 18, but you could not vote until you were 21. So we were essentially being drafted and sent halfway around the world to fight in a war that had murky justifications, at least to us, who had no say in that. Bobby Kennedy was running for president; he was against the war, and he was giving a voice to many voiceless people — the farm workers in California, native Americans on reservations, who were out of the mainstream of American life. That was all going on.
That April (1968), Martin Luther King was assassinated. I can remember right where I was. I was in a physics shop, I remember putting my screwdriver down, listened to the radio and felt profoundly moved. I couldn’t even begin to tell you why. It was just as if the light had gone out. Then when Bobby Kennedy was assassinated on June 6, just after he won the California primary. I think for a lot of people my age, we just decided the country lost something that was a lot more than two individuals. But it was a belief that you could work in the system, work within the structure and change the world and make it better — and we all had a responsibility to do that. That was my moment of political awakening. I ended up doing this for a lot of reasons.
So my message to you is that you really are not powerless. I am speaking more to young people, not to those who teach and guide them. What this country desperately needs is to rebuild a sense of community. There are certain things we have to do together to make us all better. The only tool we have to make that happen is our government structure — and the will of individuals to use that structure. If you drop out, it operates on its own. You are the drivers. Civic literacy gets you there. It is your ticket.

That looks a lot like a rebuttal to the Occupy movement to my eyes:
  •  America has structures for civic engagement but those structures don't run themselves, they are only tools for citizens.
  • The civil rights movement is a demonstration of how to effectively use those tools.  Civil disobediance targeted at specific laws, with the purpose of changing them to create fairer and better laws.  With the tools we have, even the most disadvantaged segments of society can affect radical change.
  • No system is perfect, and sometimes things go bad as when national reform leaders were murdered.  We face a choice in those moments, to carry on the work of building a better society or to abandon it and fall into cynicism and disassociation.
  • Too many people have chosen the latter course in the false belief that it is a means of reform.  It is not.  Our system of governance is the only one we have, and disassociating from that system won't change it.  It just makes the system operate poorly.
Instead of blowing up another park Occupy leaders might want to think about this.

Thursday, December 1, 2011

Bartlett on Gingrich

Bruce Bartlett has a good op-ed in the NY Times on Gingrich's efforts to stupidify congress.  What struck me was the ending line:
It is essential that Congress not cripple what is left of its in-house expertise. Gutting the G.A.O. and abolishing the C.B.O. would be acts of nihilism. Any politician recommending such things is unfit for office.
Acts of nihilism are pretty much all Republicans can manage.  Consider the attempt to default on America's debt, or the intent to revoke health care reform without an alternative solution.  On too many fronts Republican ideas have been proven decisively wrong:  Lassez-faire markets and the wall street debacle, climate change and the increasing frequency of catastrophic weather events, trickle down economics and the most unequal society in living memory, the George W Bush administration...  Rather then acknowledge failure, Republicans resort to wholesale denials of reality and nihilism.  Gingrich isn't exceptional in his need to dumb things down, he is typical of the Republican party.

Finished reading "Broken Branch"

This book wasn't what I wanted.  Too much of it was the authors quoting their own columns in Roll Call.  Ugh…  I came away knowing not much more then I did going in.  Newt Gingrich is responsible for a lot of bad things, the level of centralization within the house has changed over time.

Ok, why did the house trend toward decentralization for most of the 20th century?  Why did incoming Democratic freshmen demand more of a voice, while incoming Republican freshmen gave it up?  Why are congressmen less likely to stay in DC and why in an age of ever-present telecommunication does it matter?  Why does the south seem to dominate national politics through whichever party it leans towards?

Questions for another day (and a different book).