Whatever It Is, It’s Not Insurance

Tom Emerick

Posted 5/9/12 on Cracking Health Costs

Discussions about covering “pre-existing” health conditions occur frequently among health policy people. One frequent thread is that health insurers should not be allowed to deny coverage to people with pre-existing health condition. After all, aren’t those the people who need health insurance the most?  Sounds reasonable, doesn’t it?  Problem is that proposition is really not reasonable.

Let me explain.  For any kind of insurance to work right, the “contingent event” can not have already happened before you buy it.  In life insurance, the contingent event is the death of the policyholder.  You can’t buy life “insurance” on someone who has already died.  For homeowners insurance, you can’t buy fire insurance after the home has burned.

Continue reading “Whatever It Is, It’s Not Insurance”

“Doctors call for end to five cancer tests, treatments”

Tom Emerick

Posted 4/6/12 on Cracking Health Costs

So reads the headline in a Reuters story on April 4, 2011.

Let’s linger on the notion that they are exposing procedures that are “harmful” yet “routinely prescribed.” Giving harmful care to cancer patients is not rare, but “routine”. The words immoral, unethical, unscrupulous, and venal come to mind.A private task force was led by Dr. Lowell Schnipper, a cancer physician at Beth Israel Deaconess Medical Center. The task force was organized by the American Society of Clinical Oncology.  The goal was to “…to identify procedures that do not help patients live longer or better or that may even be harmful, yet are routinely prescribed.” [Italics mine.]

Continue reading ““Doctors call for end to five cancer tests, treatments””

Great News! Medicare Tightening Up At Last

Tom Emerick

Posted 4/3/12 on Cracking Health Costs

Good news on the Medicare front.  In a few states (FL, CA, MI, TX, NY, LA, IL) they are at last tightening up on unnecessary surgical procedures, according to a news story in Forbes.  Hurray!

According to the story, “In 2012 CMS will perform an audit before paying for several big ticket cardiology and orthopedic procedures in certain key states.”  All I can say is, at last.

This is huge news.  If Medicare takes this seriously, and gets the results it should get, it will be a great step forward in advancing evidence-based medicine in the public sector.  Further, it will pave the way for employer-sponsored plans to be more aggressive in dealing with over-surgery.  Readers of Cracking Health Costs know that I’ve been tough on Medicare for looking the other way over unnecessary surgery for decades.  May the day come when I can take it all back.

Predictably surgeons are unhappy.  Most surgeons have had no accountability to anyone for getting diagnoses right or doing surgery only when truly necessary.  They will vigorously resist such accountability.  However, such accountability is the norm in most industrialized nations.  That lack of accountability here is one of the main reasons why we spend so much more on health care than our peer nations but get worse and worse results.  Accountability needs to be the norm here too.

Plus Wall Street doesn’t like the idea either.  “Reaction to the report on Wall Street was immediate.  Hospital and medical device stocks plunged after the report was issued on Friday….”  Hmm.  My theory is Medtronic’s stock price is inversely related to America’s economic health.

This is a good test to follow as it is a battle between evidence-based medicine and profit-driven medicine. To see the full article, click here.

An Epic Battle Has Begun. And NOT in the Supreme Court

Tom Emerick

Posted 3/26/12 on Cracking Health Costs

On the front page of yesterday’s WSJ is an article written by Anna Wilde Matthews and John W. Miller about a battle between Highmark (the Blues plan in the Pittsburgh area) and the University of Pittsburgh Medical Center.

This may be a more important event than even the current Supreme Court case over PPACA.  Let me explain why.  Click here to read the full article.

UPMC, an academic-based medical center, has been a dominant system for years.  Highmark has purchased a competing health system called the West Penn Allegheny Health System.  According to the article, “UPMC, which has its own insurance arm as well as 19 area hospitals and 3,240 doctors, says it doesn’t want to bolster a company [Highmark] it now considers a direct rival.”  Consequently, UPMC has said it will not continue to particate in the Highmark network.

Continue reading “An Epic Battle Has Begun. And NOT in the Supreme Court”

Another Stent Device Biting The Dust

Tom Emerick

Posted 3/26/12 on Cracking Health Costs

We’re seeing a trend.  The FDA approves a stent without proper testing.  Death and complication rates with the new stent increase, the FDA is force to review it.

Remember the controversy over drug eluding stents?

According to an article in the WSJ by Thomas Burton, the so-called Stryker stent…aka the Wingspan device… is increasing rates of  death of patients who have received them.  Following protocol a panel has been convened.  According to the WSJ article, “The FDA had asked the outside panel to advise it on what to do in the wake of a large study last year showing more strokes and deaths in patients with the Wingspan device than among those whose condition was treated using drugs.”

Further, “Researchers in the study concluded the rate of stroke in the patients who got the Wingspan device was ‘substantially higher than the rates previously reported
with the use of the Wingspan stent.’ ”

This is yet another reason for patients to be cautious in agreeing to a stent, and another reason employers need to consider favoring clinics who practise strict evidence-based medicine constructs.

Its All About High Health Care Prices

Tom Emerick

Posted 3/6/12 on Cracking Health Costs

Ezra Klein wrote and article in the Washington Post on March 2, 2012 on this subject.  He wrote, “There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.”

That’s true enough.  Klein goes on to say,”…unlike in other countries, sellers of health-care services in America have considerable power to set prices, and so they set them quite high.”  Click here to read the article.

Again, why is that way in America but not in other resource advantaged countries?

Here’s why.  In the US we are trying to maintain a fiction that the free market should basically rule in the the area of pricing for health care services….with some limitations, of course…but national policy is to let the “market” basically rule.

Continue reading “Its All About High Health Care Prices”

Doctors’ Personal Health Choices

Tom Emerick

Posted 2/28/12 on Cracking Health Costs

Doctors often do not seek for themselves treatments they offer patients. This is particularly true for end of life care.  I’ve seen examples of that all my career.  I’ve also asked doctors about whether or not they personally would seek aggressive of treatment if they had a specific type of cancer.  Rarely do they say yes.

The question is, what’s up?  The WSJ today has a really good article on this topic. Click here to read it.  The following quote probably sums it up: “It’s not something that we like to talk about, but doctors die, too. What’s unusual about them is not how much treatment they get compared with most Americans, but how little. They know exactly what is going to happen, they know the choices, and they generally have access to any sort of medical care that they could want. But they tend to go serenely and gently.” 

I’ve made it abundantly clear to my family that when my time comes I want to exit quietly, as painlessly as possible, and with dignity.  That makes the best sense to me, and evidently to most doctors too.

HR Benefit Ideal – Time For Change

Tom Emerick

Posted 2/14 on Cracking Health Costs

The Human Resources notional view of health care benefits needs to change and do so quickly.

At one time the view of health benefits was one of satisfying/motivating employees, closely coupled with a notion that health benefits were a great way to attract and retain top talent.  Truthfully, that was never really the correct notion of health care reimbursement models.

Continue reading “HR Benefit Ideal – Time For Change”

Toward a Virtuous Quality and Savings Loop

Tom Emerick

Posted 2/1/12 on Cracking Health Costs

If doctors in the US followed the prevailing medical ethic in most of our peer countries, quality of care would improve and hundreds of billions of dollars could be saved.

The prevailing medical ethic in the US is this.  If a treatment may help a patient, let’s do it.  That doesn’t sound bad, does it?  Problem is, that is a deeply flawed ethic.

Continue reading “Toward a Virtuous Quality and Savings Loop”

Medicare Spending Time Bomb

Tom Emerick

Posted 1/23/12 on Cracking Health Costs

A huge amount of attention is focused on the national debt, and it should be.  The real train wreck in the pipeline is Medicare and Medicaid spending.

According to CBO projections, “Total spending on health care would rise from 16 percent of gross domestic product (GDP) in 2007 to 25 percent in 2025, 37 percent in 2050, and 49 percent in 2082.”  Click here for full report.  One problem with CBO estimates is they are notoriously optimistic, with actual costs coming in sometimes as much as eight times higher than CBO projections.

Sometime between 2025 and 2050, America’s going to…. Oh well, I’ll let you complete the sentence.

To quote Alan S. Blinder from a WSJ editorial on this topic, “So no, America, we don’t have a generalized overspending problem for the long run. We have a humongous health-care problem.”

Our children and grandchildren will resent our generation, perhaps bitterly, if we let this stand. In time historians will puzzle over why we knew this was coming but failed to act.

Misdiagnoses Common (Per WSJ)

Tom Emerick

Posted 1/17/12 on Cracking Health Costs

Good article in the WSJ by Laura Landro called “What if the Doctor Is Wrong”, corroborates what I’ve been saying all along.  A large number of patients are seriously misdiagnosed.  Click here to read the article.

As with my last post about USA Today covering how most of the money in a health plans is spent by very few members, I’m very pleased the WSJ is covering the serious problem with how large numbers of patients are diagnosed, or should I saymisdaignosed.

Continue reading “Misdiagnoses Common (Per WSJ)”

Headline USA Today: 5% of Patients Account For Half of Health Spending

Tom Emerick

Posted 1/16/11 on Cracking Health Costs

Kudos to USA Today which just ran a story on outliers. Click here to read full story.

Readers of Cracking Health Costs will be  encouraged to see that the popular media is getting the picture right on who is driving health spending.

Citing a report by the Agency for Healthcare Research and Quality, “The report’s findings can be used to predict which consumers are most likely to drive up health care costs and determine the best ways to save money, said Steven Cohen, the report’s lead author.” 

As the quote says, benefit executives can indeed find the major spenders and manage them better.  The first thing to do for the 5% outliers who spend half the health care dollars is to make sure they have the correct diagnoses and treatment plans.  It’s time to get started.

Doctors Going Broke. So What?

Tom Emerick

Posted 1/11/12 on Cracking Health Costs

According to a nearly breathless article in CCN, some doctors in the U.S. are going broke.  Read it here.  I feel sorry for anyone who goes broke, but why all the gnashing of teeth when it happens to a health provider?

According to the author, some doctors have unsustainable debt and are facing reimbursement reductions by insurers.  A good question is whose fault is unsustainable debt?  After all, many of our institutions have become bloated and can’t adapt to the economic downturn.

Continue reading “Doctors Going Broke. So What?”

It’s 2012. Let’s Recap

Tom Emerick

Posted 1/02/11 on Cracking Health Costs

Let’s hit a few highlights of 2011.  In Cracking Health Costs we described certain…um…scary trends in health care in the US:

  • US spending on health care is lapping our peer countries while our life expectancy is declining comparatively.  This is a major drain on our economy and is costing us jobs.
  • We have a huge amount of unnecessary surgery and testing.  It’s getting worse, not better.  (Read The Treatment Trap by Rosemary Gibson and Janardan Prasad Singh for real life examples.)
  • Continue reading “It’s 2012. Let’s Recap”

Comparing US & OECD Risk Factors

Tom Emerick

Posted 11/30/11 on Cracking Health Costs

In my last two posts we looked at the fact that the US health care costs per person are twice that of OECD (Organisation for Economic Cooperation and Development) member countries, yet our life expectancy at birth has declined relatively over the past 15 years.  We also looked at how we do invasive heart procedures at about twice the rate of OECD members. (See OECD 2011 Health at a Glance.)

When some people see these stats they may say ‘Yes, but people in the US are so much less fit and healthy.’  Hmmm.  Let’s look at the facts.  Data may justify a 10-11% higher heart surgery rate but not one 100% higher than peer countries.


OECD   18.9%

US       33.8%


OECD     2.1%

US       18.1%


OECD     9.1

US         8.8

So, we have about 14.9% more obese people in the US, but we drink about a liter less per person, and our smoking rate is 4% less. if we subtract the smoking rate from the obesity rate, one may conclude that the US population is about 11% less “healthy” than the average OECD member.

Again, my point is data may justify a 10-11% higher heart surgery rate, but not a 100% higher rate!  This is evidence that demands a verdict.

What does a benefit executive do?  Same advice as yesterday:

  • Be informed that something is very wrong with health care in the US.
  • Make a decision to do something about it for your employees.
  • Identify the specialists who overdo procedures and tests.  (Doing this step may be easier than you think. I was examining some data recently and found a specialty practice that was doing costly testing at 20 times the national average. You don’t have to accept that.)
  • Provide incentives for plan members to go to the right surgeons and clinics.

Tom Emerick is a health care consultant for employers and the former VP, Benefits at Walmart. He writes at Cracking Health Costs.