Future Now
The IFTF Blog
Interview Summary - Joe Newhouse, Harvard, March 26, 2009
HC2020 Interview Summary: Joe Newhouse, Harvard U
Interviewer: Richard * Date: March 26, 2009
1. HIS WORK
He is a health economist. Currently working on 2 big projects:
1) Doing a randomized trial to study outcomes of
people with Medicaid vs those with no health insurance.
(State of Oregon expanded Medicaid, but couldn't cover
everyone immediately Radomized 100,000 applicants, now
doing physical exams after 18 mos to measure health status)
2) NIH grant to study private plans under Medicare Part C
Also interested in:
1) whether more choices for coverage are helpful or not to
beneficiaries.
2) Impact of Medicare Part D (Prescrip. drug coverage) on
Parts A & B: does coverage for drugs result in better
health outcomes, lower expenditures for care?
3) Why have lower cost plans been disappearing?
4) How reduction in reimbursement for oncologists has
led to more chemotherapy treatments.
5) Geographic differences in Medicare spending
TRENDS/CHALLENGES
2. How optimistic about future of health/healthcare in 2020?
He is a two-handed economist:
On one hand, he is optimistic:
- Optimistic that industry will continue to come up with
new things/treatments that are good for patients
- Spread of EMRs will improve efficiency
- Quality of care is likely to improve
On the other hand, he is pessimistic:
- Govt will have to do something to restrain health
care costs, many not do it correctly: we don't
know how to control costs
- We know how to get people covered, but we don't
know how to pay for it
- Concerned that we will resort to simplistic solutions
to control costs
3-4. BIGGEST CHALLENGES & RESPONSES TO THEM
1) What to do about the uninsured
See Massachusetts example: they have reduced the number
of uninsured to 2-3%, have fairly effectively addressed
the problem. But MASS is idiosyncratic state, may not
be a national model.
Approach that has worked is to impose an individual
mandate to have insurance with subsidies for low income
people. Employees can keep their employer-based insurance.
2) How to control costs
Rate of increase of health care costs in the U.S. is similar
to much of the rest of the world. No one is doing a great job
of controlling costs.
There are interventions that take some costs out of the system,
but nothing has worked to restrain overall costs over time.
One view is that as we get richer, we tend to spend more of
our GDP on health/health care. This is a real dilemma with no
obvious solution.
3) How to improve quality of care
10 years is about the right period of time to see real impact
of a new development like IT in health care. But it may not
deliver what we expect. The biggest payoff may come from
integrating real decision-support tools -- but this is still
a way off
5. Have these trends surfaced before?
6. Challenges/responses not on radar now?
How we pay for care.
Will payments become more capitated, more bundled?
Organized medicine has resisted bundling payment for
care, e.g., bundling post-operative care with
DRG for surgery. But Obama is talking about bundling
care reimbursements (in his new budget)
Medical Home model is a start toward more integrated
care ("partial capitation), but we need to go much
further.
Some history: When Medicare was started, radiologists,
anestheseologists, and pathologists were going to be
included in Part A - Hospital coverage. But they got
themselves separated and paid directly. If they can't
be integrated, who can be?
He has been working for the past two years on the Eastern
Massachusetts Health Intitiative - an attempt to integrate
health care regionally.
FUTURE SCENARIOS
7. Most preferable scenario
- Uninsured has been reduced to single digits (from about 16%
today)
- We will have taken some costs out of the system without
damaging "the march of science" to improve care, esp.
biotech
- IT will continue to expand its impact. Personal Health
Records will be widespread, will be beginning to merge into
true widely shared Electronic Health Records.
- Solo and small practices will slowly diminish as integration
becomes more widespread.
- We will have figured out how to pay for performance, reward
quality as mainstream reimbursement.
- We will have gotten better control over hospital-borne infections,
do better at targeting disease management to those who most need
it and benefit from it.
8. Most plausible scenario
- Similar to #7, but less progress on covering the uninsured; more
problems with the uninsured; more use of safety net clinics
- More TIERING of health care
# Bottom = safety net + public hospitals + free clinics
# Mass = Kaiser like coverage for those with insurance
# Top = wider access to services, more customized, less
rationing
9. Most negative scenario
- Government attempts to take over entire health care system in
order to reduce costs, but in a way that distorts the market &
stifles innovation.
- Medicare becomes "a giant administered price system" - but we
aren't able to set prices efficiently.
- Result is that we get cost control, but at a high price.
Issue is how much increase in costs are we willing to accept before
some sort of drastic action is taken?
Every year except 3 since 1946, federal revenues have been 16-20%
of GDP = an "immovable object" But increase in health care costs
seem to be an "irresistable force" that will cause this percentage
to increase. Which will give way??
10. WRAP-UP
Medicare Trustees will issue their annual report shortly that is
likely to show Part A Trust Fund will reach $0 in 2016 or 2015.
This is likely to increase the pressure to do something.
His conclusion: Traditional Medicare is an OBSTACLE to real change.