Atul Gawande: Lowering Medical Costs By Providing Better Care

From NPR:

One of the criticisms of the health care reform bill enacted last year is that it expanded coverage without doing enough to control rising health care costs. Surgeon and journalist Atul Gawande says there are hopeful signs that costs can be contained — not by cutting back, but by providing more intensive services to chronically ill patients who incur huge costs with long stays in hospital rooms and intensive care units.

Ezra Klein - An insurance industry CEO explains why American health care costs so much

There is a simple explanation for why American health care costs so much more than health care in any other country: because we pay so much more for each unit of care. As Halvorson explained, and academics and consultancies have repeatedly confirmed, if you leave everything else the same -- the volume of procedures, the days we spend in the hospital, the number of surgeries we need -- but plug in the prices Canadians pay, our health-care spending falls by about 50 percent.

In other countries, governments set the rates that will be paid for different treatments and drugs, even when private insurers are doing the actual purchasing. In our country, the government doesn't set those rates for private insurers, which is why the prices paid by Medicare, as you'll see on some of these graphs, are much lower than those paid by private insurers. You'll also notice that the bit showing American prices is separated into blue and yellow: That shows the spread between the average price (the top of the blue) and the 90th percentile (the top of the yellow). Other countries don't have nearly that much variation, again because their pricing is standard.

The health-care reform debate has done a good job avoiding the subject of prices. The argument over the Medicare-attached public plan was, in a way that most people didn't understand, an argument about prices, but it quickly became an argument about a public option without a pricing dimension, and never really looked back. The administration has been very interested in the finding that some states are better at providing cost-effective care than other states, but not in the finding that some countries are better at purchasing care than other countries. "A health-care debate in this country that isn't aware of the price differential is not an informed debate," says Halvorson. By that measure, we have not had a very informed debate. But download this pack of charts (pdf), and you'll be a bit more informed.

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New Thomson Reuters Report: Healthcare system wastes up to $800 billion a year

From Reuters:

The U.S. healthcare system is just as wasteful as President Barack Obama says it is, and proposed reforms could be paid for by fixing some of the most obvious inefficiencies, preventing mistakes and fighting fraud, according to a Thomson Reuters report released on Monday.

The U.S. healthcare system wastes between $505 billion and $850 billion every year, the report from Robert Kelley, vice president of healthcare analytics at Thomson Reuters, found.

"America's healthcare system is indeed hemorrhaging billions of dollars, and the opportunities to slow the fiscal bleeding are substantial," the report reads.

"The good news is that by attacking waste we can reduce healthcare costs without adversely affecting the quality of care or access to care."

One example -- a paper-based system that discourages sharing of medical records accounts for 6 percent of annual overspending.

"It is waste when caregivers duplicate tests because results recorded in a patient's record with one provider are not available to another or when medical staff provides inappropriate treatment because relevant history of previous treatment cannot be accessed," the report reads.

Some other findings in the report from Thomson Reuters, the parent company of Reuters:

• Unnecessary care such as the overuse of antibiotics and lab tests to protect against malpractice exposure makes up 37 percent of healthcare waste or $200 to $300 billion a year.
• Fraud makes up 22 percent of healthcare waste, or up to $200 billion a year in fraudulent Medicare claims, kickbacks for referrals for unnecessary services and other scams.
• Administrative inefficiency and redundant paperwork account for 18 percent of healthcare waste.
• Medical mistakes account for $50 billion to $100 billion in unnecessary spending each year, or 11 percent of the total.
• Preventable conditions such as uncontrolled diabetes cost $30 billion to $50 billion a year.
• "The average U.S. hospital spends one-quarter of its budget on billing and administration, nearly twice the average in Canada," reads the report, citing dozens of other research papers.

"American physicians spend nearly eight hours per week on paperwork and employ 1.66 clerical workers per doctor, far more than in Canada," it says, quoting a 2003 New England Journal of Medicine paper by Harvard University researcher Dr. Steffie Woolhandler.

Five Myths About Health Care in the Rest of the World

Journalist and author T.R. Reid set out on a global tour of hospitals and doctors' offices, all in the hopes of understanding how other industrialized nations provide affordable, effective universal health care. The result: his book The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care.

Listen to a great interview with Reid on NPR's Fresh Air | Read the transcript here

By T.R. Reid:

As Americans search for the cure to what ails our health-care system, we've overlooked an invaluable source of ideas and solutions: the rest of the world. All the other industrialized democracies have faced problems like ours, yet they've found ways to cover everybody -- and still spend far less than we do.

I've traveled the world from Oslo to Osaka to see how other developed democracies provide health care. Instead of dismissing these models as "socialist," we could adapt their solutions to fix our problems. To do that, we first have to dispel a few myths about health care abroad:

1. It's all socialized medicine out there.

Not so. Some countries, such as Britain, New Zealand and Cuba, do provide health care in government hospitals, with the government paying the bills. Others -- for instance, Canada and Taiwan -- rely on private-sector providers, paid for by government-run insurance. But many wealthy countries -- including Germany, the Netherlands, Japan and Switzerland -- provide universal coverage using private doctors, private hospitals and private insurance plans.

In some ways, health care is less "socialized" overseas than in the United States. Almost all Americans sign up for government insurance (Medicare) at age 65. In Germany, Switzerland and the Netherlands, seniors stick with private insurance plans for life. Meanwhile, the U.S. Department of Veterans Affairs is one of the planet's purest examples of government-run health care.

2. Overseas, care is rationed through limited choices or long lines.

Generally, no. Germans can sign up for any of the nation's 200 private health insurance plans -- a broader choice than any American has. If a German doesn't like her insurance company, she can switch to another, with no increase in premium. The Swiss, too, can choose any insurance plan in the country.

In France and Japan, you don't get a choice of insurance provider; you have to use the one designated for your company or your industry. But patients can go to any doctor, any hospital, any traditional healer. There are no U.S.-style limits such as "in-network" lists of doctors or "pre-authorization" for surgery. You pick any doctor, you get treatment -- and insurance has to pay.

Canadians have their choice of providers. In Austria and Germany, if a doctor diagnoses a person as "stressed," medical insurance pays for weekends at a health spa.

As for those notorious waiting lists, some countries are indeed plagued by them. Canada makes patients wait weeks or months for nonemergency care, as a way to keep costs down. But studies by the Commonwealth Fund and others report that many nations -- Germany, Britain, Austria -- outperform the United States on measures such as waiting times for appointments and for elective surgeries.

In Japan, waiting times are so short that most patients don't bother to make an appointment. One Thursday morning in Tokyo, I called the prestigious orthopedic clinic at Keio University Hospital to schedule a consultation about my aching shoulder. "Why don't you just drop by?" the receptionist said. That same afternoon, I was in the surgeon's office. Dr. Nakamichi recommended an operation. "When could we do it?" I asked. The doctor checked his computer and said, "Tomorrow would be pretty difficult. Perhaps some day next week?"

3. Foreign health-care systems are inefficient, bloated bureaucracies.

Much less so than here. It may seem to Americans that U.S.-style free enterprise -- private-sector, for-profit health insurance -- is naturally the most cost-effective way to pay for health care. But in fact, all the other payment systems are more efficient than ours.

U.S. health insurance companies have the highest administrative costs in the world; they spend roughly 20 cents of every dollar for nonmedical costs, such as paperwork, reviewing claims and marketing. France's health insurance industry, in contrast, covers everybody and spends about 4 percent on administration. Canada's universal insurance system, run by government bureaucrats, spends 6 percent on administration. In Taiwan, a leaner version of the Canadian model has administrative costs of 1.5 percent; one year, this figure ballooned to 2 percent, and the opposition parties savaged the government for wasting money.

The world champion at controlling medical costs is Japan, even though its aging population is a profligate consumer of medical care. On average, the Japanese go to the doctor 15 times a year, three times the U.S. rate. They have twice as many MRI scans and X-rays. Quality is high; life expectancy and recovery rates for major diseases are better than in the United States. And yet Japan spends about $3,400 per person annually on health care; the United States spends more than $7,000.

4. Cost controls stifle innovation.

False. The United States is home to groundbreaking medical research, but so are other countries with much lower cost structures. Any American who's had a hip or knee replacement is standing on French innovation. Deep-brain stimulation to treat depression is a Canadian breakthrough. Many of the wonder drugs promoted endlessly on American television, including Viagra, come from British, Swiss or Japanese labs.

Overseas, strict cost controls actually drive innovation. In the United States, an MRI scan of the neck region costs about $1,500. In Japan, the identical scan costs $98. Under the pressure of cost controls, Japanese researchers found ways to perform the same diagnostic technique for one-fifteenth the American price. (And Japanese labs still make a profit.)

5. Health insurance has to be cruel.

Not really. American health insurance companies routinely reject applicants with a "preexisting condition" -- precisely the people most likely to need the insurers' service. They employ armies of adjusters to deny claims. If a customer is hit by a truck and faces big medical bills, the insurer's "rescission department" digs through the records looking for grounds to cancel the policy, often while the victim is still in the hospital. The companies say they have to do this stuff to survive in a tough business.

Foreign health insurance companies, in contrast, must accept all applicants, and they can't cancel as long as you pay your premiums. The plans are required to pay any claim submitted by a doctor or hospital (or health spa), usually within tight time limits. The big Swiss insurer Groupe Mutuel promises to pay all claims within five days. "Our customers love it," the group's chief executive told me. The corollary is that everyone is mandated to buy insurance, to give the plans an adequate pool of rate-payers.

The key difference is that foreign health insurance plans exist only to pay people's medical bills, not to make a profit. The United States is the only developed country that lets insurance companies profit from basic health coverage.

In many ways, foreign health-care models are not really "foreign" to America, because our crazy-quilt health-care system uses elements of all of them. For Native Americans or veterans, we're Britain: The government provides health care, funding it through general taxes, and patients get no bills. For people who get insurance through their jobs, we're Germany: Premiums are split between workers and employers, and private insurance plans pay private doctors and hospitals. For people over 65, we're Canada: Everyone pays premiums for an insurance plan run by the government, and the public plan pays private doctors and hospitals according to a set fee schedule. And for the tens of millions without insurance coverage, we're Burundi or Burma: In the world's poor nations, sick people pay out of pocket for medical care; those who can't pay stay sick or die.

This fragmentation is another reason that we spend more than anybody else and still leave millions without coverage. All the other developed countries have settled on one model for health-care delivery and finance; we've blended them all into a costly, confusing bureaucratic mess.

Which, in turn, punctures the most persistent myth of all: that America has "the finest health care" in the world. We don't. In terms of results, almost all advanced countries have better national health statistics than the United States does. In terms of finance, we force 700,000 Americans into bankruptcy each year because of medical bills. In France, the number of medical bankruptcies is zero. Britain: zero. Japan: zero. Germany: zero.

Given our remarkable medical assets -- the best-educated doctors and nurses, the most advanced hospitals, world-class research -- the United States could be, and should be, the best in the world. To get there, though, we have to be willing to learn some lessons about health-care administration from the other industrialized democracies.

Source: washingtonpost.com

Reid is a foreign correspondent for The Washington Post and the former chief of the paper's London and Tokyo bureaus.

Reid was the lead correspondent for the 2008 Frontline documentary Sick Around the World, which examined five other capitalist democracies, looking for lessons on health-care delivery. His books include Confucius Lives Next Door: What Living in the East Teaches Us About Living in the West and The United States of Europe: The New Superpower and the End of American Supremacy.

Ir-rationing Health Care

So, there are billion-dollar investments being made to build prostate cancer proton treatment centers that may or may not be any more successful than older radiation therapies that doctors have been using for years. Or, more successful than doing nothing at all, for that matter.

Meanwhile, just as one example, the nation’s emergency rooms are crumbling into decay. Emergency rooms do not make a profit. They have very high overhead because they have to be ready for, well, emergencies. And many people who use emergency rooms can’t pay the bills. So many hospitals are closing or cutting back or downsizing emergency rooms.

(And the practice of using emergency rooms as default “free” clinics for the poor and uninsured not only adds to the burdens on emergency rooms; it is also probably the least cost-effective way anyone could think of to provide last-ditch health services to the poor and uninsured, which is another big reason our nations spends so much on health care.)

Anyway — it appears that if somebody is making money off a particular gizmo or course of treatment, the health insurance industry manages to find room in its heart to pay for it. However, the private insurance companies routinely refuse to cover people who have even minor “preexisting conditions” and drop customers whose ailments are money-losers.

One of the reasons the medical-industrial complex gets away with scamming us is that doctors themselves often do not know which treatment is most effective. There is remarkably little effectiveness testing going on. “Drug and device makers have no reason to finance such trials, because insurers now pay for expensive treatments even if they aren’t more effective,” Leonhardt writes. So the doctors often have little else to go on but what the sales reps tell them. And some doctors are as keen to boost their revenue streams as anyone else in the complex.

A critical part of President Obama’s health care proposal is called “comparative effectiveness research (CER).” CER is not, as the Right claims, a plan that would allow the government to countermand a doctor’s decisions based on cost-effectiveness studies. The common claim on the Right that CER is about rationing is a lie. The point behind CER is to fund the kind of effectiveness testing that is not being done now and provide that information to doctors and patients, so that doctors and patients can make more informed decisions about what course of treatment to pursue.

The mendacious anti-reform talking points repeated ad nauseam by the dittoheads of the Right are generated by a network of right-wing think tanks and other organizations that exist solely to influence public opinion. This network is very good at getting their propaganda uncritically parroted throughout mass media and the Internet, repeated over and over until it becomes “common knowledge.” And in many cases the deep pockets funding those think tanks are also heavily invested in the medical-industrial complex. And round and round it goes …

Read it all at The Mahablog

Health-care spending in rich countries

AMERICA'S health-care system is the costliest in the world, gobbling up about 16% of the country’s economic output. Comparisons with other rich countries and within the United States show that its system is not only growing at an unsustainable pace, but also provides questionable value for money and dubious medical care. Economists at the OECD found that America does indeed do well on some measures, such as breast-cancer survival rates and cervical-cancer screening, but does worse in others. Infant mortality was 6.7 per 1,000 births in 2007, against an OECD average (excluding Mexico and Turkey) of 4.0. Reforms are being considered to extend coverage for the 49m people with no health insurance, possibly by obliging individuals to buy insurance.
Source: The Economist

A Doctor's View of Obama's Healthcare Plans

By Dr. Abraham Verghese

I mention this because I have similar problems with the way President Obama hopes to pay for the huge and costly health reform package he has in mind that will cover all Americans; he is counting on the “savings” that will come as a result of investing in preventive care and investing in the electronic medical record among other things. It’s a dangerous and probably an incorrect projection.

But I’d like to officially let McAllen off the hook and say that having practiced in five states, including 15 years in the great state of Texas, we are all complicit in practicing just that kind of medicine if you look hard enough and if you looked at us individually. Conflicts of interest are rife; they are almost the rule. So is the ability to wear blinders so we are (mostly) oblivious to our conflict.

Which brings me to my problem with the president’s plan: despite being an admirer, I just don’t see how the president can pull off the reform he has in mind without cost cutting. I recently came on a phrase in an article in the journal “Annals of Internal Medicine” about an axiom of medical economics: a dollar spent on medical care is a dollar of income for someone. I have been reciting this as a mantra ever since. It may be the single most important fact about health care in America that you or I need to know. It means that all of us—doctors, hospitals, pharmacists, drug companies, nurses, home health agencies, and so many others—are drinking at the same trough which happens to hold $2.1 trillion, or 16% of our GDP. Every group who feeds at this trough has its lobbyists and has made contributions to Congressional campaigns to try to keep their spot and their share of the grub. Why not?—it’s hog heaven. But reform cannot happen without cutting costs, without turning people away from the trough and having them eat less. If you do that, you have to be prepared for the buzz saw of protest that dissuaded Roosevelt, defeated Truman’s plan and scuttled Hillary Clinton’s proposal. The good news is that the AMA, representing perhaps 15% of active practicing physicians, is not as powerful as it was in Truman’s time, and in the eyes of the public and many in medicine, it’s identity in the reform debate, is that of a protectionist, self-serving, organization; as a result, even their most progressive statements are viewed with suspicion. I’ve found the views of the American Medical Student Association particularly exciting—the next generation of physicians I sense has a deeper commitment to affordable health care for all than ours; they are, simply put, better people.

We may not like it, but the only way a government can control costs is by wielding great purchasing power to get concessions on the price of drugs, physician fees, and hospital services; the only way they can control administrative costs is by providing a simplified service, yes, the Medicare model (with a 3% overhead), and not allowing private insurance to cherry-pick patients (some of them operating with 30% overheads, the cost passed on to you).

Contrary to what we might think, comparative studies show us that the US when compared to other advanced countries, does not have a sicker population: we actually use fewer prescription drugs and we have shorter hospital stays (though we manage to do a lot more imaging in those short stays—got to feed the MRI machines). The bottom line is that our health care is costly because it is costly, not because we deliver more care, better care or special care. Alas, a solution that does not address the cost of care, and negotiate new prices for the services offered will not work; a solution that does not put caps on spending and that instead projects cost-savings here and there also won’t cut it. Leaders have to make tough and unpopular decisions, and if he is to be the first President to successfully accomplish reform there does not seem to be much choice: cut costs.

—Abraham Verghese is Professor and Senior Associate Chair for the Theory and Practice of Medicine at Stanford University. He is the author of the novel “Cutting For Stone.”

Read more in at WSJ.com

Unhealthy numbers: Bankruptcies, uncontrolled costs argue convincingly for health-care reform

At a glance, the plight of these 47 million appears to be much if not most of what needs fixing. But, as Chronicle business columnist Loren Steffy observes in his column this past Sunday (“Insured but not covered”), things are far from copacetic for those millions of Americans supposedly adequately covered by health plans through their employers.

They are not. As Steffy puts it, this umbrella leaks, and thousands of families are going under financially because their health insurance does not perform as advertised. Steffy cites a study in the American Journal of Medicine showing that two-thirds of all bankruptcies over the past six years were related to medical expenses, and that a surprising three-fourths of those filing for bankruptcy for medical-related reasons had medical insurance when they did so.

Or perhaps this is not so surprising. Certainly it will not astonish anyone who has attempted to navigate the maze of co-pays, deductibles, explanations of benefits and frequently inscrutable bills from hospitals, laboratories and other care providers. For the unwary and uninformed health-care consumer, these can all be a source of emotional and financial stress on top of whatever medical condition may afflict them or a family member.

Harvard Professor David Himmelstein , author of the study mentioned above, doesn’t mince words. “Private health insurance is a defective product, he says, “akin to an umbrella that melts in the rain .”

The notion of competition in the health-care insurance industry is mostly myth, Himmelstein contends. For most consumers, the choices are limited by what their employers offer and at what cost they choose to offer it. For some lucky ones the choices may be made broader by the option of insuring through a spouse.

Read more at the Houston Chronicle

Workers' health costs up 34% in 3 years

Americans with job-based health insurance saw their protection from higher out-of-pocket costs erode between 2004 and 2007, especially those who were sick and of modest means, according to a new study.

"American families with employer-based coverage were worse off in 2007 than they were in 2004," said Jon Gabel, the lead author of the study, which was published June 2 on the Web site of medical journal Health Affairs (pdf file). "This is during a period of time when the economy was expanding."

"In the United States, if you are sick and earn a modest income, then you are probably underinsured, even if you have employer-based health coverage," the researchers wrote.

Overall, the recession may exacerbate the trend toward eroding financial protection as employers become more sensitive to the rising costs of workers' health insurance, Gabel said.

"I would expect to see significant increases in cost-sharing in the next few years at a time when households are going to be less able to pay for it," he said.

Read more at MSN Money

More Medical Bankruptcy-Have Insurance, Go Bankrupt - PNHP Press Release

Press Release:

Medical problems contributed to nearly two-thirds (62.1 percent) of all bankruptcies in 2007, according to a study in the August issue of the American Journal of Medicine that was published today online. The data were collected prior to the current economic downturn and hence likely understate the current burden of financial suffering. Between 2001 and 2007, the proportion of all bankruptcies attributable to medical problems rose by 49.6 percent. The authors’ previous 2001 findings have been widely cited by policy leaders, including President Obama.

Surprisingly, most of those bankrupted by medical problems had health insurance. More than three-quarters (77.9 percent) were insured at the start of the bankrupting illness, including 60.3 percent who had private coverage. Most of the medically bankrupt were solidly middle class before financial disaster hit. Two-thirds were homeowners and three-fifths had gone to college. In many cases, high medical bills coincided with a loss of income as illness forced breadwinners to lose time from work. Often illness led to job loss, and with it the loss of health insurance.

Even apparently well-insured families often faced high out-of-pocket medical costs for co-payments, deductibles and uncovered services. Medically bankrupt families with private insurance reported medical bills that averaged $17,749 vs. $26,971 for the uninsured. High costs – averaging $22,568 – were incurred by those who initially had private coverage but lost it in the course of their illness.

Individuals with diabetes and those with neurological disorders such as multiple sclerosis had the highest costs, an average of $26,971 and $34,167 respectively. Hospital bills were the largest single expense for about half of all medically bankrupt families; prescription drugs were the largest expense for 18.6 percent.

The research, carried out jointly by researchers at Harvard Law School, Harvard Medical School and Ohio University, is the first nationwide study on medical causes of bankruptcy. The researchers surveyed a random sample of 2,314 bankruptcy filers during early 2007 and examined their bankruptcy court records. In addition, they conducted extensive telephone interviews with 1,032 of these bankruptcy filers.

Their 2001 study, which was published in 2005, surveyed debtors in only five states. In the current study, findings for those five states closely mirrored the national trends.

Subsequent to the 2001 study, Congress made it harder to file for bankruptcy, causing a sharp drop in filings. However, personal bankruptcy filings have soared as the economy has soured and are now back to the 2001 level of about 1.5 million annually.

Dr. David Himmelstein, the lead author of the study and an associate professor of medicine at Harvard, commented: "Our findings are frightening. Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy. For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments and deductibles that illness can put you in the poorhouse. And even the best job-based health insurance often vanishes when prolonged illness causes job loss – precisely when families need it most. Private health insurance is a defective product, akin to an umbrella that melts in the rain."

"For many families, bankruptcy is a deeply shameful experience." noted Elizabeth Warren, Leo Gottlieb Professor of Law at Harvard and a study co-author. Professor Warren, a leading expert on personal bankruptcy, went on: "People arrive at the bankruptcy courts exhausted—financially, physically and emotionally. For most, bankruptcy is a last choice to deal with unmanageable circumstances."

According to study co-author Dr. Steffie Woolhandler, an associate professor of medicine at Harvard and primary care physician in Cambridge, MA: "We need to rethink health reform. Covering the uninsured isn’t enough. Reform also needs to help families who already have insurance by upgrading their coverage and assuring that they never lose it. Only single-payer national health insurance can make universal, comprehensive coverage affordable by saving the hundreds of billions we now waste on insurance overhead and bureaucracy. Unfortunately, Washington politicians seem ready to cave in to insurance firms and keep them and their counterfeit coverage at the core of our system. Reforms that expand phony insurance - stripped-down plans riddled with co-payments, deductibles and exclusions – won’t stem the rising tide of medical bankruptcy."

Dr. Deborah Thorne, associate professor of sociology at Ohio University and study co-author stated: "American families are confronting a panoply of social forces that make it terribly difficult to maintain financial stability—job losses and wages that have not kept pace with the cost of living, exploitation from the various lending industries, and, probably most consequential and disgraceful, a health care system that is so dysfunctional that even the most mundane illness or injury can result in bankruptcy. Families who file medical bankruptcies are overwhelmingly hard-working, middle class families who have played by the rules of our economic system, and they deserve nothing less than affordable health care."

"Medical bankruptcy in the United States, 2007: Results of a national study," David U. Himmelstein, M.D; Deborah Thorne, Ph.D.; Elizabeth Warren, J.D.; Steffie Woolhandler, M.D., M.P.H. American Journal of Medicine, June 4, 2009

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Medical Bankruptcy – Q&A

1 - What is a "medical bankruptcy"?

A number of medical factors can contribute to a family’s financial collapse, including high medical bills or lost time from work. Because different researchers use different definitions, we supplied a detailed analysis of debtors who:

• Specifically identified medical problem of the debtor or spouse (32.1%) or another family member (10.8%) as a reason for filing bankruptcy.
• Specifically said medical bills were a reason for bankruptcy. (29.0%)
• Lost two or more weeks of wages because of lost time from work to deal with a medical problem for themselves or a family member. (40.3%)
• Mortgaged their homes to pay medical bills. (5.7%)
• Spent more than $5,000 or 10% of annual household income in out-of-pocket medical bills (34.7%)

• Total, one or more of the above criteria: 62.1%

The vast majority (92%) of bankruptcies that we classified as medical had medical bill problems as indicated by: listing medical bills as a specific reason for their bankruptcy; or having medical bills of bills $5,000 or 10% of household income or that forced them to mortgage their home. The remaining 8% whose bankruptcy was classified as "medical" indicated that a medical problem or income loss due to illness was a cause of bankruptcy.

2 - Why do only 29% of bankrupt people identify medical bills as a reason for filing bankruptcy, but you say the total percentage of medical bankruptcies is 62.1%?

Families characterize their problems differently. Someone may mortgage a home to pay for surgery, then be unable to pay off the mortgage, describing the reason for filing bankruptcy as "unable to pay the mortgage." Similarly, some people explain that they have lost too much time from work when they have taken off to care for a child who has been hospitalized. We believe that multiple ways of asking about medical bankruptcies give the most complete picture, but we publish the breakdown in responses so that any other research or commentator can draw his or her own conclusions.

Finally, it should be noted that many people who are financially ruined by illness are undoubtedly too ill, too poor or demoralized to pursue formal bankruptcy, and are not counted in our study.

3 - What is the impact of health insurance?

More than three-quarters (78%) of the families that met the criteria for medical bankruptcy had health insurance at the onset of their illness or accident. By comparison, 80% of the non-elderly adult population and 85% of the entire U.S. population had health insurance in 2007. Hence, it appears that health insurance offers only modest protection against medical bankruptcy.

4 - Is the problem of medical bankruptcies just because of the recession?

No. The families in this study filed for bankruptcy between January-April of 2007, before the recession began. Since then, the financial stress on families has grown.

5 - Is this a national sample of all families filing for bankruptcy?

Yes. The sample was drawn from bankruptcy filings across the country.

6 - How did you get your information?

We contacted a random sample of all personal bankruptcy filers in the U.S. during the winter of 2007. Written questionnaires were returned by 2,314 debtors, and we also analyzed their bankruptcy court records. We also carried out extensive telephone interviews with 1,032 of these debtors.

Finally, to be sure that the debtors who returned our survey were similar to those who did not, we also analyzed the court records of 99 of the non-respondents. They were almost identical to those who returned the survey in terms of debts, income, assets and other characteristics.

7 - What’s the basis for saying that the proportion of bankruptcies that are medical rose by 50% between 2001 and 2007?

In order to compare the medical bankruptcy rates in 2007 and in our 2001 study we had to use the same definitions in both years. Our 2001 study had used a less stringent ("legacy") definition of medical bankruptcy that included families with more than $1000 in unpaid medical bills. Using this "legacy" definition, the medical bankruptcy rate rose from 46.2% in 2001 to 69.1% in 2007 – a 49.6% increase. The 2001 estimate relied on data collected from bankruptcy filers in five states. Analysis of the 2007 data confirmed that the five states included in the 2001 survey also saw a 50% increase in medical bankruptcies.

8 - Would health reform eliminate the problem of medical bankruptcy?

Many debtors described a complex web of problems involving illness, work, and family. Separating medical from other causes of bankruptcy is difficult. Hence, we cannot presume that eliminating the medical antecedents of bankruptcy would have prevented all of the filings we classified as "medical bankruptcies." The high rate of insurance among the medical bankrupts suggests that any health reform that fails to improve existing private coverage is unlikely to make a major impact on medical bankruptcy. Moreover, our data also highlight the need for improved disability coverage.

9 - Why do some others claim that medical bankruptcy rates are much lower?

Ours is the only study based on direct surveys and interviews with a large sample of families filing for bankruptcy. Others have based their findings on bankruptcy court records alone (with no direct surveys or interviews) or on surveys of the general public that inquire about bankruptcy filings. Court records fail to identify medical bankruptcies because many medical bills are charged to credit cards and hence cannot be identified as "medical" in court records. Similarly, when medical providers turn debts over to collection agencies they would not appear as "medical." Because bankruptcy carries a substantial stigma, about half of all respondents who are bankrupt deny that fact. As a result, surveys of the general public are an unreliable source of information on medical bankruptcy. For these reasons, the only way to accurately assess medical bankruptcy is to directly survey families who file for bankruptcy.

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Medical Bankruptcy – Fact Sheet

• In May 2009, more than 5,000 families filed for bankruptcy every business day. For all of 2009, the total is expected to reach about 1.4 million. The average personal bankruptcy involves 2.71 debtors and dependents. In total, an estimated 3.8 million Americans will be involved in personal bankruptcy filings this year.

• Illness and medical bills were a cause of at least 62.1% of all personal bankruptcies in 2007. Based on the current bankruptcy filing rate, medical bankruptcies will total 866,000 and involve 2.346 million Americans this year – about one person every 15 seconds.

• Using identical definitions in both years, the proportion of bankruptcies attributable to medical problems rose by 49.6% between 2001 and 2007.

• Most medically bankrupt families were middle class before they suffered financial setbacks. 60.3% of them had attended college and 66.4% had owned a home; 20% of families included a military veteran or active-duty soldier.

• Most medical debtors had some health insurance, but many suffered gaps in coverage:

77.9% of the individuals whose illness led to bankruptcy had health insurance at the onset of the bankrupting illness; 60.3% had private insurance.
69% of debtor families had coverage at the time of their bankruptcy filing
60% of families had continuous coverage
Only 0.3% of the uninsured went without coverage voluntarily, i.e. because they though they didn’t need it – most others couldn’t afford it.

• Among medical debtors, hospital bills were the largest medical expense for 48% drug costs for 19%, doctors’ bills for 15% and insurance premiums for 4%. In 38% of cases, lost income due to illness was a factor.

• Out-of-pocket medical costs since the onset of illness averaged $17,943.

• For the privately-insured, out-of-pocket costs averaged $17,749.
• For the uninsured, out-of-pocket costs averaged $26,971.
• Patients with neurologic disorders such as multiple sclerosis faced the highest costs, and average of $34,167, followed by diabetics at $26,971.
  

• According to earlier studies, between 7.1% and 14.3% of Canadian bankruptcies are due to "health/misfortune" (a category that includes some non-medical problems).

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Downloadable copies of press release and info above is at the PNHP website here.

And again, downloadable full text of professional peer review journal article is here.

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More:

In addition to whatever else your minimal demand is, mine is for what would seem to be a non-radical, non-shrill, non-extremist minimal demand, and one that some senators and congresscritters claim to have agreed to (but need pressure to help them keep them promise):

"There must be a complete, honest, side-by-side comparison of all proposals, including single payer HR-676 (Conyers) and SB-703 (Sanders), by the Congressional Budget Office.

The side-by-side comparison should include projected costs to state governments, employers and to households of different income levels. For 2010 and beyond."

Because the only way to actually control costs and provide universal and comprehensive coverage is single payer.

It is crticial that whatever it is we are going to be allowed to get, and whatever it is we are not getting, be honestly and transparently compared for all to see:

The best we have for now is the January 2009 report from the Commonwealth Fund done by the Lewin Group comparing congressional proposals, as summarized in their graph and table below:

1. "Stark"=Single Payer (expanded and improved Medicare for All)

2. "Building Blocks" = Obama/Baucus (mandates to buy private for-profit health insurance + real Public Option + expanded Medicaid)
   
   

Total Change in National Health Expenditures, in 2010 (in Billions) Under Different Health Reform Proposals:

and

Change in Health Spending by Stakeholder Group, Billions of Dollars, 2010

That is why Senator Baucus keeps asking the CBO to "fix the numbers."

Call these critical Democratic Senators, and let your voice be heard:

• Senator Max Baucus at (202) 224-2651
• Senator Charles Schumer at 202-224-6542
• Senator Edward Kennedy at (202) 224-4543
• Senator John Rockefeller at (202) 224-6472
• Senator Ron Wyden at (202) 224-5244
• Senator Kent Conrad at (202) 224-2043
• Senator Jeff Bingaman at (202) 224-5521
• Senator John Kerry at (202) 224-2742
• Senator Blanche Lincoln at 202-224-4843
• Senator Debbie Stabenow at (202) 224-4822
• Senator Maria Cantwell at 202-224-3441
• Senator Bill Nelson at 202-224-5274
• Senator Robert Menendez at 202-224-4744
• Senator Thomas Carper at (202) 224-2441

Cross Posted from Daily Kos with a Hat Tip to Dr. Steve

When Being Insured Doesn’t Mean Being Protected

Part Five of a Special Report from CQ Healthbeat

As the drive for an overhaul gains momentum, consumer advocates have been recounting horror stories of people facing devastating medical costs: a breast cancer patient struggling to pay more than $30,000 she owes her doctors; a couple losing their home to foreclosure after paying for their daughter’s treatment for a chronic disease; a prostate cancer survivor having to forgo annual screenings because he can’t afford them.

Though much of the discussion has centered on the need to cover the nation’s 46 million uninsured, the people behind these particular stories are examples of a different problem. They’re all insured; their policies just aren’t comprehensive enough to protect them from potentially crushing bills.

As costs rise and employer benefits become weaker, the phenomenon of “underinsurance” has become increasingly common, patient advocates say. About 25 million Americans had inadequate health coverage in 2007, according to one widely cited estimate by the Commonwealth Fund, a foundation that supports health care research.

The problem is giving rise to one of the central questions lawmakers face as they tackle an overhaul of the system: Exactly what needs to be covered by an insurance policy, and how far should the federal government go in mandating the specific details?

“The policy issue we’re facing as a country is that we’ve never put a floor under insurance benefits and said, at a minimum, a policy has to be broad in scope,” said Cathy Schoen, senior vice president at the Commonwealth Fund. “There are still policies on the market that don’t protect you from high costs. We’ve never done basic insurance standards.”

Read More....: "