Everyone should read this article in Health Affairs. It is the moving story of a woman diagnosed with terminal breast cancer who chose palliative treatment over interventionist strategies.

Amy Berman is one knowledgeable and connected patient. She is a nurse, works for a health foundation in New York, and is a long time policy leader in health care. She received a terrible diagnosis: stage IV inflammatory breast cancer that had already spread—incurable, even with aggressive treatment. And though she was only 51 years old when she received this diagnosis, she chose a path of palliative rather than aggressive care.

The April issue of Health Affairs is all about cancer: research on cancer; quality improvement in cancer, and the cost of cancer care. It is a rich issue and includes great examples of new and improving strategies for dealing with cancer, including an article about the Cancer Care Continuous Quality Improvement Initiative led by the University of Michigan and Blue Cross Blue Shield of Michigan.

But Amy’s story is the most powerful. It is powerful because it is personal and beautifully told. It is also powerful because in it, Amy reflects on what is important in life and counters the pressures so pervasive in medical care today—pressures that often cause patients to seek more care even when it seriously interferes with quality of life.

When she was diagnosed with inflammatory breast cancer, she went to see a specialist who told her what kind of treatment she should get without ever asking about her wishes. The specialist made it clear that he expected she would do everything possible—at whatever personal cost—to prolong her life, even if it meant just a few more months for her.

Those of us who have had friends who have died of cancer even after trying aggressive treatment approaches know what a cost those treatments exact on quality of life: nausea, pain, fatigue, disfigurement, and a pervasive feeling of always, always being sick. Amy chose another path: one of symptom management, to feel as good as possible for as long as possible, even if that might mean less time than possible with aggressive treatment.

In medical care today, we are bombarded with constant messages that more is better—more tests, more surgery, more visits to the doctor. But that isn’t really true. Indeed, nine leading physician groups have now come out with a list of procedures that should not be done on a routine basis—saving dollars, yes, but more importantly, saving people from diagnostic and other interventions they may not need. Physicians in this Choosing Wisely effort were goaded into action by Howard Brody, a physician and medical ethicist. Dr. Brody challenged the profession to lead an effort to recommend a more sensible use of medical resources. It is refreshing to see physician organizations begin to educate the public that more might not be better.

Similarly, the use of palliative care needs a different framework in our thinking about health care. Choosing palliative care is not “giving up,” as too many think it is. It is choosing to live life—and handle death—with dignity and quality.

Amy Berman, a knowledgeable and strong woman, chose her own path. Wouldn’t it be wonderful if millions more had the information and support to make a choice that reflected their personal values, as Amy did?

On April 13, 2012, CHRT is sponsoring a symposium geared to health policy-makers, funders and researchers, to ask this question: can individuals from these three worlds do a better job of working together?

I come from the health policy world at the state level, and more recently have a toe in the academic world, so I’ve had the chance to see the world from both vantage points. Throughout my career, I’ve been interested in translating research into policy, and I’ve always valued my public health education because it gave me the ability to understand research so I could apply it.

But I became particularly passionate about the need for policy makers and researchers to work better together when I was running the Michigan Department of Human Services. In that capacity, I could see that some academics were focused on producing information relevant to the problems we were facing, and some were not. I have long wanted to strengthen this connection and help policy makers (writ large, inclusive of those who make decisions for a population in the private sector as well) make better decisions on behalf of their constituents, because their decisions have real impact on individual lives.

Now that I’ve spent some time being hosted in an academic setting, I have a better understanding of the way incentives work in academia (tenure decisions and the like) and how funding priorities can affect researchers’ choices about what to study. Policy-makers rarely have time to wait for randomized control trials to shed light on their questions, but applied research is messy (at best) and messy research doesn’t always lead to publishable articles useful for tenure decisions.

As funding from the National Institutes of Health and others is reduced, however, it will be increasingly necessary for researchers to seek funding from sources that care more about speed and relevance to policy than the ability to publish in academic journals. So, the key question is: how can we bring these groups together in a way that helps them achieve their goals and leads to better decisions for all?

Because our symposium includes prominent speakers from all three perspectives, it should be a stimulating look at this question. We have health purchasers representing some of the largest payers in the country, as well as legislators and major funders from the state and national levels. And we have a panel of University of Michigan researchers, all of whom have managed not only to produce and publish top notch research, but also demonstrate real change in practice and policy with an impact on people’s lives.

We expect a lively, interactive discussion between the panelists, the panelists and the audience, and within the audience itself. And most of all, we hope that real-life examples and ideas will emerge. As the University of Michigan’s new Institute for Healthcare Policy and Innovation becomes operational, we all want to do whatever we can to realize the promise of its title. On April 13, some of the best thinkers around will help us achieve that goal.

Everybody and their brother will be blogging about the Supreme Court arguments on health care reform over the next several weeks. I do not want to add to the noise by focusing on the arguments and/or who has the winning position: many others will offer that kind of analysis.

Instead, I want to focus on what will happen if the Supreme Court rules that the Affordable Care Act, in part or in its entirety, is unconstitutional.

Think about what happened in the 90s, when the Clinton administration proposed health care reform. At that time, the great political debate was around a proposal that would have implemented health care “purchasing alliances” and moved the country toward a model known as “managed competition,” where health plans would compete for members on a more level playing field than existed at the time—or today.

Opponents of the Clinton proposal were very effective at sowing fear in the minds of the public (remember Harry and Louise?) and creating a political climate that led to the overwhelming defeat of health reform. With the defeat of health reform at the federal level, most Americans assumed that the status quo would stay in place—but that is not what happened.

Instead, employers—concluding that they could not count on the federal government to help them rein in rising health insurance costs—tackled the issue themselves by making fundamental changes to the benefits they offered to employees: shifting most open-access, indemnity-type coverage plans into tight, managed-care approaches. Health maintenance organizations (HMOs) became predominant.

Consumers hated that shift, and thus was born the managed-care backlash. The failure to convince most Americans that managed care was a desirable way to deliver health benefits has, over time, resulted in more costs being shifted to consumers a decade or so later.

Fast forward to 2012 and the ACA. In this very political year, with all the rhetoric around “repeal and replace,” the real question is: if we are going to replace the ACA, what are we going to replace it with? What will really happen if the ACA is determined to be unconstitutional? Does anyone really believe the status quo will stay in place this time around, any more than it did after the failure of the last major attempt at health care reform?

Already we are seeing employers—beyond shifting costs to employees—dropping coverage at stunning rates. And, even with an economic recovery coming to life to some degree, small businesses and others who dropped coverage do not seem to be adding it back.

So, what is likely to happen if the Supreme Court strikes down the core coverage components of the ACA (or, if it gets repealed through the political process)? Well, despite what the rhetoric might lead one to believe, on this we have some pretty good clarity: Without the ACA, insurance costs will go up, coverage will decline, people will be paying more out-of-pocket for medical care, and providers will be paid less.

In other words, if the ACA does not stand (constitutionally or politically), the trends we’ve seen over the past few years will not only continue but get much worse, with no prospect for improvement in sight. And the chances that Congress will go out on a limb and pass a comprehensive approach to expanding coverage or dealing with the tough political issues around health care are slim and none in the near term.

In the longer term, the prospects for some form of a single-payer solution will actually increase, because every other compromise approach will have failed either politically (managed competition, ACA incrementalism) or practically (market-based solutions).

So, opponents and proponents of the ACA alike, you should all be hoping that the Supreme Court upholds the core provisions of the ACA. Because for both sides, the alternatives are worse.

The Feb. 16 issue of the New England Journal of Medicine had an excellent commentary by Peter Newman about how difficult it is to talk to the public about health care costs.

He captures the issue well:

“The problem is that no one in charge seems willing to acknowledge that getting a handle on cost growth will also involve uncomfortable trade-offs. We cannot as a society provide patients with unlimited access and unlimited choice. Providing better-quality care, though it is vital, won’t change that reality.”

He goes on to note that our political discourse—one that has emphasized a shift to patient-centeredness—has further compounded the difficulty in this conversation. He says:

“Changing the conversation to emphasize patients and stakeholders also has unhelpful consequences that few are willing to acknowledge. Focusing on patients’ own preferences to the exclusion of considerations of societal resources will only compound our cost problems. Engaging stakeholders is undoubtedly important, but one person’s stakeholder is another person’s interest group. Moreover, the only stakeholders seemingly not at the table are future taxpayers (our children and grandchildren).”

Newman’s commentary begins with a nod to the American College of Physicians’ (ACP’s) new ethics guidelines, which speak to the need for physicians to use resources efficiently, and indeed, “parsimoniously,” to help assure that resources are used equitably. He applauds the ACP for its guidance, and mentions several other entities that have a role in dealing with this issue, but in the end he does not suggest an answer to this important question: Who can have this conversation with the public?

While I, too, applaud the ACP for the clarity and rightness of their guidelines, I am not convinced that resource trade-offs should be in the purview of physicians—at least not in their one-on-one interactions with patients.

After all, where does the physician’s duty lie? Is it society at large, or the individual patient before them? If a procedure is very expensive and raises premiums for a particular group, while at the same time benefiting one patient, is it the physician’s responsibility to look out for the group, or the patient? As a patient, I hope my physician is looking out for me. While I agree that physicians have a duty to be efficient, that doesn’t go to the depth of making “uncomfortable trade-off” decisions. And it certainly cannot be other providers of care, for the same reasons as for physicians.

Who else is involved and can speak to the issue credibly?

Well, health plans make decisions about trade-offs like these; can they be the ones to lead the dialog with the public? I can say from personal experience that this is not a role for health care payers. Some years back, a physician recommended my father undergo a medical procedure that I thought might not be needed. I raised the concern with my dad; he told me in no uncertain terms that he believed my concern was prompted by my job (at that time) with a health insurer and that I was just interested in saving money. This despite the fact that I didn’t work for the insurer who provided his coverage, lived in a different state, and most importantly—he was my father—not a stranger. If I couldn’t convince my own father that my concern was based on the fact that too much medical care carries risks and can cause harm; I certainly couldn’t be the one to convince others.

So, not providers or health plans; who else is there? Well, I think it is safe to say it won’t be those who stand to gain financially by increased use of services (e.g. drug and device makers).

What about consumer advocates—could they take on this role? Not really. Their role is specific—advocating for the consumer, not for society as a whole or future generations.

Again, I ask: who is left? Who can have this conversation with the public?

Public policy makers. They have been elected to look out for the public interest; they are the ones who ought to be concerned about future generations; they are the ones who have the bully pulpit and can use it to communicate hard truths.

Unfortunately, our current public discourse does not promote this kind of dialog. Either the public doesn’t want to hear hard truths, or policy makers are too fearful to speak them. But until we are honest in our public discourse, we will not be able to moderate the increase in health care spending to any significant degree.

Better quality, better health, and patient-centered care are all good. But, as Newman notes, in the end “hard” trade-offs are necessary if we are going to address health care spending as well. For the sake of our children and our grandchildren, let’s hope that someday, we will have policy makers who are willing to have that honest conversation, and that we are willing to listen.

In late January, just after my fellow instructors and I had led our students at the U-M School of Public Health in a discussion of the complexity of health coverage, and the difficulty of actually doing what health insurers do given the American system of financing health care, the New York times ran an opinion piece by Ezekiel Emanuel and Jeffrey Liebman that started like this:

“Here’s a bold prediction for the new year. By 2020, the American health insurance industry will be extinct. Insurance companies will be replaced by accountable care organizations — groups of doctors, hospitals and other health care providers who come together to provide the full range of medical care for patients.”

Now, maybe Emanuel and Liebman meant to simply be provocative. But the piece is based on some faulty logic, and it is concerning that these two esteemed policy makers would make such statements, especially in a publication like the New York Times.

The fundamental problem with the piece is that it both underestimates what health insurers do in the health care market place today and overestimates what providers of health care will likely be able to do in the health care market place post ACA coverage changes.

Just a few examples of their assertions:

“All that insurance companies do is process billing claims.”

This statement is simply not true when describing the majority of health plans in the market. All major health plans today—whether HMOs, for-profit national carriers, or non-profit plans like Blue Cross and Blue Shield—do more than process claims. Among other things, they negotiate contracts with providers of care, set payment rates and make medical policy coverage decisions, perform utilization review and quality oversight, monitor fraud and abuse, help set benefit designs and incentive structures for providers and consumers and answer inquiries on coverage from consumers.

Emanauel and Liebman may be referring to a minority of entities called “third party administrators,” who do perform limited functions; but these entities are a relatively small proportion of the health insurance market precisely because most employers or others do not want to take on the broader insurance functions that go beyond “processing billing claims.” Indeed, even when employers contract with third party administrators to administer their benefits, they often also contract with other network management organizations to do the kind of administration health plans otherwise do.

Another example:

“In addition to providing better and more efficient care, ACOs will also make health insurers superfluous. Because they will each be responsible for a large group of patients (typically more than 15,000), they will pool the risk of patients who have higher-than-average costs with those with lower costs.”

This statement reflects another significant misunderstanding of the health insurance market. While 15,000 individuals is a significant size to many providers, it is a small size to any health plan. ACOs by design are local in nature. They are made up of physicians and one or more hospitals, working together to coordinate the care of patients who come to see them. But, health purchasers generally are not so narrowly focused.

Think of auto companies as just one example. They have employees located across the country, and while they are self-funded, they expect uniform benefit delivery regardless of where their members go. Even mid-sized employers, who are more locally-based, have employees who go to more than one provider network.

And what happens to employers with employees in rural areas where there aren’t 15,000 patients in the population? How could one or even several ACOs serve to manage all the administrative and oversight functions that the diversity of employers expects?

And finally, Emanuel and Liebman make this point:

“Accountable care organizations will increase coordination of patient’s care and shift the focus of medicine away from treating sickness and toward keeping people healthy.”

We all certainly hope this will be true, but remember, that was the founding principal of HMOs in the 1930s and 40s, and only a few such plans—with much tighter structures than ACOs are likely to have—have shown the ability to do this, even for relatively small populations.

What magic will ACOs bring to the table that HMOs (who have been striving to meet this goal for 20, 30 or sometimes, 60 years) have not yet achieved? After all, HMOs have the same access to health IT today that ACOs will have, and working together, health plans and providers can integrate the clinical and billing data necessary to provide a complete picture of care.

There are relatively few certainties in life. But, I feel confident that I can say that despite what has been posited by Emanuel and Liebman, health insurers will not be replaced by ACOs by 2020.

And, indeed, unless we have a total change in political will and a sudden embrace of a British-style health care system, health insurers will remain a vital part of the health care landscape long into the future.

Perhaps the more relevant question for us is: what will these health plans of the future look like, and how can providers and health plans work better together to capitalize on the strengths of each for the betterment of all?

Earlier this year, the Wall Street Journal reported on some research that would make anyone who is trying to inform public policy lose sleep.  The story described just how impervious to the facts people often are in their assessments of data relevant to public policy.

Case in point: immigration. The survey showed that people believe the percentage of U.S. residents born outside the country to be double what it actually is, and the percentage of illegal immigrants six or seven times higher than the real percentage.

Americans also vastly overestimate the amount of federal dollars spent on foreign aid, and at the same time, underestimate the amount of the federal budget that goes to Social Security, Medicaid, and Medicare.

The Wall Street Journal describes this lack of understanding of data about key public policy issues as “math illiteracy.” Sadly, that finding in and of itself isn’t very surprising: our public policy debate seems increasingly ill-informed, and rhetoric increases unmatched by facts. This problem has certainly been exacerbated by the decline in the number of objective news media outlets.

Indeed, civics seems to be an increasingly lost subject–with many surveys showing Americans evidencing considerable ignorance about a plethora of issues relevant to public life.

What was most concerning in the article, however, was the report on the studies showing how people (and not just Americans) stick to views formed based on false information even after they are given correct information. Indeed, it appears that even when given the facts of a situation, people somehow find a way to use those facts to justify the belief they initially developed based on a false understanding of the data.

Wow. That’s a tough conclusion for anyone working to illuminate data amidst the din of spin. And given that our goal at CHRT is do just that—to help policy makers and the public make better, more informed decisions about policy-related issues—we must pay close attention to these research findings.

So what does this information tell us? Should we just throw up our hands and give up? No, that’s not the right conclusion—it will always be important to provide access to objective, nonpartisan information for policy-makers and the public.

What this research does tell us is that the timing of this information is very important: in particular, we should do everything we can to provide accurate information before false information becomes embedded in public opinion.

The Affordable Care Act could be a case study for this particular issue. Today, the public holds so many false beliefs about the ACA that it is very hard to get factual information through all the confusion. Unfortunately, insufficient attention was paid to communications when health reform was a bill. Actually, long before it was a bill, at town hall meetings in the summer and fall of 2009 more than six months before the law was passed, false information spread the idea that the bill would include “death panels.” And, while that view has been have been decried and debunked, negative views of the ACA took hold and have an indelible place in American views of health care reform. It is no wonder that polling done since then shows Americans are as confused today about health reform as they were when the law was passed.

So this is a lesson we must learn well; a lesson in human behavior and foibles. Whether we like it or not, once formed, views are hard to change. It is crucial to help form public opinion based on objective information in the first place. But, if that battle is lost, then efforts at communications must be more than redoubled. New efforts must be intensive, ongoing, and credible to counter our tendency to stick with our beliefs despite new evidence.

That is the challenge for those of us who are doing this work. Giving up is not the answer—communicating more, better, and sooner, is.

With lawmakers under increasing pressure to reduce overall federal spending, funding has been limited in many areas of health research and enforcement. Even before the recent focus on deficit reduction, funding for the National Institutes of Health (NIH) has been significantly constrained. In the 10 years prior to fiscal year 2008, the NIH budget grew by 31 percent, to $29 billion. From fiscal year 2008 through fiscal year 2011, the NIH budget grew by only 3%, to $30.6 billion (including a decline between FY 10 and FY 11 to $30.8 billion). In the most recent four-year period, competitive NIH grants were flat.

Cuts have occurred elsewhere in the public health arena as well. In FY 2011, the budget for the Centers for Disease Control was cut by $720 million and cuts look to be deeper in 2012. All predictions from federal budget watchers are for federal resources supporting health research to decline over the next 10 years.

These budget reductions have many implications, and leave us with much to consider. Everything from recent critiques of the FDA to challenges faced by HHS on implementing core functions can be connected to severely-constrained funding levels. In this post, I am focusing on one particular outcome of concern: the issue of conflicts of interest.

The New York Times ran an important and concerning article on the front page of its business section on November 3, 2011. The article described issues of conflict of interest facing several panels, which are developing guidelines for hypertension, cholesterol, and obesity. The Times reported that 20 of the 52 members of these panels—including co-chairs—have been instructed not to vote on crucial parts of the guidelines because of connections with industries affected by the guidelines. The connections include fees for speaking and consulting engagements, which have long been a source of concern in various federal health panels, and others involve industry funding for research.

These challenges are not new. There were scandals about this issue years ago, long before recent cuts in federal funding for research. And, the NIH goes to great lengths to identify conflicts of interest and minimize impact—through disclosure forms and other techniques designed to make the process transparent—but further limits to federal funding for health research will make it increasingly difficult to avoid conflicts of interest going forward.

Medical schools and schools of public health—institutions that have long relied on research dollars from NIH and other agencies to support core science and health innovations—won’t simply cut back on programs; they will look elsewhere for support. And with a shortage of public financing, it is likely they will turn to industry for funding. There simply aren’t a lot of other good alternatives. So, we shouldn’t be surprised to see candy makers or the soft drink industry becoming major sponsors of research on obesity at universities. Or to see the pharmaceutical industry funding guideline-connected research: research that then later causes concerns about the recommendations of federal panels on evidence based medicine.

In the end, we really can’t have it both ways. If we cut public financing, we have to understand the impact of that choice. With less public financing, other sources will be sought. And, just like in campaign financing, we might not like the end result we get.

Well, the federal government has spoken about its intent with regard to defining essential benefits, and the answer is: leave it to the states. As Tim Jost notes in his latest blog post, there are some (probably, most) who assumed the Affordable Care Act would result in more uniformity in essential benefits across the country. But instead (no doubt bowing to a perceived political backlash at this time of difficult discourse in Washington, DC) the Obama administration decided to publish guidelines and establish broad parameters for essential benefits without going into the details.

As Politico noted, the reaction was muted even though there were many disappointed health reform advocates. So why wasn’t there a bigger outcry? Because even the most ardent activists understand what the administration is up against politically.

Had the administration decided to enumerate benefits, it would have opened itself to renewed charges of a government “takeover” of health care and “socialized” medicine. As noted in the New York Times, the administration clearly did not want to give that kind of ammunition to opponents of health reform—particularly in this political year.

During the 2008 presidential campaign, Democratic pollsters admonished the candidates to use certain words and phrases when talking about health reform. One of those phrases was “uniquely American solution.” In today’s political climate, this “uniquely American solution” seems to center around the idea of not telling people what to do: be they consumers with the individual mandate, or states setting up exchanges, choosing qualified health plans, and now, establishing essential benefits. Centralized decision-making (in health care, at least) seems to evoke terms like “socialism” and give fuel to the opponents of reform.

Like so much in today’s political discourse, the critique of centralized decision-making is most unfortunate. It seems to be made in a vacuum, independent of analysis and thoughtful dialogue. A serious discussion—in this case, about how much health policy should be carried out federally and how much at the state or local level—is an important precursor to informed public policy. These kinds of decisions include tradeoffs, and these tradeoffs are most evident when it comes to things like essential health benefits.

Today, Medicaid plans benefit plans vary—within some guidelines—from state to state. And most health plans tailor benefits for their largest customers and manage risk for smaller customers through benefit design. This means that, over time, health plans can end up with literally thousands of different benefit options for large customers to choose from.

The question is: what value does this benefit variation provide? Yes, it gives autonomy to different decision makers in the system (HR managers, state legislators, labor negotiators and the like) but does it meet any other goals? Does it improve the health of the population? Or the cost effectiveness of health care? The evidence would seem to indicate that it probably does not achieve either of these goals. It does reflect the coverage priorities of decision-makers and presumably represents how they might want to spend health benefit dollars. But, if anything, this plethora of benefit designs and benefit structures adds considerable administrative cost to the system without consideration of the value of the benefits provided with regard to health or wellness. The added cost comes at every level: from the health plans that must train benefit representatives to become familiar with thousands of benefit designs to the providers who have to remember each formulary or other scope of coverage questions before they prescribe care to their patients. Benefit variations add cost to the system.

In most other developed countries, benefits chosen centrally and are generally uniform across population groups. American health care reformers hoped the essential benefits component of the Affordable Care Act would do something similar: help lower administrative costs and clarify benefits for consumers. With the current decision on essential benefits, it does not appear that those goals will be met.

The ACA provisions on essential benefits do advance us from where we are today, but not as far as many hoped we would get. So, it would seem that for now, the “uniquely American solution” on essential benefits is politics-smart, but policy-weak.

OK, I admit it: we made a mistake.

Earlier this year, we were asked if we had ever seen a one-page flow chart of the Affordable Care Act (ACA) from a consumer perspective. We hadn’t seen one—and after much looking, still didn’t—so we decided to create one ourselves.

It seemed like such a simple idea. Hmmm—not so simple in the end.

The reason it’s not so simple is illustrative of the Obama administration’s problem in communicating the ACA: it is, in fact, extremely complicated—but complicated for a reason (more on that later).

It took us several months and many review cycles to prepare our flow chart for publication. When we finally released it, the chart was shared widely via social media, stimulating some interesting discussions—and a very polite question from a financial policy analyst in California, who asked us if we meant to say “less than” rather than “more than” in one of the flow chart’s boxes.

That very good question caused us to review the whole document once more, and we realized the chart needed further clarification in several spots: in particular, areas relating to parts of the ACA that focus on “affordability tests” (where eligibility for subsidies is determined based on both whether or not an employer offers coverage and the cost of that coverage relative to the employee’s income). There are a number of moving parts in that formula, and our efforts to portray them in an understandable way caused us to short-circuit the clarity. In the corrected version, the employer coverage section goes from six boxes to twelve.

OK, so why is it so hard to depict the consumer perspective in a one-page flow chart? To answer that question, it is important to remember that the ACA is as complicated as it is because it builds on the existing system of financing and coverage rather than replacing it.

President Nixon proposed health care reform in 1971 and 1974 that would have fundamentally changed the structure of health care financing in the country, and President Clinton’s plan would also have made that kind of fundamental change. But both efforts failed to get the necessary political support. One of the lessons that President Obama and today’s Congressional leaders took from those past defeats (and subsequent polling data) was the importance of building on the current system rather than replacing it. After all, more than 70 percent of the U.S. population has private coverage and another 15 percent is covered by Medicare; both populations are generally satisfied with their coverage.

In an effort not to disrupt those happy with what they already had, but still meet the goals of expanding coverage and moderating costs, those who drafted the ACA tried to keep all major structures (public and private coverage) intact—with some “corrections”—but no outright replacement. There was also some early hope that Republicans would support the idea of an individual mandate because the idea had originated with the Heritage Foundation (a conservative think tank) during health reform debates under Clinton.

So, in the art of compromise that has characterized our political process (at least historically), the idea was to expand coverage by requiring everyone to have it, retaining a predominantly employment-linked coverage approach, and subsidizing those considered relatively low income but not low enough to be eligible for Medicaid. Making sure that coverage was affordable, while working within a predominantly employment-connected financing system, required a complex formula designed to let the market work—except when it wasn’t “affordable.”

Therein was the challenge. The current American structure of health care financing is not a straightforward system; in fact, it isn’t a system at all. The ACA doesn’t create a unified system either: it fills cracks in the existing structure to address key issues of coverage, cost and quality. As a result, the ACA does indeed create something similar to a Rube Goldberg machine.

But make no mistake: coverage under the ACA is complicated because it reflects what was politically possible. Americans said they did not want radical change. So in the end, the ACA is the system Americans asked for, even if they don’t understand it.

We could have had simple. We could have had a system that reduced complexity, increased coverage, and reduced administrative costs (and put many policy wonks and consultants out of business!). That system could have been called Medicare for All. If the goal was simple and clear and easy to understand, that would have been it. But, until America is ready for simple and clear, our now corrected (we hope!) flow chart is here[CHRT FLOWCHART].

As we continue to focus on health care spending, it is important to look at the tools we’ve tried already and learn from our experience – especially our mistakes.

In health care, it seems that every action taken to reduce spending leads to an equal and opposite reaction elsewhere in the system. This issue has been well illustrated by the Congressional debate on the sustainable growth rate (SGR) formula since 1998 (for more on SGR see our 5/10/2010 blog post[POST TITLED “THE WRONG POLICY: PHYSICIANS…”). While health policy analysts and people in both parties agree on the need for a fix—and have lots of ideas for it—every solution is fraught with major problems and creates winners and losers, and that makes the politics of change extremely difficult.

Another illustration of this type of a problem can be seen in payment changes made to oncology drugs. The issue of payment for oncology drugs delivered in physician offices has been a topic of much debate among health plans over the past 10 years. There was little doubt that the amount paid for these drugs by most payers was highly inflated relative to their cost, and that payments were providing “windfall” profits to oncologists who provided chemotherapy in their offices. In January of 2005, Medicare significantly lowered its payments for physician-administered drugs—a change that many private health plans followed. Specifically, the change lowered the amount paid for these drugs from the average wholesale price (AWP) to the average sales price (ASP) of the drugs, plus a 6 percent margin. The AWP was an artificially set price that was not what physicians were actually paying for the drugs. The ASP rate was intended to more than adequately cover the cost of the drug along with the cost to administer it. The ASP was significantly lower than the AWP—in some cases, quite dramatically so.

So, what happened as a result of this change? The November 2, 2011 New England Journal of Medicine reports on a fascinating study that describes some of the impacts of that change with regard to one disease – lung cancer. In the United States overall, the rates of chemotherapy treatment for lung cancer went up after the payment change, by 10 percent within 60 days of the payment change and about double that within six months of the change. That is, as rates for these drugs were cut, on average, physicians in the United States started providing more treatments to patients.

Clearly, this change is a concerning one from a patient care standpoint: one wonders about the impact on patient outcomes and care from this additional chemotherapy. But, perhaps unfortunately, the change is not entirely surprising—target income theory notes that as prices are cut, providers will seek to offset those cuts by providing more or different services (an experience quite in evidence with the SGR).

What was most surprising in the study reported on in the NEJM, however, is that this change was not uniform across the country—it varied quite significantly geographically. For example, use rates for chemotherapy went up quite significantly in New Hampshire, Minnesota, and the District of Columbia (and in many other states), but down in Idaho, South Dakota, and North Dakota. Indeed, there is no discernible pattern among the states that increased use considerably, modestly, or not at all. And, this change was certainly not driven by a change in patient characteristics between the states.

If we look just at the experience of the SGR, we can see that it is essential to think about the unintended consequences of reimbursement changes. But, looking more deeply at the example of these chemotherapy drugs helps us understand that the picture is even more complex than we might have thought. What do we learn when we add in this complexity? If nothing else, this study is a reaffirmation that local practice patterns are essential: geography is indeed destiny and all health care is local.

Looking at cost trends in broad averages isn’t enough. If we are going to have any sustained success at changing this cost picture, it will take aligned incentives that are not focused on price alone and that take human behavior into account. Anything less and we will be destined to repeat the mistakes we have made so brilliantly made in the past.