Very good piece.

That said, you too easily accept the cost-saving projections from Lewin when there are a lot of questions. (PS-- "Gold standard" in health care consulting? There's a lot of different parts of health care and Lewin isn't consulting in most of them. A minor quibble.)

Short answer: Does an Obama/Clinton/Lewin plan save money? Probably not, according to most I've spoken to on the topic. It may provide better services at the same/flat growth cost, but that's very different than saving money.

Long answer?

Some of these assumptions are really questionable in Lewin's analysis.

They have four big buckets of cost-savings:

-prescription drugs
-restricted provider payments
-cost synergies from "medical homes"
-lower admin costs

I think the drugs and admin costs savings are reasonable models (with some minor quibbles), the other two definitely are not. Provider payments assumed that physicians would take a 17% cut and hospitals a 26% cut. Beyond being completely politically tone-deaf (can you imagine the commercials on the "lower-quality public health care" put out by providers? the next-gen Harry and Louise ads are practically writing themselves already) they are assuming the provider reimbursements are cut to Medicare levels, which are widely disparaged by providers as being below their costs of care. There is absolutely zero chance of Lewin's assumed reimbursement levels being the reality. Zero. And they know that, or at least should. It does really make me question the neutrality of the rest of the analysis. It is hard to see this as anything except trying to find dollars, when we know the reality is far different.

On medical homes, its a great concept, but like many similar improvements in health care (e.g. health IT, greater use of evidence-based medicine, etc.) the experts in the trenches will consistently tell you that assuming cost-savings here are foolish. These improvements very likely increase quality, but with a concomitant increase in utilization generally. If they have a zero-sum cost effect with increased quality, its great value, but there are no real cost-savings. Consultants can get ahead of themselves with their modeling.

There are also some broader assumptions that completely ignore viable criticisms of public health plans. Few utilization controls are in place in Medicare, yet the assumption of Medicare-style administration is not met with any differences in assumed utilization. This is a huge oversight. Similarly, they assume that the uninsured will utilize health care at the same rates as the current insured, when there are real questions about whether that population is more likely to have greater health issues at the start, requiring higher levels of utilization.

There are other more minor assumptions that add questions, but at minimum, 40% of their targeted cost-savings are either extremely questionable or not based in reality. Couple that with likely underestimates on the costs of the program (i.e. utilization), and all of the sudden that 1 trillion in savings can shrivel close to zero.

A few days back I watched the Frontline’s “SICK AROUND THE WORLD”. I was very disappointed to see how the countries presented controlled spending. Some countries cover things that we are certain do not work at all like acupuncture and traditional medicine. This gives little hope that we could get rid of stuff that have no net benefit like back surgery.

The one takeaway was that in Japan they are able to squeeze doctors quite a bit and yet still have plenty of doctors. That makes me wonder if just reducing the requirements for practicing medicine would lead to lower cost.

That makes me wonder if just reducing the requirements for practicing medicine would lead to lower cost.

Ding, ding, we have a winner!

Now we're talking about how we really cut costs...

Is this a conflict between the reality-based community and those who want to make their own reality?

I would disagree with wisewon on the minor quibble.

"The Lewin Group, currently the gold standard in health-care consulting,"

The only person I have ever heard commend the Lewin Group is Ezra, it's the only time I have ever heard their name. I checked with some consultants at real firms, Marsh, Buck, Deliotte, and none of them had heard of them. The people I asked have combined 100+ years experience.

This isn't a minor point, it needs called what it really is. A hack journalist pushing a specific ideology trying to lend credence to a questionable article by claiming some no name outfit is not only legit but one of the most prominent and respected. It's complete BS. If the plans really do what you’re claiming why can’t you get a real brokerage house or a respected actuary to come out and support it? Instead you find some obscure firm no one has heard of and try to build them into something they aren’t. The fact is Lewin group are paid shills that for the right price would probably supply a study claiming Ezra knew anything about Healthcare. They where bought for a specific result and they delivered it. The only way these laughable assumptions and claims get any consideration is because the target Progressive audience is to stupid and uninformed to know the difference.

This isn’t a minor point, if someone has to lie about the credentials of the firms supporting a plan then people should be questioning not only the supporters but the plan itself.

It’s the same with the fictitious Progressive claims that single payor is more efficient, no honest consultant or actuary that actually works in the business believes it so they get studies from hack academics paid for the result not the work.

Why can’t Progressives produce any legitimate studies to back up any of their claims? And do you really think your going to float one of these plans nationally and not have it torn apart as a bunch of lies?

"It simply caps spending and induces providers to use available funds more cost-effectively."

Really? Does it hand out magic wands and ruby slippers to accomplish this task? Why wouldn't the cost caps (read, "price controls") lead instead to lower quality service?

"Some countries cover things that we are certain do not work at all like acupuncture and traditional medicine. This gives little hope that we could get rid of stuff that have no net benefit like back surgery."

Anecdotal evidence: A friend recently had back surgery, and can feel his feet again. Also is no longer in constant pain.
Another friend was hit by a car some 15 or 20 years ago, which resulted in a torn rotator cuff. (diagnosed by her surgeon in the hospital where she worked)She did not want to have the surgery, so she tried acupuncture. After a series of treatments, she has not had further trouble with the shoulder (she couldn't raise that arm above her waist initially), and she is now 83.

There have been research studies in American hospitals that show that acupuncture works for certain things such as labor pain. Don't be so quick to dismiss everything from other medical traditions. Some of these things work, some are probably placebos, and some don't. Carefully designed research can sort this out.

I liked the idea of giving people a choice that includes upgraded Medicare with the idea that over time more and more people would choose Medicare over existing private
insurance since it is cheaper. But teeth, ears and eyes need to be reunited with the rest of the body and included in coverage. The plan was to move gradually to single payer as people experienced the benefits of the better administered government plan.

ostap I think that the goal is less un helpful service.

ostap the idea would be that they would stop giving the treatments that do not work. Evidence based Medicine is a no-Governmnet initiated move in that direction. Un-fortunately as my earlier post showed that is not how the other countries achive their lower spending.

LauraK no net benefit does not mean that no one is better off after the treatment.

Also as far as acupuncture is has never been shown to be better that any other miss-direction of pain like the clothes pin on the earlobe.

LauraK,

"...people would choose Medicare over existing private insurance since it is cheaper."

Private insurance 3500 per year Medicare 6000. Some is due to older population but most is fraud and poor administration. Why would people choose to pay more for less coverage?

"The plan was to move gradually to single payer as people experienced the benefits of the better administered government plan."

By what measure are government plans better administered? Do you mean poor service? High losses due to fraud? no choice of benefits? no control over cost, service or benefits? Maybe if your a fan of communism having your insurance dictated to you in a one size fits all plan would seem appealing, most American's have rejected this model already.

I am in serious need of a top-notch health care consultant/analyst, and so noted with considerable interest your characterization of the Lewin Group.

Then, I began following the links. Turns out the Lewin Group is an Ingenix company, which I thought was a name I remembered. And sure enough, Ingenix is a United Health Group company, so I'm right back with UHC, which is one of the vendors we deal with, and so not terribly useful for my purposes.

But a larger point is that, with that ownership structure, I wonder about conflicts of interest in their advice/analysis. Don't you?

Nate,

The "gold standard" characterization may have been borrowed from here:
http://www.lewin.com/Spotlights/LewinHP/LewinGoldStandard.htm

I guess two Senators would, by many, be taken to be reliable...

Wendell,

Would you take the advise of two Senators in choosing your benefit consultant? Wasn't it Congress that said HMOs where the solution to all our HC problems in 1972?The fact that 2 Senators said it discredits it more then it proves it.