Tuesday, July 27, 2010

Building the Case for Medicaid Reform

Cross-posted from The Agenda on National Review Online.

For those who haven’t had their fill of the Medicaid reform discussion, the full results of the UVa surgical outcomes study have been published in the online edition of Annals of Surgery. (I ask everyone who has had their fill for forgiveness.) There are a couple of points that keep coming up in the comments and in responses from other bloggers, so I want to spend at least one post addressing them.

Austin Frakt writes that, contrary to my expressions of concern, he is quite open-minded to the possibility that outcomes with Medicaid are poorer than those of the uninsured (and especially those with private insurance). He remains reasonably skeptical that studies like the Virginia one adequately control for the poor social and health status of the Medicaid population:
There are undoubtedly studies that consider Medicaid vs. uninsured outcomes using the random variations provided by the natural experiment that is Medicaid. Characteristics of the program vary by state and year, making it a perfect set-up for such an analysis of this issue. This second I can’t point to a study. But I know where to look. One place to start would be to examine the literature cited by Stan Dorn on Ezra Klein’s blog at the Washington Post (tinyurl.com/StanDorn), Harold Pollack on The New Republic’s The Treatment blog (tinyurl.com/HPollack), and by J. Michael McWilliams on this blog (tinyurl.com/JMMcWill).

That’s it. That’s my position, and it always has been. If you read carefully you ought to notice that I didn’t actually condemn or praise Medicaid. I didn’t actually say how it should be reformed. I just listed the possibilities.
It is certainly important, in any study comparing Medicaid to other insurance populations, to control for the kinds of things, like prior health status, that negatively skew Medicaid outcomes. In medicine-speak, these factors are called comorbidities. As I have written before, one must be careful with comorbidity analyses not to eliminate the ways in which Medicaid actually contributes to poor health status.

Having said that, the authors of the Virginia study did control for 30 different comorbidity measures, using a widely used, highly validated methodology first worked out by Anne Elixhauser and colleagues in 1998. Using 1992 data from 438 California hospitals, Elixhauser et al. identified those factors that most significantly contributed to “substantial increases in length of [hospital] stay, hospital charges, and mortality.”

Notably, the Elixhauser comorbidities include several factors that many associate with the Medicaid population: AIDS, alcohol abuse, depression, drug abuse, liver disease (such as hepatitis), obesity, and psychoses.

(The others are: deficiency anemia, arthritis/collagen vascular disorder, chronic blood loss anemia, congestive heart failure, chronic pulmonary disease, coagulopathy, uncomplicated and complicated diabetes, high blood pressure, hypothyroidism, lymphoma, fluid and electrolyte disorder, malignant cancer, neurologic disorders (other than stroke), paralysis, peripheral vascular disease, pulmonary circulation disorder, renal failure, solid tumors (non-malignant), peptic ulcer disease (without bleeding), heart valve disease, and weight loss.)

The Virginia study authors also controlled for income, age, and gender.

To me, this is a responsible, comprehensive, and quantitatively validated list of comorbidities and adjustments. To those who disagree: what other adjustments would you have preferred to see? Which, if any, of these additional adjustments would have had a significant impact on the results of the study? What data can you cite to support their importance, and to support that they are independent of the effects of Medicaid itself or of welfare dependency? Austin has written extensively about the general concept of controlling for extenuating factors, so his thoughts on this topic could be illuminating.

Austin also writes that a definitive study to measure the benefits of Medicaid against those with other forms of insurance (or uninsurance) would need to be prospective—that is to say, we take X number of people, put half on Medicaid and half on something else, and see what happens. While he’s right that prospective studies are, all else being equal, better than retrospective ones, they can also be misleading if they aren’t stratified properly by health status, social factors, etc. Another disadvantage of prospective studies is that they usually sample a much smaller number of people than retrospective studies can. Even if we could design a good prospective Medicaid study, actually conducting one would be very difficult and take several decades to play out. I hope we can all agree to use the best available evidence in the meantime.

I would also point out to Austin that exactly the same arguments could be applied to PPACA: i.e., let’s do some well-designed, prospectively-controlled studies before adding 16 million people to the Medicaid rolls at a cost of $100 billion a year.

Aaron Carroll points out that the UVa study focuses solely on surgical outcomes. Aaron, as a pediatrician, wonders whether its results are applicable to non-surgical situations. I have addressed this issue in part, but I will take a look at pediatric outcomes in a separate post.

Aaron also notes that Medicaid is voluntary: but this is weak support for the implication that Medicaid, in its current form, is the best we can do. In the Vietnam days, some conservatives used to tell liberals to “love [America] or leave it.” I don’t remember liberals being too happy about that. Nor does Medicaid’s voluntary nature mean, ipso facto, that it must be doing some good. Does the voluntary nature of Medicare overutilization mean that Medicare overutilization is a good thing? Most liberal health policy types that I know believe otherwise.

A number of people ask: “Ok, let’s suppose for a minute that the UVa study is accurate, and that those on Medicaid do fare worse than the uninsured. Are you suggesting that we abolish Medicaid and do nothing about the problem of the uninsured?” No—I am suggesting that we transition to something akin to the Swiss model, whereby we offer graduated subsidies with which the poor can buy consumer-driven private insurance. Simply sending them the cash would be far more efficient than what we do now.

I would ask those who ask these philosophical questions if they are happy with Medicaid as it is, or if they have their own ideas for reform. Hopefully we can get past this idea that criticizing Medicaid equals seeking to abolish assistance for the needy.

The evidence of Medicaid’s problems is, in my view, overwhelming. I encourage those who believe otherwise, or are simply agnostic, to spend some time going through the data. Medicaid reform is an issue that should unite those who are concerned with the plight of the poor, and those who are concerned about America’s fiscal condition. These are the two things, after all, that health care reform was supposed to be about.


  1. Hmm, did you leave out coronary artery disease or is that lumped in with peripheral vascular disease? This methodology was created before the era of drug eluting stents. We have seen a number of people die after routine surgeries because their stents clotted when taken off of their Plavix. All of the major surgeries you cite would have had patients taken of of their Plavix. If it were me, I would also prefer some basic gauge of functional status also, even something as simple as a MEPS score. Arrhythmias are also considered a risk factor for major surgeries. Surprised they missed that one. It is my clinical impression, unsubstantiated by good data I will concede, that well insured patients get more stents. One could certainly conjecture that a pt. received stents while insured, then became uninsured and then surgery.

    Will make it to library when I can to read it. I would have also liked to have language listed in the study. It is much more difficult to get a good history from a non-English speaker. I also hope they delineate what kinds of hospitals provided care. The kinds of surgeries you listed wont be done at most small hospitals. Of our local hospitals, at least 3 would not do the procedures listed, 5 if you count the boutique surgeon owned places.

    Still, as these things go, not an awful study. If they really did ignore coronary artery disease though, this is nearly useless IMHO.


  2. Hi Steve, it's an intriguing question. It's not clear whether or not CAD is part of another comorbidity. I'll ask the authors about it.

    I think that it's a big stretch to say the study is useless without CAD controls -- it's possible, but unlikely, that CAD would have made a material difference. The following points come to mind: (1) The study looked at CABG procedures as a discrete category; (2) As you point out, a higher rate of percutaneous coronary intervention with DES would lead to more Plavix and therefore more adverse events (i.e., it works against the insured); (3) While drug-eluting stents are effective for treating the symptoms of angina, they don't do much for long-term outcomes; (4) the rate of cardiovascular complications in the study was not a driver of the overall result: 6.7%, 4.1%, 4.3%, and 4.0% for Medicare, Medicaid, uninsured, and private insurance on an unadjusted basis, and 1.12, 1.04, 1.00, and 1.00 on an adjusted, relative basis. Procedure-related complications, on an adjusted basis, were 1.10, 1.10, 0,97, and 1.00 respectively.

    I think your point about language is interesting also, though I would guess that many of those with language issues are illegal immigrants who not eligible for Medicaid and are therefore uninsured.

  3. "While drug-eluting stents are effective for treating the symptoms of angina, they don't do much for long-term outcomes;"

    To be clear, the issue is not the stents working as prophylaxis. I am pretty agnostic about stents and mortality. The issue is what happens when you take them off of their Plavix. The official recommendation at present is to continue Plavix for a year, but we are seeing people clot when they come to the OR 2 or more years out. My gut feeling, talking with my cardiologists, is that most are keeping patients on Plavix forever once they get a DES and this will probably become the official recommendation some day. (I am actually arguing your case here in a way.)

    Intrinsic to every perioperative evaluation is assessing for CAD. TBH, I would lobby to rid my department of anyone who was not evaluating for CAD as part of their anesthetic assessment.

    "I think your point about language is interesting also, though I would guess that many of those with language issues are illegal immigrants who not eligible for Medicaid and are therefore uninsured."

    I have never seen it studied, just my experience that the uninsured are a very mixed bag. I suspect that if you could control for all social factors, you would find that results for uninsured and Medicaid patients are going to be almost the same since their care will be provided disproportionately by residents and fellows for the kinds of patients in this study.


  4. hi avik,

    i had a quick question that is (unfortunately) unrelated to the post above: i was wondering your take on the malaysian sovereign wealth fund's take over of parkway from fortis healthcare?
    perhaps a future blog regarding the finanical implications of medical tourism, and particularly, the role of the state in promoting it.

  5. Hi Troeltsch, I have followed the story in the papers as it sounds like you have. I think it demonstrates that medical tourism is a fast-growing business, and that Singapore is one of the best destinations for Americans and others looking for high-end, high-value medical care.

    I have some brief thoughts on medical tourism (with links to studies) over on the Health Tank page: http://www.avikroy.org/p/health-tank.html#1b . It's a subject I do intend to return to at a later point -- stay tuned.

  6. thanks for the valuable analysis; i agree with your general take. one particular angle i was interested in is the shifting role of the state in "financing" medical tourism. previously, we have seen a number of countries (such as India) essentially offer fiscal incentives for private investors to enter the market. That is, states have promoted the industry via fiscal transfers (i.e., giving up or deferring tax revnues) to private investors.

    With the takeover by Malaysia's sovereign wealth fund, however, we now see governments actively funding and taking stakes in firms with the explict goal of the Malaysian government to build up the industry domestically. I think we will see further investments along this line uping the ante throughout Asia, and it would be an interesting angle to see how states are funding the growth in medical tourism.


  7. Finally got a copy of the study. It raises lots of questions. First, is the difference in Medicaid and uninsured mortality rates actually statistically different. Next, there are a lot of oddities in outcomes. The uninsured actually have lower rates, statistically significant, than the insured for GI, pulmonary and urinary complications. Other than urinary, I cannot think of any valid reasons for that to happen. In fact, the only listed complication significantly higher, barely, for the uninsured is in wound complications. What were they dying from to reach a rate 1.74 times that of the insured?

    Next, the study is over represented by southern hospitals, especially for the uninsured. Lastly, it does not cover CAD, nutritional or functional status.

    Medicare patients are higher also. Why?

    Having had the chance to look at this in more detail, I think the best you can say is that the uninsured and Medicaid patients have little difference in mortality, but much longer stays. I strongly suspect there are coding issues at play as you are using data that was not intended for the purpose of this study. Having had some long conversations with the person in charge of our coding, I suspect there are multiple reasons why this may be the case. At any rate, it is still a useful study given its size and scope. Insurance does matter.


  8. Oops, forgot. Off the top of my head, the number of Medicaid patients seems low or else the number of private patients is high. They should, in theory, cover the same age groups?


  9. Hi Steve,

    The lack of statistical significance in terms of the difference between Medicaid and the uninsured is not the point -- the point is, why are we spending half a trillion dollars a year for a system that doesn't provide the poor with health care that is meaningfully different from those who are uninsured? And why are we seeking to dramatically expand a broken system?

    As I discussed in the blog post above, the composition of the comorbidities was driven by their correlation to in-hospital mortality and surgical outcomes. While there may be ways to improve the methodology, it's a quantitatively validated one.

    I am certainly all in favor of being rigorous about evaluating data. I just ask that those who apply that standard do so equally across all studies. I think it's hard to say that the UVa isn't among the most thoughtful and rigorous studies ever conducted on this subject.

  10. As to the study, I agree that it is an important study. It makes for a strong association between outcomes and insurance, for both Medicare and Medicaid. It says nothing about why that association exists. The oddities in outcomes should alert us to the fact that this study does have problems, like all studies, and is not definitive. Comparing Medicaid patients with the privately insured, it looks like most of the difference in outcome is related to wound and infectious complications. This localization of complications should raise some questions.

    On the larger issue, I would at least partially agree with you. It looks like there is little difference in outcomes between those who have insurance and those who do not. However, it also looks as though people on Medicare do much worse. The whole issue needs to be explored if we are to reach the correct conclusions. My bias is that we made a huge mistake in starting Medicare. Everyone should be in the same general system (no, I dont mean single payer) as is done in most of the other first world countries. It could be a Swiss type system, French, German, Singapore or whatever, but the politicization and stratification that comes from Medicare, and later Medicaid, are not good.

    On a personal note, thank you for responding. I think you write in good faith and mean well. I need to read knowledgeable and serious people with a right of center view on health care. Suderman is only a part timer. Guys like Goodman seem just as interested in snark as health care. The big time econblogs treat health care as a topic fairly infrequently. Given that it is the biggest cause of future debt, I still find that odd.


  11. Hi Steve,

    I agree with you that dividing the population into Medicare, Medicaid, and the rest was a consequential mistake. We can only hope one day that people are willing to come together to rework that mistake -- it will be hard, but from what I see, there is a possibility of a centrist consensus.

    Thanks also for your praise. I agree with you that more right-of-center people should write about health care -- which is why I do it (I have a day job, after all!). If you haven't already, check out the work of the Cato Institute -- Michael Cannon and Michael Tanner. They do good, serious work. The current issue of National Affairs has several good articles on health care.

  12. Treating the poor fairly...

    Selling out of the Poor? What would Elmo say?

    Full Name: Wayne Berman Title: Vice-Chair; Finance Co-Chair; Adviser
    Over the course of three years, Berman’s lobbying firm was paid $660,000 to lobby on behalf of UnitedHealth subsidiary Americhoice, a managed care HMO providing health insurance to Medicaid, Medicare, and SCHIP recipients. Specifically, according to the lobbying report, they lobbied on Medicaid issues in the Deficit Reduction Act of 2005.[Americhoice Lobbying Reports 2004 – 2007; Americhoice.com ] Berman Also Lobbied For “Absurdly Low” Rates for Medicaid Managed Care Companies to Pay Out of Network Hospitals. Also included in the DRA, and mentioned as a lobbying issue on Berman’s Americhoice lobbying report, was a provision setting rates managed care companies must pay to out-of-network providers -- mainly hospital emergency rooms -- for care received by Medicaid beneficiaries. Rather than forcing managed care companies to reimburse out-of-network hospitals an amount comparable to network providers, the legislation set the default amount to the state’s “fee-for-service rate,” which often is “absurdly low.” The provision thereby shifted financial responsibility for services to Medicaid beneficiaries from the managed care companies to the hospitals themselves, permitting managed care companies to rake in huge profits, while hospitals incurred added losses.[Modern Healthcare, 1/29/07; Text of S. 1932] To Save Money, Bill Cut Services to Medicaid Beneficiaries, But Left Managed Care Providers Untouched. Under the final budget package, substantial Medicaid spending cuts were achieved by imposing new premiums and increased co-payments on Medicaid beneficiaries; some costs were also shifted to the states, who in return were awarded new powers to drop coverage or reduce benefits to certain beneficiaries. In a letter to Senate Majority Leader Bill Frist, the AARP CEO decried the final bill, saying it “protects the pharmaceutical industry, the managed-care industry and other providers at the expense of low-income Medicaid beneficiaries.”[Inside CMS, 12/29/05; Los Angeles Times, 12/22/05; World Markets Analysis, 12/21/05; The Hill, 12/20/05]

    The Players and whats up for grabs. Profits United Health Group 2010 $4.293 billion
    Here are some other 2010 budget numbers: Wonder what it cost CMS ( Can't Manage Sxxx) to operate each year.$453 billion Medicare///$290 billion Medicaid ///$78.7 billion Department of Health and Human Services/// UnitedHealth Group Awarded TRICARE Managed Care Support Contract ... Jul 13, 2009 ... UnitedHealth Group Awarded TRICARE Managed Care Support Contract for more than $20.3 billion. BILLIONS awarded and still to be awarded United's AmeriChoice unit is the largest government contractor administering state Medicaid programs for the poor and federally sponsored plans for children. AmeriChoice's revenue rose 34% last year, to $6 billion. United Health Group and its subsidiarys must be exhausted from signing Corporate Integrity agreements each and every year and as reward for their violations well what happens? they are awarded more contracts and more money and maybe even an ambassadorship here and there and if anybody should question what the heck is going on, then send them a Elmo doll.(Americhoice sponsors Sesame Street) Up side, Billions to be made, down side pay some fines (cost of doing business) move on and nobody goes to jail or gets excluded from the game. Get up the next day put on your Elmo costume and its back to work as usual. WOW, even in the Casino world or Mob world this would be a no no, suprised Hollywood has not done a movie on this or maybe even great TV.

  13. Politico reports that advisers to the main 2012 presidential contenders and other veteran Republican operatives reveal they have one mission in common: Stop Sarah Palin. Pickup this message at 214PM via Smirf etc. decoded 227PM

    Obtained from reliable sources and yes it's true Aliens have decided to cast their vote for the Tea party.The greys have reviewed the political issues of all the party's and have agreed that those who have the tea party's viewpoints are less likely to present issues that conflict with their globle view obstructions. Sometime soon after the midterm elections they will make themselves knowed but in the intermin they have left their sexuality concerns and viewpoints in sacred trust with the earthling Sara. All other concerns about the future have been stored in the secret and private volts of the A1 Limo service. Since my retirement my personal advisor in matters of this importance have been rendered to me from Horhay who is also a friend and my special ranch weed grower. Sincerely, your friend George

    Jeffrey Skilling, the former Enron Corporation president, has one last, good chance to get out of prison soon. The Fifth U.S. Circuit Court of Appeals in Houston will hear arguments today about how many, if any, of the 19 felony counts on which Mr. Skilling was convicted in 2006 should be overturned as a result of the landmark Supreme Court decision in his case. Please don't worry Election Year Medicaid Medicare Inducement issues left open for November not openly discussed.Politics have gone from heated to man on fire thoughts. Also the Judicial dilemmas, since all are offically allowed to bear arms again, the big city Mayors are concerned about how the poor will be able to rearm themselves, and are looking for some type of financial relief from Federal State Medicaid programs to maintain their status quo.The higher courts face tough issues this term since making honest fraud legal, there agenda now turns toward making honest kickbacks and honest bribes equally as legal. This topic remains high as a shared issue by the medicaid medicare enrollment providers since they are looking to expand inducements past the complicated pregnancy stage.

    The DOJ has serious concerns that if legalized marijuana in California for medical reasons could be used as a inducement or inticement to help secure new enrollments for the Federal State Medicare Medicaid programs.The State of California is concerned that if the Feds step up their effort in killing off the marijuana crops it could cause higher tax problems that effect Medicaid currently under consideration by the State 'marijuana tax control board'. Limo drivers cancel their planned Medicaid Cuts DC rally and leave for California to protect this years crop. Wow, don't think I would like to be in Politics for this years elections. Govenor Schwarzenegger indicated that if the Tea Partys membership keeps holding their rallies at our Marijuana burning fields they will have to be taxed for their free use of inhalants, prior to having them bused back to Arizona. Senator McCain wants the deportation of illegal Mexicans to stop immediatley claims their State has gone to POT and insists California return his landscapers at once.