Category Archives: Health care

A Greater Role for Nurse Practitioners

nurse_practitionerby James A. Bacon

While Medicaid expansion may have been dead on arrival at the General Assembly this year, the Senate Education and Health Committee has been thinking of other ways to improve medical access for Virginia’s poor. One solution is to loosen the regulatory restrictions that limit the ability of nurse practitioners to handle routine medical cases without a physician’s supervision. Three bills passed by the committee would improve medical access by expanding the role for nurse practitioners.

Reports the Richmond Times-Dispatch:

  •  SB 369 would establish a pilot program in which nurse practitioners would practice without direct supervision of a physician in clinics in medically under-served or high-unemployment areas. The nurses would collaborate with physicians via tele-medicine, and would have authority to issue prescriptions.
  • SB 264 would allow a nurse practitioner to provide care for up to 120 days in the event that the physician overseeing the patient care team dies, retires, becomes disabled or no longer has a license.
  • SB 463 would authorize nurse practitioners certified as nurse midwives to practice without the requirement for collaboration and consultation with a patient care team physician.

By themselves, these measures will not solve the plight of Virginia’s uninsured population, which Medicaid expansion is meant to address, but they are a step in the right direction. Combined with other measures such as the rollback of Certificate of Public Need regulations and the expansion of primary-care clinics, Virginia can do a lot to ensure better access for the poor and near-poor without exposing taxpayers to the massive fiscal risk of expanding Medicaid.

Advocates of Medicaid expansion tend to overlook a critical point: Having access to health insurance is not the same as having access to primary care services. Because Medicaid tends to pay health care providers less than it costs them to provide a service, Medicaid patients are money losers. As a consequence, many primary-care physicians, who tend to be over stretched as it is, refuse to take Medicaid patients. The looming physician shortage makes it increasingly difficult for Medicaid patients to find a primary-care physician, which is why so many end up in the emergency room.

The U.S. health care system is an extraordinarily complicated organism, and its problems cannot be fixed by throwing money at it. By taking up the if-you-don’t-like-Medicaid-expansion-what’s-the-alternative challenge, Virginia can build a health care system that works better for all. These three bills are excellent examples of the kind of thinking we need. If Republicans win the White House in 2016 and succeed in their dream of dismantling Obamacare, we’ll be darn glad we chose this path.

Smoke Less, Save More

Source: WalletHub

I have a philosophical aversion to social engineers who continually meddle in other peoples’ business. That includes a resistance to measures that restrict the rights of people to smoke (except when that smoking impairs upon the rights of people not to inhale their smoke). That said, I think smoking is gross and disgusting habit, and I would urge all smokers to quit. The difference between the meddlers and me is that I rely upon moral suasion and social pressure, not the coercive power of the state.

That is preamble to the latest report from the listicle freaks at WalletHub who have compiled the lifetime costs of smoking for cigarette junkies. WalletHub added up out-of-pocket costs (average cost per pack of cigarettes, assuming consumption of one pack per day); opportunity cost (assuming that the smoker had invested the money in the stock market instead); health care costs; income loss due to absenteeism, lower productivity and lower earnings in the workplace; and miscellaneous costs. Most of those costs accrue to the individual doing the smoking.

According to WalletHub, the average life-time cost to a Virginia smoker is $1,359,000. The costs are broken down as follows:

Out-of-pocket cost: $91,418
Financial opportunity cost: $864,459
Health care cost: $128,766
Income loss: $264,351
Other costs: $9,861

Wow, I don’t smoke and never have. Although I still have a few years to go to accrue the full benefits of a life-time of non-smoking, I should be loaded. But I’m not. I haven’t accumulated anything close to $865,000 in stock-and-bond assets. Perhaps that’s because I never put my savings from not smoking a pack per day into the market. My bad.

Bacon’s bottom line: For what it’s worth, Virginia’s smoking costs are the 13th lowest in the country — a fact that can be attributed largely to having the second lowest cigarette tax rate in the country. Add up the taxes over a life-time and impute a return on investment to them, and Virginians are $1.1 million per smoker less badly off. But that doesn’t change the fact that smoking is really stupid, and people should stop.


PolitiFact Claim Based on Faulty Assumption

politifactby James A. Bacon

In a recent survey asking people if they supported or opposed Medicaid expansion in Virginia, Del. R. Steven Landes, R-Weyers Cave, made what PolitiFactVirginia reporter Sean Gorman regarded as a fallacious statement:

While expansion would enroll up to 400,000 currently uninsured Virginians in Medicaid, it could cost the Commonwealth of Virginia over $1 billion per year, forcing cuts to other key services like education, mental health and public safety.

Landes’ estimate rests on the “eye-popping” supposition that the federal government might one day renege on its commitment to pay 90% of the cost of expansion, as provided in the Affordable Care Act, wrote Gorman Monday. “But this is pure speculation on his part. There’s no effort in Congress now to cut the federal share at all, let alone by the proportion Landes suggests.”

The burden of proof rests on Landes to back up his statement with facts, Gorman says, “and he comes up short. We rate his claim False.”

Incredibly, Gorman failed to notice that Republicans in Congress succeeded in passing a bill that would have repealed the Affordable Care Act, which President Obama salvaged with a veto Friday. Here’s what House Speaker Paul Ryan had to say:

The idea that Obamacare is the law of the land for good is a myth. This law will collapse under its own weight, or it will be repealed. Because all those rules and procedures Senate Democrats have used to block us from doing this? That’s all history. We have now shown that there is a clear path to repealing Obamacare without 60 votes in the Senate. So, next year, if we’re sending this bill to a Republican president, it will get signed into law.

What would happen if Virginia enacted Medicaid expansion and a Republican administration and Congress then repealed it, thus eliminating federal funding for the program? Virginia would face the choice of either abandoning the program it had just enacted, throwing the health care market into turmoil, or continuing to fund the expansion itself.

Please note that Landes did not say that Medicaid expansion “will” increase state funding by $1 billion a year, he said that it “could.” Who will win the 2016 presidential election? While Las Vegas odds give Hillary Clinton the edge, they concede that a Republican has a solid shot at making it to the White House. The scenario that I just laid out — and very possibly the one that Landes was thinking about — very well could happen, and it would be reckless to ignore the possibility.

There are logical reasons for supporting Medicaid expansion — hundreds of thousands of Virginians still lack health coverage, we’re already paying for the expansion through other taxes under the Affordable Care Act, even if Virginia doesn’t take advantage of the opportunity, so why not? — but those are separate issues that must be considered on their own merits.

As for proclaiming Landes’s statement outright false, Gorman was seriously remiss in ignoring the political reality that the Republican Party remains ferociously opposed to Obamacare and likely will repeal it if it takes power in Washington next year. His analysis comes up short. I rate his claim False.

An Alternative to Expanding Medicaid: Market-Based Reforms

healthcare_reformby James A. Bacon

Republicans in the General Assembly are dead-set against expanding Medicaid and incurring a new budget-busting fiscal obligation. But what are they for? What solutions do they propose to help the hundreds of thousands of lower-income Virginians who can’t afford medical insurance?

One approach explained yesterday by Del. John O’Bannon, R-Henrico, vice chair of the House Health, Welfare and Institutions Committee, is to strengthen the safety net of free clinics that provide primary care services for the poor and near-poor. One can argue that the state’s commitment to free clinics is insufficient to serve Virginia’s large uninsured population but at least it’s a theoretical alternative to an inflexible Medicaid program that stifles money-saving innovations.

Another approach is to implement market-based reforms to promote competition and transparency in Virginia’s health care sector. The hope is that empowering entrepreneurs and consumers will restrain the relentless cost increases that have made medical treatments so unaffordable to begin with — in effect, treating the disease, not the symptom.

The federal government dominates health care policy in the United States because it makes the rules for Medicare, Medicaid, and the state health care exchanges set up by the Affordable Care Act, which account for more than half of all health care spending. But state laws and regulations shape local health care markets, too.

O’Bannon’s vision is to make Virginia’s health care system more competitive and to empower consumers with more information on the cost of elective procedures. He and like-minded legislators have submitted bills, or likely will, to prune state laws and regulations that buttress special interests and inhibit innovation. Here’s a quick run-down:

Certificate of Public Need. Reforming the Certificate of Public Need process is at the top of O’Bannon’s list. The law, which requires would-be investors to demonstrate a public need for new medical facilities and imaging services, is criticized for protecting the turf of established providers and limiting competition. HB 193 would not eliminate the law entirely but would exempt everything except open-heart surgery, organ transplants and nursing homes from the need for regulatory review.

As concessions to the hospital industry, O’Bannon proposes phasing in the law over tree years to provide a “soft landing.” To avoid the problem of ambulatory surgery centers “cherry picking” the most profitable patients and sticking hospitals with uninsured and low-paying Medicaid patients, new entrants into the market would be required to provide the same level of charity care as established providers. O’Bannon acknowledges that the bill faces stiff resistance but hopes he can negotiate a compromise with hospitals.

Transparency. O’Bannon said he intends to file bill that give health consumers the right to find the price of elective procedures. Consumers facing $1,000 or more in deductibles and/or co-pays should be allowed to shop around and find the best deals. That information should be readily available to hospitals, he said. “Consumers have the right to know what it will cost to get it done.”

Direct primary care. O’Bannon cited the work of another Republican legislator on the topic of “direct primary care,” which allows consumers to contract directly with primary care physicians, bypassing the middleman insurance provider. The American Association of Family Physicians describes it this way:

The direct primary care (DPC) model gives family physicians a meaningful alternative to fee-for-service insurance billing, typically by charging patients a monthly, quarterly, or annual fee (i.e., a retainer) that covers all or most primary care services including clinical, laboratory, and consultative services, and care coordination and comprehensive care management. Because some services are not covered by a retainer, DPC practices often suggest that patients acquire a high-deductible wraparound policy to cover emergencies.

Direct primary care benefits patients by providing substantial savings and a greater degree of access to, and time with, physicians.

This proposed legislation, says O’Bannon, would state explicitly that the contracting parties are exempt from insurance regulations.

Medical licensure. Critics of the health care system have observed that medical licensure creates occupational guilds in which politically powerful professions stake out medical procedures that only they can perform. While justified on the grounds of patient safety, the issue looming doctor shortage makes licensure particularly problematic for physicians. O’Bannon said consideration is being given to the idea of expanding the scope of practice for nurse practitioners and to integrating military medics into the civilian health care system.

Meanwhile, the health care sector is undergoing a revolution as entrepreneurs concoct new applications for information technology. O’Bannon cited the “the patient will see you now” phenomenon in which patients use their smart phones to shop more aggressively for doctors and wearable sensors that can monitor everything from temperature to blood sugar levels. Virginia’s policy, he said, should be to encourage providers to be more flexible in how they adapt to these new technologies.

An Alternative to Expanding Medicaid: Expanding Free Clinics

Del. John M. O'Bannon III

Del. John M. O’Bannon III

by James A. Bacon

With all the bad press that Virginia’s Medicaid program has been getting recently, the prospect of the General Assembly enacting an expansion of the health care entitlement in 2016 are just about nil. First came a report last month that the state wasted $21 million last year paying Medicaid benefits to recipients who no longer qualified. Then the McAuliffe administration revealed that the state share of funding Medicaid is forecast to surge in the next two-year budget cycle, boosting the annual cost from $7.9 billion in fiscal 2015 to $9.3 billion in fiscal 2018.

That’s without expanding Medicaid as allowed for in the Affordable Care Act. While the federal government has covered 100% of the cost for an introductory period, state governments will have to begin paying a share of the cost beginning in the next fiscal year, eventually topping out at 10% of the added spending.

Virginia Republicans have held fast against expanding the entitlement. Their primary argument has been one of fiscal responsibility: Every state dollar spent on Medicaid is one less dollar that can be invested in K-12 schools, higher education, and other pressing state needs. But Medicaid doesn’t exist in a vacuum. It needs to be seen against a larger backdrop of reforming a largely dysfunctional health care system and a tattered social safety net.

Yesterday I sat down with Del. John O’Bannon, R-Henrico, a practicing physician who happens to be vice chair of the House Health, Welfare and Institutions Committee, to discuss the wellness (or lack of it) of Virginia’s health care system. The thrust of my questions was this: It’s all very fine to oppose Medicaid expansion on fiscal grounds, but the health problems of poor and near-poor Virginians are real. What do Republicans propose as an alternative?

His answer comes in two parts. First, the General Assembly has steered more funds into the state’s mental health programs and into free clinics. Said O’Bannon: “We’re for strengthening the safety net.” But he prefers programs that Virginia can control without federal interference or that leverage private-sector philanthropy. Second, the state should do more to promote competition and transparency to contain medical costs and improve outcomes for all Virginians, including the poor. In this post, I’ll focus on the first approach.

In the current fiscal year, the General Assembly approved $125 million in new safety-net funding for mental health, free clinics and Federal Health Centers.

Of that amount $96 million is dedicated to SMI mental health, which, with an equal match from the feds, should treat 20,000 people with serious mental illness. (SMI stands for Serious Mental Illness.)

The balance of the new funds supports free and affordable clinics, which provide physician care, x-ray services, lab services, immunizations, preventive services, prescription drugs, and some dental care to Virginians lacking other health care coverage. According to, there are 254 clinics in the state of Virginia. Some clinics are federally sponsored Community Health Centers, which may charge patients a fee, depending on income, while others are entirely free. While coverage does not extend into every nook any cranny of the state, it is extensive. In Southwest Virginia, the mobile Health Wagon fills in some of the gaps by providing care services to residents of 11 counties.

State funds complement charitable donations and professional time contributed by doctors, nurses and other volunteers, while the Virginia Health Care Foundation works with pharmaceutical companies to contribute prescription drugs.

Although free/affordable clinics do provide primary health care to hundreds of thousands of Virginians, the health safety net is “stretched as never before,” states the website of the Virginia Health Care Foundation. “Free clinics reported up to a four-month wait for patients seeking a first appointment. Some have instituted lotteries to determine who can receive care. Other clinics are simply unable to accept new patients because of capacity and/or resource limitations.”

As imperfect as the safety net may be, Virginia’s dense network of free/ affordable clinics is “unique” in the country, says O’Bannon. By comparison, he says, Maryland doesn’t have a single free clinic. Instead of expanding Medicaid, with its arbitrary rules and fiscally unsustainable cost, Virginia should focus on strengthening its home-grown institutions that are inherently closer and more responsive to the community.

A Moral Choice: Economic Development or Lower Medical Charges?

cfphby James A. Bacon

Building on its plans to establish a Center for Personalized Health, Inova Health System is forging a partnership with George Mason University that will allow physicians, researchers and clinicians to work together on personalized medicine research, the two institutions announced yesterday. (See the Washington Business Journal article here.)

Inova will contribute $2.5 million in seed funding to the partnership and work with GMU to raise more money over the next few years. Much of the activity will take place in the former Exxon Mobil campus in Merrifield that Inova had previously purchased for $180 million. Inova’s plans also include a $250 million cancer institute, to be funded in part by a large donation by real estate mogul Dwight Schar. The larger vision is to build a health “ecosystem” devoted to the research, education and treatment of complex disease therapies tailored to an individual’s genetic make-up.

Meanwhile, GMU has unveiled a $40 million Advanced Biomedical Research building, rebranded its Prince William County location as its Science and Technology Campus, and started construction on a $73 million health sciences building.

These developments represent a welcome diversification of the Northern Virginia economy, which has been overly dependent upon defense, intelligence and homeland security spending by the federal government. Governor Terry McAuliffe understandably praised the latest announcement as a step in developing the “new economy” in Virginia. With characteristic enthusiasm, he said the new personalized-medicine campus could become a world leader. ” I love it because this agreement here is going to take us to the next level. … I want this facility to be the greatest in the globe.”

But the investment spree raises moral questions. For the most part, Inova Health System’s funding comes from its hospital operations. The not-for-profit Inova, which exercises near monopoly dominance in the Northern Virginia health care market, generated operating income of $218 million in 2014 on $2.7 billion in operating revenue. That’s a profit margin of about 8%, more than twice the profitability that non-profits normally need to maintain healthy operations. That translates into about $109 million in what one could classify as excess profit.

Unlike a for-profit company, Inova is not obligated to maximize profits. To the contrary, insofar as the company is exempt from taxes and has a community mission, one could argue that it is morally obligated to (a) reduce charges to patients afflicted by ever-escalating medical bills or (b) provide more care to low-income patients not covered by Medicaid.

To be sure, Inova does provide a significant volume of charity care. Its flagship hospital, Inova Fairfax Hospital, provided $151 million in 2014, according to Virginia Health Information. But the company’s high level of profitability suggests that it could do more.

Instead, Inova has chosen to plow its excess profit into economic development. I have no doubt that the personalized medicine initiative will benefit the Northern Virginia community in the long run by creating a new economic pillar in the region. The funds to do that are not likely to come from any other source. But it’s important to understand the trade-offs that Inova’s board is making here. It is extracting wealth from the community to bulk up the profits that grow the Inova empire. The people paying higher medical bills are not necessarily those who will benefit from the investment in the Center for Personalized Health.

Would I make the same decision if I served on the Inova board? Perhaps I would — I don’t know. But I’d like to hear all points of view presented. It’s a decision in which the public should have a voice.

Agreed, We Can’t Risk Expanding Medicaid. But What’s the Alternative?

innovationby James A. Bacon

Republican leadership in the House of Delegates once again has slammed the door on Governor Terry McAuliffe’s proposal to expand Virginia’s Medicaid program. There are good reasons both for and against extending the entitlement but the decisive and most compelling argument is the likely inability of the federal government to honor its commitment to pay 90% of the cost of the expanded program far into the future.

If you need a sobering reminder of how dismal the long-term fiscal condition of the federal government is, just read this recent Senate Budget Committee testimony by Boston University economist Laurence Kotlikoff. As everyone knows, the national debt now exceeds $18 trillion. But that’s just the tip of the fiscal iceberg. The fiscal gap, the difference between revenues and obligations projected 75 years into the future, is $210 trillion — more than 10% of GDP. The gap between revenues and promises in the U.S. is worse than that of any other developed country, Kotlikoff said, worse even than Greece. (Hat tip: Tim Wise.)

If something can’t go on forever, eventually it won’t. At some point, whether ten years from now, twenty years, or thirty, the federal government will reach a crisis. There is a high likelihood that a future Congress will decide either to radically curtail Medicaid or to dump a significant share of the funding burden on the states. Either event would be traumatic for Virginians. This is not scare-mongering, it is arithmetic.

While rejection of Medicaid expansion may be fiscally justified, it leaves hundreds of thousands of poor and struggling Virginians without access to health care, except in emergency room settings. If Republicans and conservatives are going to reject the fiscally improvident expansion of Medicaid, they are obligated to present a different vision for Virginia’s healthcare future. We have seen bits and pieces of such a future — repeal the Certificate of Public Need (COPN) process that protects established companies from competition, and make patient-level data more widely accessible — but no one has articulated a coherent vision. Let me advance three propositions that may lead us to such a vision:

  • The main reason that medical insurance has become so unaffordable for so many Virginians is that the underlying cost of providing that care has increased relentlessly over the decades faster than inflation and faster than the increase in wages and salaries.
  • The primary thrust of public policy in the United States and Virginia has not been to stimulate productivity and innovation, making medical care more affordable for all, but to restrain cost increases by regulatory means and to redistribute wealth from the affluent to the poor in a zero-sum game. The resulting system, marked by rampant regulation, red tape, cross subsidies and an total lack of transparency, is a colossal failure.
  • To make health care affordable and accessible, Republicans and conservatives need to champion market-driven competition and innovation that drive down costs and improve medical outcomes.

That’s the vision, but a vision is nothing more than words and generalities. Where do we go from here? There are three things we can do in the short term that will move us in the right direction:

  • Eliminate COPN, which protects established hospitals from competition, not only from other hospitals and outpatient-care facilities but from entrepreneurs who might have novel ways to organize and deliver care. In so doing, we must recognize that COPN represents a back-door means of compensating hospitals for the significant sums they spend on indigent care, and acknowledge that some kind of political settlement will be necessary.
  • Eliminate mandated health benefits, which limit the ability of health insurance companies to create innovate products for niche markets.
  • Create market transparency. Patients have little consumer power in the medical marketplace because they cannot compare the price of different medical procedures or the quality of work performed by different hospitals and doctors. The methodological issues of comparing price and quality are formidable but not insurmountable. For market-driven health care to work, we must have price transparency.

That’s just the beginning. Thinking more long-term, we need to acknowledge that the concept of hospitals — centralized medical facilities that provide a bundle of unrelated medical procedures — may be outdated. The future belongs to the factory model in which specialized medical teams (doctors, nurses and others) work in specialized facilities with specialized equipment, and stay up to speed with the latest scientific knowledge about particular procedures or diseases. This specialization and knowledge allows them to treat patients at lower cost with better outcomes.

In parallel, insurance companies need to pioneer new reimbursement strategies that cover not just individual procedures but entire courses of treatment, rewarding medical “factories” described above for superior outcomes and lower costs.

Republicans and conservatives don’t have to come up with every answer. They’re politicians, not medical practitioners. But they do need to paint a picture of the future, eliminate legal and regulatory obstacles and push the health care industry in the right direction. If they fail to do so, the end result will be fiscal insolvency, hundreds of thousands of Virginians people dispossessed of health care, or a chronic health care crisis for all.