Privacy and Electronic Health Records

President Obama wants a national electronic health records system up and running in the United States by 2014. There is a lot of skepticism about whether or not it can be set up that quickly, but the point is creating one of these systems is the ultimate goal.

This national health information network will be a large database of medical records that can be accessed from many locations. Professor Thomas Lauer, the Chair of Decision and Information Systems at Oakland University, provides a simple example of how the system would work. “You take a vacation in Aspen and get in a skiing accident, the doctor in Aspen can look at your records [from your hometown] to make the most accurate diagnosis for you.”

Creating this centralized network would obviously make the system far more efficient if it is implemented effectively, but what if it isn’t? Having all of that health information in one location raises some serious privacy issues. “If you have so much data in one location the risk of loss is far greater than if data is dispersed. With paper records the most someone could get is a few records, if someone gets into this system they own the whole thing,” professor Lauer says. It could be like Fort Knox in the movie Goldfinger.

Aside from someone hacking into the system, there are simpler, everyday privacy questions. We will need to determine what 3^rd parties get access to the information, and how much information these 3^rd parties are allowed to see. Should employers be able to see the information? What about health insurance companies? These are issues professor Lauer is particularly concerned about. “A lot of privacy issues have to do with power asymmetry, you are weak, others are strong,” he says. If a person wants a credit card or insurance, he has to give up certain private information, and “if you’re not comfortable giving out that information, the powerful can demand it.” The individual really doesn’t have an option. If they need the service, they need to give up the information.

After determining which people should be able to access which information, there is the potential problem of onward transfer. “I collect your information and you feel confident in me, but I have to give it to someone else, and so on. You may trust my ability, but these other people I gave the information to you can’t be so sure about,” professor Lauer explains. Credit bureaus used to engage in this type of behavior. They would collect secret databases on people, and then sell them.

This also happened in the medical area, with an organization called the Medical Information Bureau, which is similar to the credit reporting agencies. They would collect data, wouldn’t let individuals see their data, and wouldn’t tell them what was in the data. If something in the data was inaccurate, too bad, nothing could be done about it. This information was sold to the MIB’s member insurance companies. Nowadays, patients are able to look at their report once a year, but most people still don’t know this organization exists. This type of onward transfer is a major issue, and with a national database, it could conceivably become much easier.

Finally, there is the issue of what professor Lauer calls “function creep.” The goal of the health information network is to help doctors make a more accurate diagnosis. However, at some point down the line, this can change to “wouldn’t it be great to study the relationship between physical disease and mental disease.” So it’s important to know who controls the data, and whether or not people should have a say in what their private information is used for.

Some people may say, ‘what’s the big deal, I don’t really care what they do with my information.’ Professor Lauer sees this as a side effect of the culture that we live in. “A lot of privacy has to do with personal dignity, and this is a value in society we should protect,” he says. “I think society is seriously compromised in many areas, so not much thought is given to areas like dignity. I believe that’s a problem.”

Whether people care or not, professor Lauer says the most important thing is that people know about these issues. “I really think it's important to raise awareness on the subject of privacy in general, and health information privacy more specifically. In my view, informed dialog that represents a public viewpoint is critical to enacting good policy.”

Do Video Games Have Health Benefits?

Some people think video games are the bane of society, saying they make kids fat, lazy, and violent. The CDC just released a report that says the average video game player is 35, overweight, and may be depressed. However, with the advent of products like the Wii Fit, there are those out there who argue that video games are actually beneficial to people’s health. Is this actually true?

Let’s start out with the issue of mental health. The CDC study says that older video game players use games as a form of ‘digital self medication.’ Other research put a different spin on that concept. One study said that people who played the game Bejeweled, showed “improved mood and heart rhythms compared with volunteers who weren’t playing.” They argue that this is because people in our society find it difficult to relax, and require a certain level of stress at all times. It’s possible that video games offer just the right balance between stress and relaxation. The catch is, this study was commissioned by Popcap games (the maker of Bejeweled), and it was just a preliminary study.

The researchers at Popcap games are not the only ones who believe that games can help with relaxation though. There is another company, called HeartMath, which offers a computer program called the emWave that is supposed to “prevent, manage and reverse the negative effects of stress, anxiety, fatigue, depression and more.” The program offers “three colorful games designed to help you transform stress into creative energy.” The software works like this: the user attaches a finger or ear sensor to their body and the program tracks their pulse. Information about your heart rhythms are then shown with “friendly graphics.” This product can be yours for the low low price of $300, or $200 for a handheld version. Maybe that’s a steep price, but hey, the website says the research behind this product is peer reviewed.

Even the health insurance company Humana is in on this healthy games idea. They have a website called Humana Games for Health. This website points to some truly interesting research in defense of video games, although the source of the research is not always mentioned. They say that surgeons who play video games three hours a week commit fewer errors, and work faster than those who don’t. It argues that children who play disease management games understand their disease better. In the case of asthma patients who used these games, emergency room visits dropped by 40%. I will just quickly run down the other benefits they mentioned. Video games can improve senior’s cognitive abilities and reaction time, playing shooting games can improve vision, and video games are often used for physical therapy (including at Walter Reed Army Medical Center). As for the actual games on the website, they have some interesting games for mental stimulation, but I’m not sure the one where I’m simulating riding a bike with my fingertips will have much effect on my physical activity level.

It does seem pretty clear that video games can actually have health benefits, and this idea is becoming fairly mainstream. Whether it is Wii fit or Dance Dance Revolution for physical activity, Brain Age for mental stimulation, or some remedial game for disease management, there are benefits to playing video games. Maybe the health care reform bill should include a stipulation requiring all surgeons to play Grand Theft Auto three hours a week as well.

Massachusetts Universal Health Care: Problems and Solutions

In 2006, Massachusetts passed a law with the goal of making sure every resident of the state had health insurance. Today, the state has almost reached that goal, as 97% of Massachusetts residents have health insurance. That is the highest percentage in the country.

In Massachusetts, all residents are required to buy insurance or pay a tax penalty. The insurance is offered through an independent public organization called Commonwealth Care. One of my relatives lives in Massachusetts, and she gave the system rave reviews. She got to choose her own doctor, her health care costs were much lower, and she can’t think of many bad things to say about it. She only says that some people didn’t understand how to use the system because it was complicated.

Although some have had a great experience with the system, there are some problems that need to be addressed. Firstly, there is an average wait time of 36 to 50 days for new patients, and around half of internal medicine physicians are not accepting new patients. This is according to an editorial on cnn.com, which cites the Massachusetts Medical Society as the source of these statistics. The editorial also points out that there has been a 7% increase in emergency room usage, and if this system was national the wait times would be worse, because Massachusetts has the highest concentration of doctors in the nation.

Secondly, there is the cost. “The program is broke. Part of it is because of recession, part of it is because there’s no cost controls,” Democratic Party Chairman Howard Dean said on NPR Tuesday night. Dean said that to combat the cost issue, Massachusetts should be moving toward a system of global medical payments.

Under a global payment system, doctors would be paid a fixed price for routine medical care over a given period of time, instead of paying doctors for individual procedures. This would mean doctors would no longer have a financial incentive to perform unnecessary treatments and tests. On the other hand, it might also give them a financial incentive to cut corners on borderline situations.

Insurance companies will set budgets for doctors, if the doctors are under budget they and the insurance company will pocket some of the savings. If they go over budget, the insurance companies and health care providers will cover the excess. In theory, this excess will be covered by other patients who are under budget, and it will all even out.

Either way, a global payment system is not going to solve the cost problem in the short run, it is meant to benefit in the long run. For more on the potential global payment system in Massachusetts, read this article.

Health Insurance Co-ops as an Alternative to the Public Option

Conventional political wisdom now says that President Obama is backing off of the public option as a part of the health care reform bill. This seems to stem from an answer he gave at a town hall last week, where he said that having a public option is not the only element of health care reform, and there are other important elements to the reform effort.

While the public option might be losing steam for the moment, another idea to create competition seems to be gaining in popularity: health insurance co-ops. Even ultra conservative Republican Richard Shelby (R-AL) is not completely opposed to it, saying “We ought to look at it. I think it’s a far cry from the original proposals.” Kent Conrad (D-ND) is behind the co-op proposal, which would likely offer several billion in loans and grants to help set up cooperative networks. There was a good article in the Kansas City Star explaining what a co-op would look like:

What’s a health insurance co-op? A private, nonprofit organization — most likely one in every state — would compete with for-profit companies to offer coverage to individuals and perhaps businesses.

How would a co-op work? Individuals seeking insurance would go to an “exchange” that would list available health care plans, both from private companies and the co-op. The customer could compare prices and coverage and choose a carrier. The co-op, as a nonprofit enterprise, would in theory provide the same coverage as the private companies at a slightly lower price. That would force private insurers to lower their prices to compete.

The article also mentioned one of the most famous health co-ops that currently exists, the Group Health Cooperative in Washington State. I looked into what kind of coverage they offered to individuals in their low income program. According to the website, those in the program pay a $150 annual deductible, get free preventative care (such as physicals), a $15 co-pay for other office visits, and $10 co-pay for generic prescriptions. However, the Group Health Cooperative is having some issues with their low income program. They are being forced to raise rates due to recent legislation, including raising the deductible from $150 to $250, and have instituted a wait list for new applicants (certain individuals are able to bypass the wait list).

Although the Group Health Cooperative is relatively successful, many efforts to establish co-ops in the past have failed. A notable example being the attempt made in Iowa, home state of swing vote Senator Chuck Grassley (R-IA), which saw it's co-op program fail in two years. According to an article in The Washington Post, a co-op needs 25,000 members to be financially viable, and over 500,000 to be able to negotiate rates with doctors and hospitals. The Washington Post article also mentioned other major drawbacks to this idea:

"Co-ops would lack perhaps the main advantage of the public option: reimbursement rates for doctors and hospitals set by federal law, like those paid by Medicare, the program for older Americans. Federally determined reimbursement rates were central to the cost-saving promise of a government-run health plan and a potentially powerful competitive advantage… [They would also] lack the ability to piggyback onto existing government institutions, like the ones that help administer Medicare."

However, since these co-ops would be non-profit, they would not be motivated to maximize returns for shareholders like public insurance companies. This would theoretically allow them to reduce premiums or reinvest money to improve care. So it’s not all bad news.

Economics Professor Addresses Common Questions About Health Care Reform

Oakland University economics professor Miron Stano is co-author of the textbook Economics of Health and Health Care, The (6th Edition). I asked him these four common questions about health care reform, in hopes that he could provide some clarity on these complicated issues.

1. Would government run health care cause costs to get out of control, and lead to the government rationing care because of a large increase in demand for health care?

There is no question that national health expenditures will be substantially higher than otherwise. This is due principally to two factors: (1) the uninsured will have coverage and consume more heath care; and (2) many others will have more comprehensive coverage resulting from the minimal benefit standards that Congress will establish. It is also possible that health care prices will increase faster as a result of the additional demand. At the moment, it is not clear how the added expenditures will be financed. Projected cost savings from improved coordination of care, greater use of electronic medical records, and greater emphasis on preventive care are very tenuous. The various revenue enhancing proposals are unlikely to generate substantial dollars. This will result in growing budgetary gaps that will probably require implementation of utilization controls or guidelines. Bear in mind though that some of this is already happening through managed care and other cost containment programs. If implemented properly, the “rationing” actually adds to society’s welfare by eliminating cost-ineffective procedures and treatments.

2. Would passing health care reform now slow down or stop the economic recovery?

A sudden restructuring of 1/6 of the U.S. economy would be a shock to the economy especially in its current fragile state. The health care reform package ultimately approved by Congress will be phased in. I hope that a recovery would be well underway within the next two quarters. While an additional $100+ billion or so per year when the health program is fully implemented is more than pocket change even for the U.S. economy, the potentially negative work and savings effects resulting from the redistributions from higher to lower income households, in my judgment, are unlikely to be large.

3. Is it impossible for the government to run a health care program (or any program) as well as or better than private industry?

A government “run” program can take on different forms. For example, goods or services could be produced by government, e.g, national defense, NASA, police and fire protection, water; or government could outsource administration of the good or service to the private sector, e.g., prisons in some states and Medicare, the largest health program. Private insurance companies, known as Medicare carriers, handle the claims processing and all the attendant issues that are associated with traditional Medicare. There is even a private insurance market for the Medicare Advantage component (Part C of Medicare).

The cost and efficiency issues associated with government programs are very complex but there are circumstances in which well conceived programs “run” by government can be very efficient. As an example that is easy to relate to, I will use the single waste hauler program adopted recently by Rochester Hills, [Michigan] after years of debate over the issue. Rochester Hills contracted with Allied Waste to provide [waste management] services that are mandated for property owners who are billed directly by Allied Waste at a rate negotiated by the City. A private market, in which households contracted with private haulers at unregulated rate, existed prior to this program. My subdivision had three trucks (waste, compost, recycling) for each hauler coming on several different days of the week creating all sorts of nuisances (noise, road deterioration, and garbage on display almost every day). Some liked the system arguing they had more choices regarding their own collection day and whether to have full or partial service. I’m sure that some Rochester Hills residents even illegally dumped garbage to avoid paying for service. And all of these negative “externalities” came at a high price. My current rate for full service is nearly one-half the rate I was previously paying for the same level of services with the same hauler.”

4. Do you think the way health insurance companies currently run their business is good, bad, or neither. I am thinking in terms of denying claims, and not taking people with pre existing conditions.

Insurance in general is associated with two important concepts: moral hazard and adverse selection. Moral hazard refers to the idea that one doesn’t take care of one’s property as carefully as otherwise with insurance coverage. There is reason to believe that behavior with regard to health also follows this pattern Moral hazard is why more health plans and employers are developing wellness and other incentive programs to get people to adopt healthier lifestyle behaviors. Adverse selection refers to the idea that a higher risk person would likely be part of a lower risk group and pay a lower premium than reflected in his actual risk. Private insurance tries to mitigate both phenomena. Deductibles, penalties for frequent claims, and incentives for alarm systems help reduce moral hazard in property insurance. Risk rating is used by insurers to deal with adverse selection.

The insurance system will break down unless there are mechanisms to deal with adverse selection. For example, there would be very little reason for healthy people to buy health insurance if they could get it at low rates once they have a serious disease. By its very nature, a national health system avoids adverse selection. In its absence, a mandate for individuals to have insurance reduces the adverse selection phenomenon. This is why the insurance industry now supports reform legislation.