A Life Of Investigation & Discovery

Richard (Buz) Cooper, MD, passed away on January 15, 2016.  During more than 50 years as a physician, he practiced hematology and oncology, conducted experimental hematology research, directed a cancer center (at Penn), was dean of a medical school (at the Medical College of Wisconsin), led a health policy institute (also at Wisconsin) and initiated a workforce center (at NYiT).  Over the past 15 years, his efforts were focused on critical issues in health care policy related principally to the demand for physicians and other health care professionals and the forces that drive health care spending. Through this journey, he rediscovered the essential role of professionalism in health care and the central importance of poverty  in the growth of health care spending. <Continue Reading>

Poverty and the Myths of Health Care Reform

Buz Cooper’s book “Poverty and the Myths of Health Care Reform” (The Johns Hopkins University Press) written in the last two years of his life and published just months after his death in 2016, argues that poverty, rather than waste and physician inefficiency, is the driver of runaway health care costs in the US and the world. Here’s a short video description – then head to the Johns Hopkins Press book page to order a copy now.

Introduction Chapter from Poverty and the Myths of Health Care Reform

The following is an excerpt from the book “Poverty and the Myths of Health Care Reform” by Dr. Richard A. Cooper, M.D., which is published by Johns Hopkins University Press. To order a copy, please visit the JHUP bookstore here.

It seems fair to ask, how did I come to write this book? After all, I am a physician, a specialist in hematology, the study of blood diseases. I practiced medicine, led an academic hematology group, and conducted research for 25 years, initially in the Harvard Medical Unit of the Boston City Hospital and later at the University of Pennsylvania, where I also cofounded and directed a cancer center. In 1985, I returned to Milwaukee, the city of my birth, to become dean of the Medical College of Wisconsin, and that started the detour that led directly to this book.

As my deanship was drawing to an end, Bill and Hillary Clinton were developing their health care plan, and it was in this context that I was confronted by two questions that would redirect my career. The first concerned physician supply, and the second concerned poverty, which is the focus of this book. One led to the other, and understanding something about the first will help in understanding why I set out to answer the second. Continue reading


This post, by my friend and collaborator Tom Rosenthal , Chief Medical Officer of the UCLA Health System, responds to an article that was published in the New York Times Magazine, entitled “What’s the Matter with Eastern Kentucky?” and also posted on its Upshot blog:

The New York Times has provided important insights about the factors related to dense aggregations of poverty.  And, no doubt the lowest ranking counties by this measure are among the hardest places in America to live.  By using counties as the geographic unit, however, it masks urban poverty and mistakenly concludes that this magnitude and intensity of poverty is “an overwhelmingly rural phenomenon”.

The NYT study ranked Los Angeles County at #703 of 3,135 counties, well down in terms of poverty.  But Los Angeles is an enormous county. For planning purposes, it has been divided into Service Planning Areas (SPAs) to allow the Department of Public Health to develop more relevant public health services for residents in different areas.

SPA 5 (West LA) and SPA 6 (South LA) share a border, and their epicenters are only 15 miles apart.  While it’s not possible to calculate precisely where this would be in the NYT list of counties, wealthy SPA 5 (West LA) would probably be in the top 10, while poor SPA 6 (South LA) would land somewhere in the bottom 100.  It is interesting to note that poor SPA 6 (South LA) has many more people living in poverty than any of the rural counties in the bottom of NYT list.

Rosenthal 2

The NYT article concludes, “Clay  and Los Alamos Counties are part of the same nation.  But they are truly different worlds.”  The same can be said for SPA 5 and SPA 6, two districts within a single county, which differ every bit as much a Clay and Los Alamos Counties. The lesson is that urban poverty must be analyzed in units much smaller than counties and, conversely, when instead, districts as different as SPA 5 and SPA 6 are aggregated and averaged, the results can be misleading.

Other examples of embedded urban poverty and its impact on health costs and outcomes are demonstrated in our recent article, Poverty, Wealth and Health Care Utilization: A Geographic Assessment .



For the first time (to my knowledge), the editorial staff of the New York Times has acknowledged that there is a PHYSICIAN SHORTAGE and pointed to the need to increase the number of residents being trained, not that I didn’t try to tell them. Since 2002, when it was clear to me and my colleagues that the US was headed for exactly the kind of shortages that are now unfolding, I  sent them three OpEds and two letters explaining the problem. They chose to ignore all of them and, instead, relentlessly pursue the Dartmouth-inspired dogma that the system was fraught with waste and inefficiency and, therefore, needed fewer, not more, doctors. David Leonhart, the Times economics columnist, even awarded his 2007 Book-of-the-Year Award to “Overtreated” which was written by Shannon Brownlee, a publicist for the Dartmouth group.

The first mention in the Times that a doctor shortage was in the works appeared in a front page article by Annie Lowrey and Robert Pear on July 12, 2013, accurately entitled “Doctor Shortage Likely to Worsen With Health Law.” Eighteen months later, the Times reversed course through an OpEd by one of its regulars, Ezekiel Emanuel, together with Scott Gottlieb, a fellow of the American Enterprise Institute, entitled “No, There Won’t Be a Physician Shortage,” which called for greater productivity of physicians rather than a greater supply of them. And now, at long last, prompted by the physician shortage at the VA (which needs 1,500 more), the Times admits that there aren’t enough  and that there won’t be enough and, therefore, the US had better train more. Thank you, New York Times!

Since they chose to ignore the problem for more than a decade and chose not to print my missives, I have reproduced them below. At a minimum, they are historically interesting You may also wish to read a paper I published in the Nov. 13, 2013 issue of JAMA, entitled “Unraveling the Physician Supply Dilemma.”


Last month, President Bush unveiled his health care agenda before an enthusiastic crowd at the Medical College of Wisconsin.  He prefaced his comments with remarks about the war on terrorism and about the soldiers who are fighting that war, and he described its ideological basis —patriotism and love of freedom—qualities that, he noted, both parties admired.  But his purpose was to discuss another war—the battle for a better health care system, a battle whose strategy rests on a different ideological base—compassionate conservatism.  Compassionate because it offers “health credits” and other ways to assure health insurance for everyone, but conservative because the range of basic benefits will be tied to one’s ability to pay.  Compassionate because it will include prescription benefits and research support for developing tomorrows therapeutics, but conservative because it will place a veil over areas of research that are abhorrent to the right.  Compassionate because everyone will have catastrophic health insurance of comparable value, but conservative because it is another step along the road from defined benefits to defined contributions.

There is more to learn, and debate is certain to be vigorous, but President Bush has restarted a process that has been dormant since the disappointing experience of the Clinton Health Plan.  Yet, as I sat listening to his broad agenda—his strategy for this other war—and as I heard him compliment the students who were present and tell them how, freed of the burdens of litigation and regulation, they would be better able to deliver quality care, I was struck by the realization that it won’t happen; that, unlike the military preparedness for the war on terrorism, there won’t be enough soldiers for the war for better health; that at a time when the President speaks about better access to specialists and more research to give them the tools that they now lack, patients are waiting ever longer to see a doctor.

Based on economic and demographic trends, my colleagues and I have projected that this situation will progressively worsen.  Without adequate numbers of physicians, the dreams of more expansive and accessible health care simply cannot materialize.  It takes a day to pass a prescription drug benefit.  It takes a decade to train a doctor.  If we want to have enough physicians to fight the President’s other war, we had better start educating more of them now.

WHO WILL BE TOMORROW’S DOCTORS?                                           June 2006

Headlines announce an epidemic of obesity.  Wal-Mart is coerced into providing broader health insurance.  The growing numbers of uninsured is a national disgrace.  More health care is wanted, and more will be needed.  Costs are a problem, but a way will be found to pay for it.  The question is, “who will provide it?”

Readers of the Times know full well that there’s a major nursing shortage.  What’s less well appreciated is that there’s a looming physician shortage.  Based on long-term economic and demographic trends, my colleagues and I have estimated that the US will need an additional 200,000 physicians over the next 15-20 years.  That will require an increase in the number of doctors being trained annually from about 25,000 to 35,000 – a 40% increase.  Moreover, because the lead-time to start new schools, educate doctors and allow them to complete residency training is so long, few of these additional physicians will be enter practice for a decade or more, even if a maximal effort were undertaken today.  Yet, little effort is underway to expand medical school capacity, and no real effort is being made to increase the number of residency positions, which were capped by Medicare at their 1996 levels.

It’s not that the problem is out of view.  Medical societies in Massachusetts, Wisconsin, California and ten other states have published reports with titles such as “And Then There Were None: The Coming Physician Supply Problem” and “Who Will Care for Our Patients?”  Merritt, Hawkins & Associates, the nation’s largest physician recruitment firm, published a book entitled “Will The Last Physician In America Please Turn Off The Lights? A Look at America’s Looming Doctor Shortage.”  And similar levels of alarm have emanated from associations of cardiologists, radiologists, anesthesiologists, pulmonary-critical care physicians and a dozen other specialties.

Despite this, most policy-makers have remained on the sidelines.  One reason is a lingering concern that the forecasts of shortages could be wrong.  Another is a long-standing belief that it’s better to undershoot than to train too many physicians.  Too many could fuel more health care spending, so they believe — any deficiencies can be filled from other countries.  But the US has relied so heavily on other countries that 25% of our current physicians are foreign trained, principally from developing countries.  Taking still more could bring the health care systems of many of these countries to the brink of collapse.

Now the landscape is sullied by the statistical artifacts of the Dartmouth group, who appear not to understand that most health care is consumed by a small proportion of the population, and, in urban areas where the concentration of specialists is highest, the high utilizers are disproportionately poor, poorly educated and with poor outcomes.  So put together the affluence of urban America with the poverty that dwells within it and suddenly Dartmouth doubletalk is understandable — not too many doctors causing bad outcomes but a inadequate support systems for the nation’s neediest, who look to the health care system (and its doctors) to repair the ills that beset them.

To their credit, some national organizations have stepped forward.  Two years ago, the federal government’s Council on Graduate Medical Education, which championed the notion of too many physicians throughout the 1990s, changed its stance and projected future shortages, instead.  The Association of American Medical Colleges followed suit a year later, and the American Medical Association soon thereafter.  But none of this has translated into a national plan for financing the necessary growth of medical schools and residency training programs.  And the clock keeps ticking.

It falls to the public to make its needs known, to proclaim its frustration with waiting times, to protest the indignities that a stressed system showers upon them, to raise concern about the care that they will receive as they age and to express fears about the care that their children and grandchildren will receive.  Yet how many among them can even imagine what lies ahead as the available supply of physicians fails to keep up with the needs and the system spirals increasingly out of control.  All the more reason that leaders in medicine and government must take it upon themselves to begin the arduous task of developing long-term plans to finance an expansion of medical education so that Americans will have the doctors who they expect and deserve.

MAKE THE US SELF-SUFFICIENT                                                             July 2007

Terrifying words emanate from Jordan through Glasgow to London and over the Atlantic to the US.  “Those who cure you will kill you.”  A band of radical Islamic doctors has attempted heinous crimes.  The first question that comes to mind is, how could they?  After all, they’re physicians.  But underlying that is an even more puzzling question.  Why are England and the US so dependent on foreign physicians?  While it may be difficult to become energy-sufficient, it should not be difficult to produce enough doctors, yet deepening shortages of physicians are evolving in the US, and no real efforts are being made to ameliorate the problem.

Let me be clear – most foreign physicians are competent and caring, and no one should fear them.  Nor should the US close its doors to immigrants.  After all, most of us or our parents or grandparents were immigrants.  But let me also be clear that being so highly dependent on foreign physicians is not only a problem for the US.  It also is a problem for the developing countries from which most come – countries that need them even more than we do.

What must be done?  First, the US must build more medical schools.  Not the few that are now on the drawing boards, but enough to add 10,000 additional physicians to the workforce annually, more than double the number recommended by the Association of American Medical Colleges and 5-fold the number that are in various stages of planning.  Fewer than that will increase our dependence on foreign physicians.

Second, and crucially, the US must build an equivalent number of residency positions, the second phase of medical education, referred to as Graduate Medical Education. But residencies have been frozen at their 1996 levels by a cap on Medicare funding, which is the principal source of support for Graduate Medical Education.

Why are there caps on Graduate Medical Education?  Because planners in the 1990s mistakenly thought that the US was producing too many physicians, and many still do, including MedPAC, the committee that advises Medicare.  Planners in the 1980s had the same belief, which led to a voluntary cap on medical school places.  But residencies expanded in the early 1990s nonetheless, and to make up for too few US medical graduates, the gates were opened to more foreign medical graduates.  That’s how the US became so dependent on foreign physicians.  Now, residencies must expand again to meet the national need for physicians, but with too few medical schools, the experience of the 1990s will be repeated again.

The simple truth is that there’s a doctor shortage and it’s getting worse.  Patients who have tried to get an appointment know it, and so do hospitals and practice groups that have tried to hire an additional doctor.  The reason is not complicated.  It’s that the US has not built the capacity to train enough new physicians to care for a growing and aging population, one that seeks the technologically-advanced, comprehensive medical care that is possible today.  But we can do better.  More than 30 state medical societies, hospital associations and medical specialty organizations have called for action.  It’s time to remove the caps on Graduate Medical Education and build a sufficient number of medical schools and residency programs to meet the Nation’s needs.  Becoming self-sufficient in educating physicians is the responsible thing to do – for the US and for the world.

EXPAND THE PHYSICIAN WORKFORCE                                           April 2009 (Letter)

There clearly is an increasing shortage of primary care physicians. But it isn’t simply because primary care physicians aren’t paid enough, although they aren’t. It is because there are not enough physicians overall. Shortages exist in cardiology, critical care, emergency medicine, general surgery, gastroenterology, nephrology, oncology, orthopedic surgery and radiology, to name just a few. Hospital and medical associations in states encompassing more than half of the US population have warned of deepening shortages, often emphasizing the greater severity in rural areas.

And worse, we can’t even begin to fix the problem, because Medicare, which provides most of the financial support for residencies, capped the number of positions it would support a decade ago. In fact, that’s why we now have shortages. And even worse, no matter what is done today, these shortages cannot be fixed for 15 years or more because it takes too long to build medical schools and residency programs and too long to train physicians. We cannot begin to meet today’s needs with physicians alone.

So our task is two-fold. We have to expand the number of physicians being trained so that our system can function 15-20 years from now, and we have to train and credential more nurse practitioners to do many things that physicians now do, particularly in primary care.

HOW WILL THE SYSTEM OPERATE WITH TOO FEW PHYSICIANS,                                                                                             November 2013 (Letter)

In response to your editorial, The Shame of American Health Care, which cites the Commonwealth Fund’s recent International Profiles of Health Care Systems, it is important to note, as the Commonwealth Fund report did, that the US has fewer physicians per capita than any of the other countries examined, except for Japan. Even including Japan, the number of physicians per capita in the US is 70% of the median of the others. It is little wonder that the US ranks poorly in access and other measures that your editorial cites. We have a physician shortage and it is getting worse daily, on course to reach 150,000 within a decade. Physicians are not the only providers of care, but it is difficult to imagine how our system will function with gross inadequacies in the numbers of physicians available to care for patients.

Hospitals Know that P-O-V-E-R-T-Y is at the Core of the Problem

For more than a decade, a coalition of health care pundits associated with Dartmouth, the IOM, MedPAC, CMS, the Urban Institute, the GAO, the CBO and the Commonwealth Fund has been peddling a line about the fact that, after adjusting for age, sex and health status, there is a large residual of unexplained geographic variation in health care that it is not explained by differences in income or other demographic factors and therefore must be due to low-performing health care systems. In response to “some” who have claimed that poverty is at the core of the problem, they state emphatically that, after adjusting for health status, there is little evidence that poverty and related sociodemographic factors play a role. I am proud to be one of the “some.”

In a sense, they are right. Of course health status is a major predictor of need. It really is the only predictor. Health care is given to people who are sick. That’s why it’s called health care. But it is poor people have the poorest health status and continue to do so even after receiving health care. So there is very little left to adjust for once an adjustment is made for health status. In fact, if the adjustment sequence were reversed — if health care spending were first adjusted for income — health status would be found to exert little influence. Failing to find that poverty is an operative element is, well, disingenuous.

But if poverty explains it all, why does the D-I-M-C-U-G-C-CF crowd consistently find an unexplained residual. The answer is that they all use large units of analysis, such as (hospital referral regions (HRRs), hospital service areas (HSAs) metropolitan statistical areas (MSAs), and these all introduce the error of aggregation of non-linear elements. Let me explain. The relationship between health care spending and the levels of income or disability are curvilinear. Spending rises steeply at the low end of income or the high end of disability, with relatively little change along the path. Averaging is, by definition, a linear manipulation. It will always fail to account for the extremes of poverty or disability. But when the problem is approach in ways that avoid such statistics, income fully explains the geographic differences. Read our paper in the Journal of Urban Health.

Now, after years of being brain washed by the D-I-M-G-U-C-C-CF crowd, whose arcane incursions into the practice of medicine have pushed hospitals and physicians to the brink, hospitals are catching on. Socioeconomic differences are at the core of the problem of high utilization after all. Read “Getting to the Root of the Problem,” excerpted below from an article by Steven Ross Johnson in Modern Health Care. It describes the success of efforts to attack the sociodemographic roots of the problem. One example is Health Leads. With support from the Physicians Foundation, the Robert Wood Johnson Foundation and others, Health Leads enables healthcare providers to prescribe basic resources like food and heat just as they do medication. But solving Americas social problems cannot be left to the health care system. The entire nation has to wake up to the problem. Read on…..

Getting to the Root of the Problem (excerpted from Modern HealthCare)

Delores Banks is a 61-year-old diabetic with congestive heart failure who was hospitalized twice last year. She lives alone on the 15th floor of a senior public housing project in one of the poorest sections of Chicago. A recent two-week elevator outage stopped Banks from leaving her building on three occasions. She decided to simply stay in her apartment until it was fixed. That’s when the Sinai Health System’s disease-management team sprang into action. One member called the Chicago Housing Authority to expedite the repair work. “It just makes you feel like you’re not alone,” Banks said. “The elevator is working now, and I haven’t been stuck.”

Healthcare systems in impoverished areas are turning toward tackling the social conditions that lead to ill-health, but they may pay a financial penalty since payers still do not reimburse for those activities.

The emergency intervention was part of a Sinai program launched in 2011 to help patients better manage the chronic conditions that lead to frequent hospitalizations. But as the care coordination team members quickly discovered, their efforts had to reach well beyond phone calls to make sure Banks took her medicine or to remind her about doctor appointments. In addition to fixing elevators, they helped her pay for her drugs and assist her with transportation to see her doctor. Team members even guided Banks through the paperwork needed to move to another senior-living facility.

Sinai is one of a growing number of health systems across the country that have begun tackling the social, economic and environmental conditions in the communities they serve as part of their programs to reduce hospital readmissions and improve outcomes. They are responding to the well-documented association between poverty, joblessness, inadequate housing, poor nutrition and chronic stress and poor health outcomes. Only by addressing these social determinants of health, they say, will they be able to get better outcomes and improve the overall health of their local populations.

Income is the single largest social factor driving overall health. A recent report from the Robert Wood Johnson Foundation’s Commission to Build a Healthier America found that 23% of African-Americans who earned less than 100% of the federal poverty level had a health status that was “poor to fair” compared with 6.8% of blacks with incomes that were more than 400% of the poverty level.

Among whites, the disparity was even greater. Twenty-one percent of whites earning below 100% of poverty reportedly had “poor to fair” health compared with only 4% of whites making more than 400% of poverty. Education level is another indicator of health. According to the report, a 25-year-old college graduate can expect to live up to nine years longer than a 25-year-old who has not completed high school.

“Without a doubt, addressing the social determinants is a key part of improving health,” said David Williams, a professor of public health at Harvard University. “Imagine a mother bringing a child to the hospital who has asthma, and that asthma is driven by poor housing conditions. All the asthma medication in the world and the latest and best medicine in the world will not solve that child’s asthma problem if we treat the child and then send them back to live in the same conditions that made them sick in the first place.”

The evidence is overwhelming that poverty, homelessness, unemployment and hunger have a significant impact on the overall health of a population in communities where such conditions are prevalent. They have disproportionately higher rates of heart disease, diabetes, lung disease and cancer.

Not surprisingly, rates of hospitalization are higher, too. Near Sinai, the rate of hospitalization for those diagnosed with diabetes in 2010 was 35 for every 100,000, compared with 25 for every 100,000 in Chicago as a whole and 19 for every 100,000 nationally. In Banks’ neighborhood of East Garfield Park, the rate was nearly double the city average, where 50 out of every 100,000 residents are hospitalized because of the disease.

Providers seeking to address the social conditions of their most impoverished patients face a fiscal environment in Washington that is making their jobs more difficult. The Supplemental Nutrition Assistance Program, for instance, was slashed by another $8.6 billion over 10 years last week in the latest version of the Farm Bill. Such cuts have a direct impact on the health of the people who rely on food stamps. A recent study in Health Affairs found the risk for hospital admission for hypoglycemia in low-income patients with diabetes increased by 27% during the last week of the month—when food budgets are strapped and food stamps run out—compared with the first week of the month. The study found no such occurrence among populations with higher incomes.

“It is not reasonable to think that every healthcare provider has to become a social worker and solve all of these problems,” Williams said. “But we can put in place complementary resources where the provider simply has to refer that patient to someone who could connect them with resources to help solve the problem that is driving their underlining health conditions.”

Some health systems have begun addressing social issues with the help of third-party coordinators who focus on providing for a patient’s nonmedical needs. Health Leads of Boston, funded by the Robert Wood Johnson Foundation, helps healthcare providers obtain basic resources such as food, heat, electricity or housing for their patients. When a physician identifies patients struggling with basic needs, they’ll refer them to a Health Leads “clinic” in the healthcare facility. The advocate then helps the patients gain access to community resources that can help provide those services. “A patient can take a prescription for heat in the winter or to have their lights turned back on to a Health Leads desk to get it filled,” said Rebecca Onie, Health Leads CEO and co-founder.

But foundation-supported efforts such as Health Leads are far from ubiquitous in communities with the greatest needs. That forces providers such as Sinai to use their own dollars to help patients address the social conditions that may worsen their illnesses and make recovery from hospitalization more difficult. Even though such work can lower readmissions, no payer compensates them for paying to get a patient’s electricity turned back on or steady access to food.

Sinai is betting that participation in the CMS’ bundled-payment demonstration program may generate enough savings to help them finance such efforts. The program gives a set payment for care over a 90-day period for inpatients with either chronic obstructive pulmonary disease or congestive heart failure. If the cost of treating those patients comes under the target price, Sinai keeps the savings. If they go over the target amount, however, the difference must be paid back to Medicare.

Some advocates contend addressing the social determinants of health is the only economically viable solution for a system that spends more than $2.8 trillion annually on healthcare without producing the best outcomes. Clearly, investing solely in sick care isn’t getting results. A study published last December in the Journal of Public Health found that every $100 spent on healthcare in the U.S. increased a patient’s life expectancy by two weeks. In Germany, the same amount spent on healthcare increased life expectancy more than four months. According to the RAND Corp.’s Tamara Dubowitz, “on a population level, investing in social conditions as they pertain to patient health is certainly the most economically sound approach.”

National Income Inequality and Local Poverty: Correlates of Health Care Spending

I recently posted an essay on the Health Affairs blog entitled “Inequality is at the Core of High Health Care Spending: A View from the OECD.” It explores the relationship between GDP and health care spending in the OECD countries, adjusts spending for price differences and demonstrates that the residual excess spending in the US, which accounts for 31% of total US health care spending, can be explained by the high degree of income inequality in the US as compared with other countries. It notes further that, while the US spends more on health care, it spends less on social services, and concludes by saying, “It is difficult not to connect the dots from inadequate social spending to excess poverty and income inequality to more chronic illness and higher health care spending. These dots reside in the core of the OECD onion, and the failure to cope with them is placing an unsustainable burden on our health care system.”

John Goodman called attention to this blog post on his National Center for policy Analysis blog. In a follow-up blog, he posted a message from Angus Deaton, a distinguished professor at Princeton, authority on the relationship between income and health and author of a recent book, “The Great Escape: Health, Wealth, and the Origins of Inequality.” Professor Deaton took issue with my conclusion that income-inequality is at the core of health care spending, pointing out that in his studies of mortality in states and metropolitan statistical areas (MSAs) with Darren Lubotsky, the correlation between income inequality and mortality stems from the failure to adjust for the density of African Americans, and that “inequality and mortality are uncorrelated across space in other settings where race is not a salient factor.”

I believe that Professor Deaton was referring to settings in the US, such as states, cities and neighborhoods, which I shall return to. But there is no question that income-inequality correlates strongly with both maternal and child mortality among OECD countries, even after excluding the US, which is the only OECD country with substantial numbers of blacks. The studies of health care spending that I reported were at the level of OECD countries, and I stand firmly behind them. At the level of countries, income inequality is at the core of high health care spending.

What about states, cities and neighborhoods? A high density of blacks in these smaller units of analysis proves to be a surrogate for poverty and income inequality. For example, Deaton and Lubotsky’s least equal states were LA and MS, which have high densities of blacks, while the most equal were NH and VT, which have few. But there is more than the density of blacks differentiating them. Moreover, both blacks and whites are affected. Deaton and Lubotsky noted that “white mortality rates are higher in places where the fraction black is higher.” Similarly, in a study of poverty and health care utilization in Milwaukee and Los Angeles, my colleagues and I found that whites living in poor neighborhoods with a high density of blacks had the same high health care utilization as their black neighbors. A high density of blacks is a marker for concentrated poverty, and concentrated poverty is the strongest correlate of health care utilization at the local level. It can be measured by income and education and often by black race, but make no mistake. It is concentrated poverty that is the operative factor at the local level.

Richard Wilkinson and Kate Pickett addressed the differences between local and national measures in their remarkable book, “The Spirit Level: Why Greater Equality Makes Societies Stronger.” They noted that in their review of nearly 170 studies of income inequality and health, the units analyzed varied substantially, from neighborhoods to towns to states or regions and to countries. While there was overwhelming evidence that inequality was related to health at the level of whole countries, the results were mixed when the measures were of smaller areas. They point out that “what marks out neighborhoods with poor health is not the inequality within them. It is, instead that they are unequal in relation to the rest of society….We should perhaps regard the scale of material inequalities in a society as providing the skeleton round which cultural differences are formed.”

Thus, at an international level, the measure of societal inequality is income inequality, and it is a strong correlate of health and health care utilization. At the level of neighborhoods, the best correlate is concentrated poverty, and it is best measured by the income-race-education triad, but within that triad, income and education always trump race. Inconsistencies often occur when data are collected at the level of MSAs or states because they are simply aggregates of neighborhoods yet subject to the national skeleton, and, unfortunately, aggregation of neighborhoods into units varying as much as CA, with 40M people, and VT, with <1M, leads to marginally significant and often conflicting conclusions. National income inequality and local poverty are the best correlates of health care utilization.

Another Look at Jobs

In response to a recent blog about jobs (see below), Alan Maynard, the dean of UK health economists, asks whether the loss of health care jobs is a manifestation of expenditure control or efficiency. Here’s my answer.

If  hospitals and physician offices were bloated with employees, this decline in employment could simply be a move toward greater efficiency. But rare is the health care worker who is not stressed already. No, this is expenditure control or, more properly, it is cutting back on the payroll in response to relentless cuts in Medicare reimbursement, both directly and in the form of penalties for the failure to meet various quality and readmission standards now and in the future as the ACA is implemented. These job losses must be viewed in the context of what’s been happening to jobs over the past several decades.

The US has currently has about 1,225 fewer jobs per 100,000 of population than it did in 1990 – almost 3% less. The big losers have been manufacturing, mining and construction, which lost almost 4,000 jobs/100,000. Local governments and most services underwent little change, but together with retail, both federal and state governments and some other sectors, another 1,500 jobs/100,000 were lost. Even information technology lost jobs, as the internet gained but newspapers shrunk.

What made up for this deficit of 5,500 jobs/100,000? Only four sectors did. Together they added 4,300 jobs/100,000. Education accounted for 8%, leisure and hospitality 17%, professional and business services 35% and health care 40%. Yes, about 1/3 of the jobs deficit that resulted from a contraction of manufacturing and other slow or no-growth sectors was made up for by additional health care jobs. but this is threatened.

Meanwhile, there are enormous unmet health care needs, especially among the poor.

The problem is, of course, that health care, more than other sectors of the economy, requires cross subsidies from the rich to the poor. But the poor have been subsidizing the rich most of these past 35 years, so a change in direction might not be unwarranted. And a bit more investment in social infrastructure would be good, too. Together, these investments in health and social services would fuel the economy, employ the populace, enable healthier lives and strengthen our democracy.

But it can’t be done without physicians. Doctors are not everything in health care — there are only about 225 practicing physicians per 100,000. But they are the lynchpins of the health care system.

Or we could continue to cut health care spending, constrain the growth of physician supply and allow the nation’s major jobs engine to sputter. But why?

Squeezing Physicians is Not Good for Jobs Growth

Four years ago, as ObamaCare was being debated, and as action on expanding physician supply languished (as is still the case), I wrote on this blog, “More Jobs, But Not Without More Physicians.” Over the previous decade, with the boom of the housing bubble and the recession that followed, the US had added only 6 million jobs, and half of those jobs were in health care.

This engine of health care jobs continued in the years after 2009 at about 30,000 new jobs per month, but since the beginning of 2013, it has slowed. Since May, health care jobs have grown at only 2/3 the previous rate, and the number of jobs in physicians’ offices has declined from a previous average of 4,000 monthly to zero. In fact, last month there was a small loss of jobs in physicians’ offices. Physicians are being squeezed, and its effect is rippling through the job market.

The top figure shows the long-term trend of jobs in physicians’ offices from 2000 to today. Below it is a graph of the past 18 months, from Jan 2012 to today.Phys supply both

The nation’s greatest engine of jobs is sputtering. Res ipsa loquitur!

IOM says “Target Decision Making.” No. Target Poverty

The IOM’s new report on geographic variation in health care was released yesterday. It attempted to define the reasons for the variation that has been projected by the Dartmouth Atlas and has fed the frenzied war on waste.

The IOM’s approach was similar to Dartmouth’s but differed in important ways. Both measured Medicare spending that had been aggregated at the level of HRRs and both adjusted it for age and gender (which don’t vary) and black race, which does but is a poor proxy for the broad group of socioeconomic factors that matter. That left a lot unexplained by Dartmouth. But the IOM committee further adjusted for input prices, which markedly decreased variation, and it also looked at variation in commercial insurance costs.

A clue that aggregation might be a problem was the IOM’s observation that there was even more variation among the 3,000 hospital service areas (HSAs) than among the 300 HRRs. Had they gone the further step of examining the 30,000 Zip codes, they would have found still more variation. So the variation that they and Dartmouth studied was partially obfuscated by the “tyranny of aggregation.”

Among Medicare beneficiaries, almost half of the variation between the top and bottom deciles was explained by health status, 9% by race and 6% by income. Due to co-variances, the three together explained 43%. These factors also explained 10-20% of the variation for commercial insurance. That left about 65% of the variation in total health care spending unexplained. Of this, about one-fourth was attributable to variation in acute care (including procedures, diagnostic tests, prescriptions and ER visits), while three-fourths was attributable to post-acute care.

The fact that there was greater variation among HSAs than HRRs drew the IOM committee to recognize that there was a great deal of internal variation and that adjusting payments based on aggregate measures of geographic differences in HRRs would unfairly reward “low-value providers in high-value regions” and punish “high-value providers in low-value regions.” Therefore, it encouraged Congress not to adopt a geographically based value index for Medicare.

But despite the fact that, as mentioned, most of the variation was in the post-acute sector, the Committee’s major conclusion was that CMS should test payment reforms that incentivize health care systems to assume some or all of the risk of managing health care. Indeed, this conclusion was incorporated into the title of its report (“Target Decision Making, Not Geography”).

No study was necessary to reach that conclusion. Indeed, nothing in the report suggests that payment reform would be necessary. Very little of the variation had anything to do with acute-care, and little credence was given to any of the variation. It could not have been more clearly stated. As I said in the Washington Post on September 11, 2009, the Dartmouth Atlas is the wrong map for health care reform.

Had the Committee pursued the lead that variation increases as the unit of analysis shrinks from 300 HRRs to 3,000 HSAs, they might have done what my colleagues and I did, which was to move even lower to the level of the 30,000 ZIP codes, where virtually all of the variation in acute care is due to variation in income, education and the burden of disease.

So what the report really found, but did not say, was that poverty and its associated poor health status is the major cause of geographic variation in health care and its effect is far greater than apparent from studies of HRRs which, because of aggregation, obfuscate its true magnitude.

Rather than recommending practice incentives to take on risk, the report should have recommended social interventions that could reduce risk. By coincidence, that is what President Obama did at Knox College in Galesburg Illinois the very same day. He said, “this growing inequality — it’s not just morally wrong; it’s bad economics… and it undermines the very essence of America.” He could have added, and it raises health care costs. Moreover, because poverty is distributed unevenly, it is responsible for the geographic differences in health care that we had been told were due to clinical practice variation but now know are due to geographic differences in income-inequality.