Archive for the ‘Health IT’ Category

Health Information Technology, High-Skilled Immigration, and Tax Administration: Radio Interview

Friday, October 14th, 2011

I was a guest on Progressive Radio Network’s “Of Consuming Interest” on September 9th, where I spoke about my work at TPI on health information technology, high-skilled immigration, and tax administration.

In my conversation with radio host Jim Turner, I discussed links between health policy and technology. I outlined the effects innovation can have on costs—to raise or reduce them—and the importance of looking at evidence to make sure policies are on the right track. I also talked about how technology affects privacy, both broadly and more specifically with regard to electronic health records. Privacy is important for consumers but privacy is not free—there are tradeoffs that require striking a balance. For example, stringent privacy rules have slowed hospitals’ adoption of electronic records, resulting in higher infant mortality.

Jim Turner and I also talked about issues involving federal subsidies to health information technology. While such technologies have the potential to spur innovation, reduce costs, and improve patient care, the roughly $30 billion provided to health care providers to speed the adoption of electronic health records in the 2009 economic stimulus could result in substantial waste and unintended consequences, even slowing the adoption of electronic records. As I argued in published comments to proposed program rules, these subsidies may end up funding activities already underway rather than inducing new investment and innovation. They can also backfire with results opposite to their intent if complex rules and uncertainties about qualifying for payment increase investment risk.

Health information technologies were the subject of the Aspen Forum workshop session I organized on the Internet, social media, and drug advertising. Consumers need information because they are playing an increasingly active role in their health care, and they are increasingly turning to the Internet and social media. Advertising goes hand in hand with public information and studies show that the benefits of prescription drug advertising outweigh the costs. Indeed, restricting information about approved products results in the dissemination of inaccurate information and counterfeit products. In a recent opinion, the Supreme Court reaffirmed that drug advertising is protected speech under the constitution.

Turning to immigration and innovation, I said that although immigration is always controversial, especially when unemployment is high, most analysts agree that lifting our stringent caps on immigration by scientists and engineers would boost innovation, productivity, and economic growth. What is less well understood is that high-skilled immigrants pay substantially more in taxes than they receive in federal benefits and are a plus for the federal budget, as my study showed. In response to Jim’s question about immigrants potentially displacing American workers, I pointed out that immigrants with advanced degrees tend to be complementary with domestic workers rather than substituting for them, resulting in higher earnings and more investment. But high-skilled immigration policy has been held hostage to comprehensive immigration reform, which is highly controversial as it involves border control issues and the problem of undocumented aliens.

Innovation in computer technology has led many people to assume that having the government prepare individual tax returns would reduce tax compliance costs. But, a study I co-wrote with Prof. Joseph Cordes of George Washington University examined the evidence and concluded that implementing such a program is not advisable. Filers may not realize significant cost savings because checking a return for completeness and accuracy requires much of the same work as preparing a return. Advances in tax preparation software and other assistance have sharply reduced the cost of tax preparation, reducing the potential savings from return-free filing. Further, additional costs to employers and other payers of income would be large and would disproportionally burden small businesses—employers’ data reporting deadlines would have to be advanced to allow tax refunds to be timely, which people count on. A return-free system would also introduce problems regarding privacy, security, and taxpayers retaining liability for errors in government-prepared returns, which could pose a particular issue for low-income filers.

Please go to the Of Consuming Interest Website to hear the full interview.

Meaningful Use Rule: Just the Beginning of Tightening Regulation of Electronic Health Records

Wednesday, July 14th, 2010

Yesterday the Centers for Medicare and Medicaid Services (CMS) announced its long-awaited rule specifying the requirements that physicians and other health care providers must meet in order to qualify for roughly $19 billion in federal subsidies for electronic health records. But the issuance of the rule, which runs 864 pages, will not end widespread concern about a lack of clarity of the required criteria.

In its proposed meaningful use rule, issued in January, CMS set forth numerous measures for hospitals and physicians to show they were using electronic records to improve quality of care. The measures address safety, patient engagements, care coordination, and privacy and security. During the comment period, many health groups, including the American Medical Association and the American Hospital Association, complained that the criteria were too ambitious and confusing. They asked for greater flexibility and more time to meet the requirements.

The final rule appropriately abandons the initial all-or-nothing approach and offers health care providers some amount of flexibility, allowing alternative ways of demonstrating meaningful use. But this is not the end of the process. More rulemaking is forthcoming. CMS will set further meaningful use criteria in two additional stages between today’s issuance and 2013, with the final stage covering payment year 2015 and thereafter. CMS will tighten the requirements at each step.

Thus, uncertainties and doubts remain about which systems will qualify for payments, increasing investment risk and reducing the incentives to innovate in a rapidly evolving environment. Future regulatory uncertainty will hold back health care providers and software developers as they contemplate the investments they must make in order for the benefits of electronic health records to be realized. Uncertainty can slow innovation and adoption of electronic health records, contrary to the intent of the subsidies.

Electronic Health Records: Should We Subsidize Activities That Would Take Place Anyway?

Monday, May 24th, 2010

The American Medical Association and the American Hospital Association along with some 50 smaller health groups have protested that the government’s proposed definition of “meaningful use” is too hard to achieve.  At issue are $14 billion to $27 billion in federal incentive payments for qualifying health care providers, i.e. those who meet all requirements for meaningful use. The groups say the proposed criteria push for too much, too soon and the program should reward providers for steps they already are taking to streamline record keeping.

Whatever one’s views about the merits of various program goals, it wouldn’t seem to be good policy to subsidize activities that are taking place anyway. The subsidies for electronic health records in the economic stimulus legislation were intended to induce new investment and new advances in health information technology, not to pay for activities already underway. My colleague Scott Wallsten proposed evaluating the broadband stimulus plan from a similar perspective by measuring the degree to which the stimulus money funded initiatives that would not have been undertaken in its absence.

I agree, however, that the proposed definition of meaningful use needs to be simplified and achievable. Indeed, the complex and evolving criteria could actually slow investment in electronic systems, as I discussed in comments I submitted on the proposal.  Uncertainties about qualifying for the payments have led to confusion about which systems will become standard and have increased investment risk. This could slow innovation and technical change in electronic health records and increase health costs.