Repeal + Replace

Repeal + Replace

Interview with Mark Pauly: Part 1

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Community Rating – The Worst Possible Way To Do a Good Thing

I have a grudging respect for health economists, “grudging” because, like many doctors, I want my pieties unchecked. Health economists check our pieties with quantitative truths. They describe the way the healthcare world is – a view from 29, 000 feet, pour cold water on the way we think the world should be, and guide, with abundant disclaimers, the way we can make things better. It’s unwise climbing Everest without a Sherpa, nor is it wise reforming healthcare without listening to health economists from across the political spectrum.

President Trump, along with the Republican House and Senate, will be dismantling the Affordable Care Act (ACA). In a sense, President Trump is not just descending Everest, a treacherous feat in its own right, but scaling a peak arguably more dangerous than Everest. Despite their differences, Mr. Obama and Mr. Trump share one commonality – an implicit distrust of the health insurance industry.

How did the American health insurance industry become so vilified? This is, in part, because necessity is the father of all vilification. Insurers are a necessary evil in a country where there’s still deep mistrust of the government. Partly, this is because we transfer our angst about the uncertainty of our future, the dice which plays with our lives, to insurers who are in the business of rolling the dice. But mostly it’s because the misdeeds of the insurance market have been grossly exaggerated, and the benefits of the market have been attenuated by a few damning anecdotes. This is what Mark V. Pauly (MVP), Professor of Health Economics at the University of Pennsylvania, and one of the most eminent health economists of his generation, believes.

WaPo Leaked Tape of GOP Repeal & Replace Talks is Troubling. But Also Weirdly Reassuring …

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“We’re telling those people that we’re not going to pull the rug out from under them, and if we do this too fast, we are in fact going to pull the rug out from under them.” 

– Rep. Tom MacArthur (R-N.J)

“The fact is, we cannot repeal Obamacare through reconciliation.  We need to understand exactly: what does that reconciliation market look like.  And I haven’t heard the answer yet.” 

– Rep. Tom McClintock (R-Calif)

“It sounds like we are going to be raising taxes on the middle class in order to pay for these new tax credits.” 

– Sen. Bill Cassidy (R-La) 

These quotes, and many others, from a leaked recording of the Republican closed-door strategy session in Philadelphia last week are both jarring and reassuring.   

They reveal in harsh light what the media, pundits, and commentators have been saying for weeks: the Trump administration and congressional Republicans are in a deep quandary about the best path forward on repeal and replace, and are just beginning to weigh the pros and cons of the complex policy options involved. 

But the discussion also shows us that rank and file Republican lawmakers understand the difficulty of the task and know the political price they’ll pay if they screw it up.  Their remarks also imply frustration with the cavalier, ill-informed, and mixed-message statements coming out of the White House.

The Arc of Justice in Healthcare

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We all fear that phone call.  A medical report turns out the wrong way and life may never be the same.  When that call arrives we all have the same needs:  A doctor who cares, a place to go for treatment and the finances to afford what’s needed.  Starting on January 20th, some of my patients will join the 20 million whose lifeline to those fundamental needs becomes jeopardized.  

One of my patients facing this threat lost his job and health insurance during the 2008 recession.   Because he’s a diabetic and has a special needs son, no insurance company would sell his family a policy.   Why would they?   Diabetics and others with serious illnesses pose high risks for future health expenses.  Insurance companies make money by avoiding such risk.   After exhausting all the options, he sweated out 18 months with no coverage.   Finally, the roll-out of the California Exchange, funded by the Affordable Care Act (ACA), allowed him to buy an Anthem Blue Cross policy for his family.  

Do we really want millions of our fellow Americans to relive those nightmares?  We all benefit from the ACA’s fundamental commitment: That everyone deserves access to healthcare regardless of their ability to pay.  The policies guided by this principle moved us toward the achievement of universal coverage without changing the existing care of the majority of working families with employer based plans nor those with self-funded coverage.   

The Rust Belt Is Burning: Republicans Lay Waste to their Base on Health Reform

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William Tecumseh Sherman, who laid waste to the South at the end of the Civil War, famously said, “War is Hell”.  So, too, is health reform.  And like Sherman’s infamous March to the Sea, where he burned town after Confederate town, the Republican War on Obamacare entered its attrition phase with the introduction on Monday in the House legislation to repeal and replace ObamaCare.  Except that Ryan is marching in the wrong direction; his troops are marching “north” and burning towns behind their own lines.

Ryan’s bill released Monday was greeted with a chorus of derision from the newly empowered Republican base; some conservative wags dubbed the bill “RINOCare”. Thoughtful conservative analysts savaged it.  Michael Cannon, the hard core libertarian Cato Institute health analyst, called it “a trainwreck waiting to happen” and suggested  that “ it will create the potential for the sort of wave election Democrats experienced in 2008”    In Reason.com, Peter Sunderman wrote,  “it’s not clear what problems this particular bill would actually solve.”

Ryan’s draft neither repeals nor replaces ObamaCare.  

Not Normal Chaos

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The short version of Vox’s Sarah Skiff on “Why Republican disarray on health care doesn’t doom repeal efforts” would read something like: “It always looks this way in the throes of preparing major legislation. Remember how wild and confusing it was when the Democrats were trying to put together healthcare reform in 2009? Joe Lieberman was insisting on a public option, ‘pro-life’ Democrats were insisting that anti-abortion language be written in? Just because it’s chaotic doesn’t mean it won’t get anywhere.”

She’s right, of course — and she’s wrong in a significant way: In 2009 Congress was debating different policy approaches and the tradeoffs involved. There was never a question whether what they were attempting was possible, just whether it was possible to find a political compromise that could garner enough votes to pass. This meant that it was reasonably predictable that they would come up with something they could call “healthcare reform.” 

Congressional Republicans are up a different creek right now: What they are attempting is mathematically impossible. The things they and President Trump have promised do not add up. Literally. Their problem is arithmetic. Getting more people covered, with better coverage, with lower deductibles and out-of-pocket costs — all that will cost more money, lots of it. Getting rid of the tax penalties for not having insurance (the “individual mandate” that is the most-hated part of Obamacare) and the taxes built into Obamacare on wealthy people and on segments of the healthcare industry — all these will cost the government revenue, the very revenue it would need to pay for the better coverage of more people. All this while they aim to cut taxes and lower the deficit. And of course they have on every Holy Book within reach that they will repeal Obamacare, so they can’t just leave it in place. This means it is highly unpredictable what they will come up with, or that they will come up with anything at all.

Paying Doctors For Outcomes Makes Sense in Theory. So Why Doesn’t it Work in the Real World?

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For decades, the costs of health care in America have escalated without comparable improvements in quality. This is the central paradox of the American system, in which costs outstrip those everywhere else in the developed world, even though health outcomes are rarely better, and often worse.

In an effort to introduce more powerful incentives for improving care, recent federal and private policies have turned to a “pay-for-performance” model: Physicians get bonuses for meeting certain “quality of care standards.” These can range from demonstrating that they have done procedures that ought to be part of a thorough physical (taking blood pressure) to producing a positive health outcome (a performance target like lower cholesterol, for instance).

Economists argue that such financial incentives motivate physicians to improve their performance and increase their incomes. In theory, that should improve patient outcomes. But in practice, pay-for-performance simply doesn’t work. Even worse, the best evidence reveals that giving doctors extra cash to do what they are trained to do can backfire in ways that harm patients’ health.

Making the Physician-Patient Relationship Great Again

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21st Century Cures is now law. Aside from its touted research and mental health provisions, it’s the most significant health information technology regulation since HITECH, now 8 years ago. A decent summary of the health IT provisions of the bill by John Halamka concludes with “That is just not realistic.” He’s almost certainly right to the extent your perspective is the hospital-centered mega-EHR model. You can’t get there from here.

Halamka and others who think that consolidated institutions will drive interoperability are in denial of the gap between financial integration and clinical integration. This recent post by Kip Sullivan describes some of the wishful thinking. But there’s another reason why HITECH’s institutional EHRs cannot get us to the Triple Aim, and it’s mostly about liability.

Halamka ignored one of the items in 21st Century Cures that could lead to clinical integration around a patient: a longitudinal health record. Section 4006 on page 149 includes:

“(1) IN GENERAL.—The Secretary shall use existing authorities to encourage partnerships between health information exchange organizations and networks and health care providers, health plans, and other appropriate entities with the goal of offering patients access to their electronic health information in a single, longitudinal format that is easy to understand, secure, and may be updated automatically.”

Useful longitudinal health records require curation and, almost by definition, the curators are not going to be affiliated with any single hospital or other institution operating a traditional EHR. Allowing licensed physicians, family caregivers, and the patient themselves to edit an institutional EHR is risky to the point of impossible. That’s why the current initiatives to introduce modern APIs into EHRs like SMART and Sync for Science are read-only.

Make Trumpcare the First Big Step toward a Free Market in Healthcare

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Say what you will about Obamacare—at least President Obama eventually took ownership of it. When it comes to the American Health Care Act, President Trump isn’t ready to do that. He’s discouraging people from calling it “Trumpcare.” Since Trump normally he puts his name on everything within reach—even the trash can liners at the Trump SoHo Hotel bear his moniker—he must be keeping his distance from the AHCA because he’s ashamed of it.

The editors of The New York Times think he should be. They accuse Trump and the rest of the GOP of “Trading Health Care for the Poor for Tax Cuts for the Rich.” The charge is based on the CBO’s prediction that Trumpcare will immediately cause 14 million Americans to lose their coverage through private insurers or Medicaid, with that number rising to 24 million by 2026. Adding those people to the existing un-covered population, 52 million Americans will be uninsured a decade after Trumpcare incepts.

The consensus among policy wonks on the left and the right is that this would be a disaster for the country. Rolling back Medicaid will harm the states that expanded their programs on the promise that the federal government would pick up the tab. It will damage hospitals and other providers too as the demand for charity care goes through the roof. The newly uninsured will suffer worst of all. Without private insurance or Medicaid to rely on, many will forgo needed medical treatments and all will face the risk of financial catastrophe associated with serious injury or illness. All of these possibilities worry Republican governors and legislators, who fear losing office when the healthcare sector revolts and voters take revenge at the polls.

One can, however, see the GOP’s predicament as an unparalleled opportunity. Instead of vewing the 52 million un-covered Americans as pathetic creatures with nowhere to turn, one could regard them as an enormous army of consumers who will have to buy their own healthcare and who will be hungry for medical services that are effective and cheap. If we were talking about housing, transportation, energy, food, clothing, televisions, cell phones, or computers, we might already see them that way.

Key Takeaways From the Price Confirmation Hearing

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As DC readies for the Inaugural fest, the four-hour confirmation hearing for President-elect Trump’s nominee for HHS Secretary, Tom Price, an orthopedic surgeon and six term House of Representatives’ member from the Atlanta suburbs, was the focus yesterday. For healthcare industry watchers, the contentious hearing surfaced several themes likely to mark the new administration’s approach to its health policies.

Key takeaways from yesterday:

Party posturing: The orchestration of each party’s messaging was evident and in stark contrast. Democrats on the Senate’s Health, Education, Labor and Pensions (HELP) committee sought to discredit the nominee as a tee-party ideolog whose views are out of touch with mainstream views about the health system. Republicans sought to reinforce “Dr. Price” pedigree as a clinician whose clinical and political experience equipped him well to lead the massive HHS machinery. Going in, the Democratic spin machine sought to paint Price’ as a corrupt politician who’d made $300,000 worth of stock trades in drug and device companies while legislating in their favor. The Republican PR machine sought to mute their attacks, noting the candidate’s trades had been cleared by the Office of Government Ethics.

Repeal and Replace: Democrats probed for specifics of the replacement for the Affordable Care Act, with particular attention to Price’ solution for the 20,000,000 newly insured thru the exchanges and Medicaid expansion. The candidate’s “Empowering Patients First” plan, introduced in 2015, served as the focus for his antagonists: it proposes the use of tax credits of $900-$3000 to permit individuals to buy private coverage, state-administered risk pools for those uninsurable, premium support for Medicare, health savings accounts with a one-time $1000 incentive and easing of restriction on insurers to allow them to sell cheaper policies. On the GOP side, the ACA was called a “disaster” due to insurance premium hikes and growing frustration of physicians. The nominee repeated “access to affordable coverage” and “giving patients more choices of plans and physicians” as his guiding principles while avoiding specifics about how President-elect Trump’s campaign promises to insure everyone and avoid Medicare cuts would be realized.

Insurance market reforms: Price stated that universal access to affordable insurance coverage is the aim and regulatory relief for insurers in the individual and small group insurance markets as keys. Dem’s probed the distinction between access and actual coverage, noting that last week’s Congressional Budget Office’ report estimated a spike in the numbers who will go without coverage in coming years if “replace” doesn’t achieve current levels of coverage. Frequently, Price criticized the ACA for limiting access to physicians by allowing insurers to use narrow networks to premium costs. He noted that one third of physicians refuse Medicaid coverage and one-eighth refuse Medicare coverage due to reimbursement rates and administrative complexities involved in participation, suggesting these were the direct result of the ACA.

Drug prices: The costs of drugs, and their well-publicized price hikes, drew barbs from Dems who noted the nominee’s plan was mute on drug prices. They asked specifically for Price to go on-record about allowing Medicare to contract directly with drug manufacturers instead of through private insurers and PBMs. The nominee said he viewed market forces as a solution, suggesting (inaccurately) that generics reflected the market’s constraint on drug prices.

Meaningful use: Only one committee member referenced HIT and meaningful use, Sen. Tim Cassidy (R-LA) a gastroenterologist who assailed the hassle and unnecessary costs associated with electronic health records. The nominee agreed, while conceding that “interoperability is the goal..and it’s good for patients”.

Medicaid: Questioning by Democratic panelists sought to discern the nominee’s views about its expansion and funding. Price offered innovation in the way Indiana’s plan was structured as a promising start whereby states could be granted more flexibility, and the long-term forecast for Medicaid expansion and funding was not addressed.

Value-based payment programs: Value-based programs were referenced three times in passing reference. Sen. Baldwin (D-WI) acknowledged the prevalence of ACOs as an innovation she hoped would continue, and two GOP panelists, both clinicians (Paul and Cassidy), questioned the value of demonstrations sponsored by the Centers for Medicare and Medicaid Innovation (CMMI). Price offered that innovation in the health system is needed and CMMI’s mandates were counterproductive. He noted that bundled payments per se were promising, but dictates from Medicare to physicians about the prostheses they could use discounted their value. (CMS does not dictate the prostheses).

Rural health: GOP committee members Murkowski (AK) and Enzi (WY) inquired about the nominee’s views about protection for rural hospitals, prevalent in their states. The nominee expressed understanding pledging that federal regulatory constraints could be eased to facilitate their survival.

And along the way, the panelists on each side opined on their favorite targets: Dems assailed the drug companies, lack of GOP attention to climate change as a health factor, and inconsistencies between the Trump, Ryan and Price plans. Republicans attacked the credibility of the CBO’s recent forecasts predicting costs would increase post-replace adding to the deficit, the need for medical malpractice as part of the replacement and the need for less regulation.

My take:

The confirmation hearing was a media event: it’s unlikely votes on either side changed and virtually certain that Congressman Price will be the next HHS Secretary due to the GOP’s majority on the committee (11-10) and control in the Senate (52-48). Notwithstanding several assertions requiring fact-checking, Dr. Price was poised and remained on message: ‘give patients more choices, let physicians practice without constraint, let markets work, and manage spending aggressively’.

The winners in the Price scheme for ACA replacement are the insurers who’ll see more flexibility in their plan designs, and physicians who’ll have an active supporter in the top job. Those likely to be challenged are hospitals, where commentary was scant in the hearing, states, who’ll shoulder more of the responsibility for the new normal, and individuals newly insured through the ACA who are anxious.

More to come. Stay tuned.

 

Pig in a Poke Health Reform

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Uwe ReinhardtFrom a political perspective, House Speaker Paul Ryan’s trashing of ObamaCare (a.k.a. the Affordable Care Act or ACC) during CNN’s recent town hall meeting probably was quite effective. One would, of course, not expect a staunch political opponent of ObamaCare to render a “fair and balanced” picture of the program, to plagiarize a Fox News mantra. Not surprisingly, the Speaker dwelt solely on some serious shortcomings of ObamaCare that are by now well known among the cognoscenti.

The question now is precisely what would replace ObamaCare, as Republicans fall over one another in their haste to repeal it. Enumerating principles, as has been done in sundry tracts in recent years and is done once again in the House of Representatives’  “A Better Way”, is no longer enough. Yet even at this time of imminent repeal of ObamaCare, the crucial details of any replacement plan remain a mystery. Surely the time has come to let the cat out of the bag.

During the town hall meeting, for example, Speaker Ryan proposed the general outline of a system that would rely on high risk pools for Americans with pre-existing medical conditions, coupled with a market for individually purchased insurance policies whose modus operandi was largely unspecified. What would be the parameters of the high risk pools? Granted, it would have been difficult to be much more specific on this point than the Speaker was in a town hall meeting. But it would certainly have been helpful had there been a website to which he could have directed his audience for the specifics of a replacement plan built on a Republican consensus.  To my knowledge, there is no such website.

Risk pools have long been the workhorse of Republican rhetoric on health reform. One can think of such a pool as just another health insurance company selling insurance in the individual market for such policies to relatively sick applicants for insurance. To assess the merits of the coverage it sells, one surely would want to know: