By Bob Laszewski
Max Baucus will be a key player in the health care debate the next two years. As chairman of the Senate Finance Committee he has jurisdiction on many of the key issues including Medicare and provider payment reform.
He is also a leader in the true bipartisan spirit–something crucial to actually getting reform done.
Last week, he released a 98-page white paper, "Call to Action–Health Reform 2009."
Reading the executive summary, which given the news stories I have read is about all the press has looked at, the Baucus outline is pretty much Barack Obama’s health reform plan. Obama’s campaign health plan is 18 pages long and Baucus has tried to take it a distance further with 80 more pages.
The Baucus Health Plan includes:
- Basing the system on existing private and public health plans—employer-provided, Medicare, Medicaid, and SCHIP.
- Insurance exchanges – Creating a system of one or more Insurance Exchanges for individuals and small business to buy their coverage from complete with a management board to run it—very similar to the Massachusetts Connector and the Connector Board.
- Premium subsidies – His subsidy proposal is vague. The Insurance Exchange Board would determine a schedule of coverage affordability based on available health plans, their costs, and income levels. A tax credit would be available to subsidize those deemed not to be able to afford part or all of the cost. This is identical to the process the Massachusetts Connector Board follows.
- Medicare buy-in – Before the Insurance Exchange is up and running and its plans available to consumers, Baucus would allow those age 55-64 to buy-into Medicare.
- Insurance regulation – Insurers could offer health plans through the exchange but would have to comply with benefit and plan option requirements and would be subject to guarantee issue requirements. The health plans could rate around restricted age, sex, and lifestyle issues.
- A government-run plan for the under-65 market – After the Insurance Exchange is running Baucus would create a government-run option for consumers to choose. It would not look like Medicare but would have benefit options like the private plans offered in the Exchange.
- Traditional insurance distribution – Insurers could also market outside the exchange using the traditional direct and intermediary distribution systems.
- Medicaid expansion – Medicaid would be expanded to cover all of those below 100% of poverty who were uninsured.
- SCHIP expansion – SCHIP would be expanded to cover all of those below 250% of poverty who were uninsured.
- An individual mandate – Baucus’ plan does differ with the Obama Health Plan in that his plan has an individual mandate to buy health insurance – “Once affordable, high quality, and meaningful health insurance options are available to all Americans, through their employers or through the Exchange, would have a responsibility to have health coverage.”
- An employer mandate – All but the smallest employers would be required to offer and pay for coverage or pay into a government pool—“pay or play.”
- Incremental cost containment "lite" – The plan’s cost containment features are vague and embrace many of the same incremental items both Republicans and Democrats have listed—all “cost containment lite” features. Baucus’ list includes the elimination of fraud waste and abuse, increased price and cost transparency, wellness initiatives, and health information technology.
- Medical malpractice reform – He explores a number of medical malpractice reform ideas around the theme of no fault health courts but makes no specific proposal.
- Physician payment reform – He spends a great deal of time on the issue of physician payment reform calling for better payments for primary care, reforming the Sustainable Growth Rate formula, and pay-for-performance and quality. However, he never deals directly with the issue of specialist payments and never draws a specific conclusion on how he would proceed.
- But no cost estimates or plan to pay for it – What is remarkable about he Baucus Health Plan is that he offers no cost estimates or mentions how he would pay for it! The Obama Health Plan would cost at least $100 billion a year and the Baucus plan is very similar—almost identical at the outline level.
I read one press report that suggested the similarity to the Obama health plan and the Massachusetts health law must mean that the Congress is coming close to a consensus on how to proceed with health care reform.
My advice to the reporter is to spend some time reading the document. It is not so much a plan for specific action as a recounting of the many broad possibilities we could take on key issues such as physician payment reform and medical malpractice reform. There is no detail for just what the most expensive and important element–individual subsidies–would be. It is notable that physician payment reform is an unavoidable issue for the Finance Committee given the pending 21% physician fee cut and he clearly has no specific plan there. There is no cost estimate or plan to pay for it.
Baucus is so vague on key elements because there is no consensus, particularly from the key relevant stakeholders to any of these issues, on just how to proceed. There is no cost estimate because the plan is so vague in structure and timetable. There is no source for funding because there isn’t a source for the likely $100 billion this would cost in the first year.
If you read just the executive summary you might see proof of consensus on what health reform might look like.
If you read all 98 pages it is clear there is no consensus on many of the key details, what health reform would cost, the timetable for implementation, or the source for paying for it.
Categories: Uncategorized
Charlie-
Sorry I have been busy in my practice.
NEJM 2003 produced the most quoted literature regarding administrative cost difference between Medicare and Private Health care. That is where I got the 30% administrative cost figures. CMA leadership has told me that Blue Cross of California adminsitrative costs (profit and overhead) are near 40%.
If all insurance companies were as responsible as your non profit group, health care would be a whole lot more affordable.
Unfortunately that is not the case and the greed of insurers will probably tip the balance in favor of Universal Health Care. For example- last year Blue Cross of Minnesota made 600,000,000 -not bad for a non profit in a state with the population of San Diego and Orange County. I just hope that the same insurers will not be contracted to administer a single payor system.
Personally, I believe that consumer driven health care , mandated insurance for all workers and highly regulated insurance pool as suggested by Regina Herzlinger (swiss model) still makes the most sense to me.
Peter – Your question about why the RVU system isn’t being adjusted without government intervention is quite possibly the single most important question out there right now. The group involved in setting the RVUs is tied to the Medicare system and is not completely private. They have allowed lobbyists to influence their decision-making for quite some time. The primary care contingent has not been well represented in recent years and it shows. Procedural specialists are making it big at the expense of PCPs. If we can get things back in balance, we will see significant results because we will prevent more illness, increase the coordination of care, and see costs become more aligned with quality. We need the patient/family doctor relationship to once again become the center of the healthcare universe. The way things are now, family docs have to limit face to face time with patients because they need volume to avoid losing money. That’s a recipe for a high cost system.
“but it can be fixed simply by reallocating the RVU system to shift reimbursement away from expensive procedures and into more “cognitive” work performed by PCPs.”
Then why is that not being done now without government?
“Has anyone calculated the cost of what it would take to buy-out the shareholders of the publicly traded insurance companies?”
It is an important question but I think we need a whole new thread about how to transition from multi-payer private to single-pay government. Will it be due to crisis or will it be done while not under duress. If the financial and U.S. auto industy attempts at a fix by government are any indication it will be done under crisis. But if the financial crisis continues and people put off elective surgery and visits to their docs because they can’t even afford the co-pays and deductibles, coupled with the cashing in of retiremant accounts to stay afloat, the crisis will be sooner than later. Certainly a buyout gets cheaper and cheaper as stocks plunge and shareholders might be glad to have someone buy their worthless stock.
Peter – I actually brought up the taxing fast food because I remembered you mentioning it previously and I think it’s a great idea. We probably agree on more things than we realize.
You and I both know that the single-pay vs. no single-pay argument could go on forever. I want to make one point though and I hope to get your thoughts, and anyone else’s thoughts who has watched things play out over the last few months. Single-payer started out as an alternative financing mechanism with the purpose of reducing administrative costs. Over time, things have been added to the concept to make it more attractive and seem like it can solve more problems than just reducing admin costs. For example, you mentioned having single pay address the issue of the inequities hurting primary care physicians in this country. I agree with that, but it can be fixed simply by reallocating the RVU system to shift reimbursement away from expensive procedures and into more “cognitive” work performed by PCPs. Simply not allowing to lobbyists to stand in the way will get it done. That requires a different kind of gov’t intervention.
The point I’m trying to make is this: I think single-payer is slowly becoming pitched as a cure all as proponents realize that the admin cost savings argument is not compelling enough. Things are getting bolted on to the concept much like pork gets attached to necessary legislation. I’m still not writing off the single-payer concept, but I will continue to play devil’s advocate until we can prove that it is truly the best solution. I haven’t been completely convinced that it is.
Sorry, I thought of one more question. Has anyone calculated the cost of what it would take to buy-out the shareholders of the publicly traded insurance companies? I know it would be in the 100s of billlions, but I’m not sure if that’s already been addressed.
“Let’s tax fast food.”
Haven’t I said that before? How about transferring subsidies from corn, wheat, soyabeans to fresh fruits and vegetables, preferably organic. How about banning sugery food ads to children. How about enforcing and strengthening pollution control laws. How about paying for better school lunches. How about putting physical education and recess back into education. How about setting up single-pay where primary care is reimbursed to attract qualified and committed practioners so that patients aren’t rationed out by cost. Just a start that won’t be addressed by industry, but by responsible government. Not necessarily the government we have, hopefully by the government Obama will work toward.
Peter – That’s exactly my point. America is getting sicker and obese rates are going up. Physicians can address it until they’re blue in the face, but it continues. Any reform plan that doesn’t at least acknowledge the role citizens are playing in driving up our per capita costs in falling far short. Our group is GIVING AWAY free nutritionist services to our patients to help tackle the problem. What is everyone else doing?
Let’s tax fast food. Let’s have penalties if patients don’t get their scheduled checkups or they don’t comply with their treatment plans. If we’re going to hand the keys over to our elected officials, then our elected officials need to attack the entire problem.
Deron, how many times do the docs in your group say to their patients; “You’re just fat, get out of my office and get some personal responsibility first.”
But Charlie, think how much bigger your bonus would be and how much more your shareholders would make if you did take 40% in costs off the top! (as do several in the individual market! Yes Mega, I mean you!)
What? You got no shareholders at HP? How can you possibly be running an efficient market-based health plan? What’s that you say? You’ve been voted the best health plan in the country most of the last decade?
Now I really don’t understand capitalism.
To be serious for a second, on the other hand, if Harvard Pilgrim’s admin rate is about 11% on a commercial population and Medicare’s is about 3% on a senior population, it’s quite possible that dollar per capita they’re the same (because seniors cost so more). So perhaps it’s possible that a group of community based insurers forced to compete on the right things (as opposed to live in a market where for-profit plans maximize their revenue on screwed up incentives) might do OK.
Sadly my guess is we’ll never get to find out.
I got excited when I saw that he devoted a section to “individual responsibility” then I read the section and was quickly reminded that he is just another politician. The individual responsibility we need has less to do with obtaining health coverage and more to do with living healthy lifestyles. When I read that nearly 50% of the population has at least one chronic illness, and that the average Medicare beneficiary has 16 prescriptions and sees 8 different providers each year, I get discouraged. Where is his plan for increasing real personal responsibility? He doesn’t address it because he feels that he cannot get re-elected if he starts telling citizens that they might share some blame for our high cost system. Telling people they’re fat doesn’t make for a good soundbite or political talking point.
“I don’t know where this 30-40 percent administrative cost number comes from, but I’ve heard it before. Can you shed some light on it for me?”
Charlie and Mike M,
Charlie’s numbers are of course, correct. I think it’s quite likely that a CEO knows his own company’s costs and has a good feel for those of his regional competitors as well. I think the 30%-40% number may have some validity in the individual insurance market where only about 20 million people or so in the entire country get their insurance. I’ve referenced it before, but the best paper I’ve ever seen on administrative costs throughout the healthcare system was by Ken Thorpe of Emory University published in Health Affairs in the early 1990’s. It is titled “Inside the Black Box of Administrative Costs.” The data probably hasn’t changed much over the years.
The strident and doctrinaire Physicians for National Health Reform (PHNP) also keeps throwing out a figure of 31% for total healthcare system administrative costs vs. 17% in Canada. This is also crap as very little of the administrative cost throughout the system has anything to do with billing or dealing with insurers for pre-authorization. As Maggie Mahar has suggested, they probably repeated it so often they became stuck with it. That doesn’t make it right and it contributes nothing useful to the healthcare reform debate.
Mike M. – I run a decent-sized non-profit health plan in Massachusetts. Our administrative expenses (including profit and overhead) are 11-12% of premiums. My costs are pretty consistent with the administrative expenses of my competitors. Overall, we spend about 87-88 cents of every dollar we collect on health care services. The for-profit industry varies from the non-profits, but probably spends between 80-85 cents of every premium dollar on health care services. I don’t know much about Switzerland, but I know enough about government cost accounting to know that the 4% Medicare number doesn’t include expenses that aren’t directly in Medicare’s budget. That means almost everything but wages – like health insurance for Medicare employees and their families, worker’s compensation, IT expenses, real estate costs, pensions, claims processing fees, and the like – is paid for through some other line item in the federal government’s budget. Medicare’s number – all in – is much higher than 4%, and ours is nothing like 30-40%. I don’t know where this 30-40 percent administrative cost number comes from, but I’ve heard it before. Can you shed some light on it for me?
I agree entirely that the plan is overreaching in one sense and thus not economically feasible. On the other hand it ignores the fundamental concept of cost containment through control of administrative costs. I find it extraordinarily hard to comprehend let alone support any plan that does not address reformation of the health insurance industry. When administrative costs(profit and overhead) are 30 – 40% in the private sector compared to 5-6 % in Switzerland and 4% in medicare.
True movement toward a single payor system will be a battle. Reforming the health insurance industry to a highly regulated or a non profit system will appeal to all stakeholders save the insurers and their lobbyists. To me this is the logical first step in the long road of health care reform.
Ok, so what if we manage to expel every illegal, won’t we need citizens to take those jobs. And if we do get citizens to fill the jobs then will they be paid at a level that enables them to buy health insurance? I don’t think so, we’ll still have too many people, with too little pay, and too high healthcare costs. Don’t forget that illegals are able to work here because Americans hire and pay them. Ask the agriculture and construction industries if they could survive without illegals. Illegals also contribute to the local ecomony; sales taxes, gas taxes, rents and lots of business for Walmarts. If local government levied a local health sales tax then that might be a way to fund local healthcare that would also have illegals contributing, it may also be able to offset property taxes – but no, Americans don’t want to pay taxes, they just want other peoples taxes to fund their life. I agree that this problem needs to be fixed in DC but that would mean a method to make the present illegals, legal, and would not address heath costs or living wages. If we get the low cost labor benefits of illegal labor then we should at least also provide them healthcare and their kids education.
Great comments, Laura L. A rare voice from real world. You’ve already tipped the answer: Baucus’ plan is completely oblivious to these three concerns, particularly # 1, a particularly important point if the feds grab disproportionate share payments to help fund their plan. You’ll still have 11 million illegals (perhaps less because of sunbelt construction collapse) and no fed subsidies. Massachusetts didn’t have a lot of illegals- California, Texas and Florida have many millions. Community health centers and overwhelmed urban public hospitals are the lifelines in all three places.
I currently work in healthcare as an IT analyst but have also worked in the finance dept so I have seen my fair share of how the numbers fall out. Three points need to be made in response to the Bauchus Plan.
1)Does his coverage include non-citizens? Because in our mid-west hospital (and I know its worse elsewhere) we have a disproportinate share of non-citizen patients that we care for and are not enrolled in any health care coverage. Do we just continue to ignore this problem or do we provide a second national healthcare coverage system for those who do not qualify because of citizen status? I’m proud to say that our hospital has a pretty good record providing translation services, financial counseling and other means to assist non-citizens but it comes at a cost. How are we to continue to care for this segment of our population? You can’t ignore them, that’s unethical and ultimately costs the community, but I don’t see where in the Bauchus Plan where non-citizen healthcare is addressed. This is an extremely necessary point that needs to be addressed in any plan.
2) Very little mention of mid-level practioners. In all my financial analyses, this was a key change in basic medicine that was saving thousands of dollars in primary care clinics. The hiring of mid-levels was not entirely embraced early on, but as the economic pressures grew, it became a necessity to bolster up their ranks. I have personally seen our family practice residents dwindle in years. Med students are disinclined to be recruited to the lowest paying physician practices, especially with the debt load they carry today. Our rural areas rely heavily on PA’s and NP’s. It seems that there should be a national trend to get out the practioners to assist the dwindling number of physicians. I personally believe that the mid-levels should work in concert with the physicians but I’ll save that for another debate. These mid-levels also emphasize the philosophy of preventative care and education and I believe would be a good and cost-effective supplement to our over-burdened docs.
3) The Medicare Quality Plan..hmmmm. I seriously owe my job to Medicare compliance. It has become so convuluted and over-bearing that there are armies of people like myself who live to conform our systems to whatever the current administration pushes. I realize that the goal is admirable but the execution has been a textbook example of “unintended consequences”. Our hospital must spend hundreds of thousands just to prove compliance on quality. And as anyone knows, numbers supplied can be skewed..ask any statistician. Basic quality comes from well-trained, well-compensated health care providers. Don’t start playing games with GME funds (its already happening now, of course) that is no way to entice quality. People improve quality not policies and procedures. The government needs to start there. I hope Senator Bauchus thinks long and hard about the Medicare plans he has. I don’t think he really understands what is happening down in the mix. By the way, I do think the best quality indicator is whether the patient thought they had a quality experience not the govt.
My two (maybe three) cents…
The Call to Action/Health Care Reform 2009 proposal released 11/13/08
(http://www.finance.senate.gov/) by Senator Max Baucus is a disaster.
The Baucus plan is an expansion and continuation of the status-quo
mixture of a government subsidized ineffective private health
maintenance insurance industry operating parallel to and within Medicare
Insurance.
7 Specific Reasons Why the Baucus Health Reform 2009 Plan Fails…..
1) The Baucus plan fails to enroll all Americans in a single payer
National Health Insurance such as the most efficient health insurance
plan (Medicare) which is already contracted with most doctors,
hospitals and clinics in the Country. Medicare has the lowest operating
expenses and the best morbidity (sickness rates) and mortality (death
rates) compared to all other insurance companies. The Baucus plan will
therefore divert $700 Billion to $1 Trillion per year away from
patients, hospitals, doctors, clinics, nurses, pharmaceuticals,
therapist and researchers into the overhead pockets of health private
insurance company administrators and executives.
2) The Baucus plan fails to technologically upgrade, integrate and
centralize medical billing and records systems in order to optimize
examination of clinical outcomes, pharmaceutical efficacies and monitor
fraud and abuse. In addition, by failing to centralize and
technologically upgrade billing and records systems within a single
National Health Insurance plan, America will be unable to instantly
monitor disease outbreaks and instantly respond to natural and man made
disasters or bio-nuclear terrorism..
3) The Baucus plan fails to control drug costs by failing to allow a
single efficient national health insurance company such as Medicare to
bid on pharmaceuticals. In addition, the Baucus plan by failing to put
all Americans on a National Health Insurance Plan such as Medicare does
little to shrink the ‘risk pool’ of insured, thereby failing to decrease
insurance premium expenses for all Americans.
4) The Baucus plan fails to provide funding for scientific, clinical and
epidemiological research and development by allowing private private
insurance companies to divert funds from medical research and
development to instead support their massive and profitable
administrative and executive bureaucratic overheads.
5) The Baucus plan fails to provide physicians with the same legal
protection from malpractice lawsuits which have been established for
commercial health insurance corporations during the last 3 decades.
6) The Baucus plan fails to explain where to find the 1.5 million new
health care workers which will be needed once 100 million new Americans
obtain health care insurance. Health care workers can be found easily by
shutting down the wasteful and inefficient private health insurance
companies, putting all Americans on National Health Insurance such as
Medicare. The 1.5 million former private insurance company bureaucrats
can then be remployed to actually deliver health care in hospitals,
clinics, nursing homes, assisted living facilities, pharmacies and home
health services such as Alzheimer family assistance.
7) The Baucus Plan fails to address this problem of disenfranchised
physicians. Many physicians in this country have left the practice of
medicine, or downsized their practices due to private insurance company
abuses, malpractice threats and direct pharmaceutical marketing. A
recent national poll of physicians based on the AMA database
demonstrated that 60% of physicians support a single payer National
Health Insurance such as Medicare. A continuation and technological
upgrading of our most fair Medicare Health Insurance for all based on
the concepts outlined above, would undoubtedly motivate those
disenfranchised physicians to return to the profession and bright
younger physicians to invigorate the field.
The Baucus plan is wasteful, inefficient, fragmented, creates a new
redundant bureaucracy and will continue to provide no potential future
health improvements for America. Only an efficient National Health
Insurance carrier such as a technologically upgraded Medicare Insurance
company will be able to provide low cost health insurance and pharmaceuticals
for all Americans while maintaining the quality of private physician practices and Hospitals.
H. Green, MD, FACP, FAAD, FACMS
The Call to Action/Health Care Reform 2009 proposal released 11/13/08
(http://www.finance.senate.gov/) by Senator Max Baucus is a disaster.
The Baucus plan is an expansion and continuation of the status-quo
mixture of a government subsidized ineffective private health
maintenance insurance industry operating parallel to and within Medicare
Insurance.
7 Specific Reasons Why the Baucus Health Reform 2009 Plan Fails…..
1) The Baucus plan fails to enroll all Americans in a single payer
National Health Insurance such as the most efficient health insurance
plan (Medicare) which is already contracted with most doctors,
hospitals and clinics in the Country. Medicare has the lowest operating
expenses and the best morbidity (sickness rates) and mortality (death
rates) compared to all other insurance companies. The Baucus plan will
therefore divert $700 Billion to $1 Trillion per year away from
patients, hospitals, doctors, clinics, nurses, pharmaceuticals,
therapist and researchers into the overhead pockets of health private
insurance company administrators and executives.
2) The Baucus plan fails to technologically upgrade, integrate and
centralize medical billing and records systems in order to optimize
examination of clinical outcomes, pharmaceutical efficacies and monitor
fraud and abuse. In addition, by failing to centralize and
technologically upgrade billing and records systems within a single
National Health Insurance plan, America will be unable to instantly
monitor disease outbreaks and instantly respond to natural and man made
disasters or bio-nuclear terrorism..
3) The Baucus plan fails to control drug costs by failing to allow a
single efficient national health insurance company such as Medicare to
bid on pharmaceuticals. In addition, the Baucus plan by failing to put
all Americans on a National Health Insurance Plan such as Medicare does
little to shrink the ‘risk pool’ of insured, thereby failing to decrease
insurance premium expenses for all Americans.
4) The Baucus plan fails to provide funding for scientific, clinical and
epidemiological research and development by allowing private private
insurance companies to divert funds from medical research and
development to instead support their massive and profitable
administrative and executive bureaucratic overheads.
5) The Baucus plan fails to provide physicians with the same legal
protection from malpractice lawsuits which have been established for
commercial health insurance corporations during the last 3 decades.
6) The Baucus plan fails to explain where to find the 1.5 million new
health care workers which will be needed once 100 million new Americans
obtain health care insurance. Health care workers can be found easily by
shutting down the wasteful and inefficient private health insurance
companies, putting all Americans on National Health Insurance such as
Medicare. The 1.5 million former private insurance company bureaucrats
can then be remployed to actually deliver health care in hospitals,
clinics, nursing homes, assisted living facilities, pharmacies and home
health services such as Alzheimer family assistance.
7) The Baucus Plan fails to address this problem of disenfranchised
physicians. Many physicians in this country have left the practice of
medicine, or downsized their practices due to private insurance company
abuses, malpractice threats and direct pharmaceutical marketing. A
recent national poll of physicians based on the AMA database
demonstrated that 60% of physicians support a single payer National
Health Insurance such as Medicare. A continuation and technological
upgrading of our most fair Medicare Health Insurance for all based on
the concepts outlined above, would undoubtedly motivate those
disenfranchised physicians to return to the profession and bright
younger physicians to invigorate the field.
The Baucus plan is wasteful, inefficient, fragmented, creates a new
redundant bureaucracy and will continue to provide no potential future
health improvements for America. Only an efficient National Health
Insurance carrier such as a technologically upgraded Medicare Insurance
company will be able to provide low cost health insurance and pharmaceuticals
for all Americans while maintaining the quality of private physician practices and Hospitals.
H. Green, MD, FACP, FAAD, FACMS
This “plan” is not an original contribution to human knowledge. It is basically saying:
Senate Finance is open for business. We’re going to co-operate w/in the broad consensus of what’s already on the table from Obama but not take a single political or intellectual risk. Sadly evasive on funding sources and therefore fiscal feasibility. Not a profile in courage. (Contrast w/ Charles Rangel’s tax proposals last year). May not have wanted to step on what Senator Kennedy comes out with later. Very disappointing.
100% agree. I was surprised that the Baucas document even generated as much news coverage as it did considering it didn’t say anything of real merit around what a specific health care reform bill would look including costs and implementation time schedule.
The reality is this – the likely $75-$100 billion price tag in the 1st year alone makes the Baucas plan a complete non-starter given the current fiscal reality at the federal level for at least the next 2 years. Maybe back on the table when the economy hopefully starts to perk back up in 2010 and the inevitable showdown starts over the Bush tax cuts (what is kept, what is scrapped, and what is newly implemented).