Earlier this week, I suggested that the Commonwealth Fund’s recent proposal for healthcare reform underlines just how difficult it will be to build a sustainable, effective, safe healthcare program for all Americans.
President Obama’s budget reinforces the message. His ten-year $634-billion plan for funding healthcare reform depends on “asking the wealthy to pitch in a bit more” (budget director Peter Orszag’s happy phrase), wringing some of the waste out of Medicare and Medicaid (cuts that are needed, but that will not be popular ); and strong-arming drug makers to raise discounts on Medicare drugs from 15 percent to 21 percent. About half of the money will come from changes in government programs, half from tax increases.
As the Congressional Quarterly reports , “the new proposals for tax hikes on couples earning over $250,000 “will immediately test the limits of the new political dynamic on Capitol Hill in the midst of a recession.” And even then, the budget provides only a “downpayment” on healthcare reform– roughly half to two-thirds of what is likely to be needed to cover everyone.
With this sobering news, the discussion of healthcare reform both in the blogosphere and in the mainstream press is becoming more realistic. This is both refreshing and encouraging. No more rose-colored glasses. No more “we’ll worry about how to fund it later.” Or “it will pay for itself.”
This is an administration that is based in reality (in contrast to the faith-based governance that we enjoyed for the past eight years.) The Washington Monthly's, Steve Benen notes “The administration seems well aware of the fact that a $634 billion over 10 years would not cover literally everyone. Neera Tanden, a top Obama health adviser, acknowledged , ‘We know that this is not enough to achieve our overall goal of getting health care for every American, but it is a significant down payment.’”
A hard-headed administration is dragging, us, however reluctantly, into a world where numbers matter. At the New Republic, the usually optimistic Jonathan Cohn acknowledges that “the amount [set aside in the budget] will not be enough to finance full universal coverage . . .The budget will call for finding that money, although that obviously raises another question: Just how much more would it cost to get everybody (or nearly everybody) covered ?”
“The answer,” Cohn writes, “depends in part upon how you define ‘decent’ and how quickly you want to get there. Passing a universal coverage plan in 2009 wouldn't necessarily mean covering everybody in 2010. Or 2011. Or, well, you get the idea . . .”
Cohn and other reformers are beginning to admit the enormous difference between passing a very broad piece of legislation that sets goals– and implementing that legislation, which means hammering out the details, admitting to mistakes, recognizing failures, and making changes.
Health care reform will be a work in progress for a long, long time.
As I have said repeatedly, it’s unlikely that we can achieve universal coverage before 2013. The politics are just too tough. And finding the money—this will require sacrifices and hard trade-offs
In the past, Cohn, and reformers such as Jacob Hacker have suggested that we could fund healthcare reform with more deficit spending. You know, just keep our fingers crossed that China will pay for MRIs all around, by continuing to buy our Treasuries at, say, 1 percent. As I noted yesterday in my analysis of the President’s speech, this is not what Obama plans to do.
The AP’s Ricardo Alonso-Zaldivar confirmed what I've heard recently: “The president’s 10-year, $634-billion healthcare plan makes some key political and policy statements. For starters, any expansion of health care coverage has to be paid for — it can't just be tacked onto the deficit.”
Worrying About the Money First
Alonso-Zaldivar notes that President Obama is focusing first on controlling healthcare inflation: “Clinton started out with the goal of covering everyone. Obama has framed the problem in a different way: slowing the increase in costs, so that eventually everybody can be covered.
“Obama is asking Congress: If you're going to cover 48 million uninsured people in the world's costliest health care system, how do you pay for it?” As I wrote in a comment on the president’s speech published on the New York Times’ “Room for Debate” yesterday, Obama is bouncing the funding problem back to Congress. He has come up with suggestions that will not be popular with everyone. Now it’s their turn. Fair enough.
"’The approach he's taking is to put some tough decisions on the table, and then bring people together to have a conversation,’ " Christine Ferguson, former senior Republican health policy aide at the federal and state levels told AP. "’You put those on the table, and if people want to have this discussion, they have to propose alternatives .’"
Where the Money Comes From
How will the wealthy “pitch in”? Obama’s budget lets the Bush administration's tax cuts for more affluent households expire, allowing the marginal rate on household incomes above $250,000 to rise from 35% to 39.6%. His blueprint also asks wealthier Medicare beneficiaries to shell out higher premiums to participate in the prescription drug plan, much as they now pay higher premiums to be in the Medicare plan that covers doctors’ visits.. (This worries me; anything that might undermine solid support for Medicare by dividing beneficiaries by class could prove a problem.)
In addition, the president proposes reducing the value of itemized tax deductions for everyone in the top income tax bracket, ( 35 percent,) and many of those in the 33 percent bracket — roughly speaking, starting at $250,000 in annual income for a married couple. The administration’s budget slices the value of deductions for these families by about 20 percent .
“Under existing law,” the New York Times explains, “the tax benefit of itemizing deductions rises with a taxpayer’s marginal tax bracket (the bracket that applies to the last dollar of income). For example, $10,000 in itemized deductions reduces tax liability by $3,500 for someone in the 35 percent bracket. Mr. Obama would allow a saving of only $2,800 — as if the person were in the 28 percent bracket.
“The White House says it is unfair for high-income people to get a bigger tax break than middle-income people for claiming the same deductions or making the same charitable contributions.” The changes also would trim the value of mortgage deductions.
As expected, the president plans to slash the windfall bonus for insurers that offer Medicare under Medicare Advantage. Under current law, payments for Medicare Advantage plans are set by a formula, and the result is that private companies are paid, on average, 14% more to care for a Medicare patient than the government would normally spend through the traditional Medicare plan.
The Obama plan would have private insuers bid to offer coverage to people in a given geographic areas: they would be paid on an average of the bids in the area. He hopes to save $175 billion over 10 years with the new bidding system. (I hope this also means much stricer regulations about what Medicare Advantage plans can cover- restricting cost-shifting to very sick patients.).
Requiring drug-makers to boost discounts for Medicare patients to 21 percent should cent save another $19.5 billion. Finally, Bob Laszewski reports that the “the president’s budget would reduce Medicare hospital payments by $17 billion over ten years by bundling inpatient and outpatient reimbursements to include the 30 days after discharge, and save another $8.4 billion in hospital reimbursements by refusing to pay for readmissions that result from substandard care.” By bundling payments, the administration hopes to encourage hospitals and physicians to work together to make sure that patients receive follow-up care and do not need to be readmitted.
Redistributing Income
As I have noted in recent posts, today wealth and income is concentrated among American families at the top of
the income ladder. This has led, not only to growing inequities, but financial speculation that has had disastrous results for the economy. When too much money chases too few things, the very wealthy begin blowing bubbles . . . .
This budget begins to redistribute income, not only by raising taxes on the wealthy, but by lowering taxes for low-income and middle-income workers while extending the new “Making Work Pay” tax credit beyond two years .
According to the Times, “the administration will argue that this tax relief, will offset households’ higher costs for utilities and other products and services." The current tax credit provides $400 to individuals earning less than $75,000 workers and $800 to couples earning less than $150,000. (Individuals earning up to $100,000 and couples earning up to $200,000 also receive a break, but not the whole credit.”
Going forward, the president would like to lift the credit to $500 for individuals and $1,000 for couples.
Resistance
The administration knows that its budget will face fierce resistance, from drug-makers, from some Medicare providers, and from Republicans who will object to the fact that, after 29 years of redistributing income upstream, this administration plans to reverse course. Already, Republicans have begun to sputter about the idea of afflicting the affluent, particularly during a recession.
Many voters will agree, arguing that for a family living in many cities and suburbs, a joint income of $250,000 just doesn’t make you "rich." (It does however, mean that the household is hauling home more than 98 percent of all American families; it’s hard to call the top 1.9 percent “middle-class.”)
Today, even Democratic Finance Chairman Max Baucus waffled on the tax increases: “Mr. Baucus acknowledged that ‘there has to be revenue’ to offset the costs of expanded coverage initially,” the New York Times reported, “but he did not endorse the proposal for limiting wealthy taxpayers’ deductions.”
“’There will be lots of options to pay it, not necessarily that one,’” Mr. Baucus said. “He would not say what revenue options he would support.” In the past, sources in Washington have told me that Baucus would like to find a “pain-free” way to pass healthcare reform. I wish him the best, but— he need to spend more time with the reality-based folks.
With this budget, President Obama has tried to spread the pain, but even so , he will have to use his considerable powers of persuasion to convince some Democrats, as well as Republicans, that if we want universal coverage, we must pay for it—and the only people who are in a position to pay for it are those that have the money. I suspect that the public will understand this. And if the president appels to voters, they will persaude their Congresmen. Or vote them out of office.
President Obama might begin by pointing out that, when compared to the citizens of other developed countries, our tax burden is not heavy. As the chart below reveals, the U.S. government’s total revenues—from taxes and other sources—represent a much smaller share of GDP than in most European countries. And note that in countries with some of the best healthcare systems (Germany, France, Denmark government revenues, measured as a share of the economy, are 30 percent to 50 percent higher. Of course those taxes fund an entirely social safety net which includes education and pensions, not just healthcare.
RevenueSpending2007
But 21st century healthcare accounts for a large chunk of social spending in any country. If we want to high quality universal coverage—just like those other countries—it seems only logical that taxes will have to rise, particularly in the early years of healthcare reform.
Make no mistake, covering everyone will cost more. In an earlier post , I quoted Paul Ginsburg, of the Center for Healthcare Systems Change, pointing out that “over the past decade, the decline in the percentage of Americans who have insurance has slowed the rate of health spending growth. “ If everyone had been insured, our national health care bill would be even higher..
Why? The uninsured die sooner –and so we save the money we would have spent if they had lived to develop expensive chronic diseases like Alzheimer’s or cancer.
Over the long term, we can learn to redistribute our health care dollars and get better value for those dollars, paying some doctors more, others less; depending on how much their treatments benefit patients, paying hospitals and doctors for better outcomes, not volume; and agreeing to accept evidence-based guidelines for care. But this means experimenting —finidng out what works and what doesn’t. It also means changing our expectations—and turning our backs on the excesses and self-indulgence that have created a bloated, profit-driven health care system.
I believe we can do that. But the solutions are not simple.President Obama understands this.
Categories: Uncategorized
Read this plan and tell me you want it to go as is………….. NO NO NO Woooooaaaaaaahhhhhh no way!
Too much sub-standard crapola and too many loose ends.
What are we in a rush for the national debt just doubled and that is our first 8 months under The New Boss? We need something better and with personal accountability, but not at this happy go lucky world of free lunches and more Gov’t dependency. How about knocking down some co-pays and taxing the Insurance companies -asking for breakdowns of their P&L. How many Made-0ff’s have we missed in this insurance racket …how many Doctors are paying outrageous malpractice insurance costs due our own court system allowing too many bogus claims to be paid. Start with balancing the benefits extend to employees in the public sector compared to the private sector…The thief’s need to be caught and brought to justice, the amount of health care services for illegal immigrants, needs to have a reformation of duties by hospital administration people in reporting these people and having them sent back to their homeland… along with some newly rational costs that don’t have us paying for future breakthroughs today. Re-structure and re-form but I want the best doctors and the ability to see them when we need them, the debt we can incur will be gladly absorbed by the Communist Chinese gov’t and soon they will have the hammer and the right to collect-and then what will they want more control of the importation of their goods to be sold here. Why can’t people see that we have to invest in American business and stop spending out side our own country and begin using our own resources? When will people start appreciating that we have great hospitals and not very long lines along with skilled doctors who still speak English? Looking down the road we are telling our youth do not achieve and o not work hard government will take care of you. If you are inspired to become a doctor becareful because the hard work and money spent may not pay off –maybe there will be more of a demand for doctors who have studied outside of the USA.
Substandard workmanship and less educated physicians. Give it away and watch the drive for being involved in medicine disappear. That’s a great way to protect our next generation. Tax the rich for always taking care of business and reward those who cannot and will not get their responsibilities in order. Or do nothing to the Insurance frauds and overpaid premiums –no recalls. No checks and balances of where the money is spent and why it isn’t calibrated to the cost effectiveness of what is seriously needed versus how we pad so many visits and premiums…. how about a pay as you go program and a reward for those who do not use the extreme medical procedures –a gift for being healthy. I am sure the republicans will make this a mess and the democrats will only try to push it through to say ‘we did something’ no foresight or regret for the future of what will be. Spend more money while we have already declared our national debt to be the most ridiculous in decades. There is certainly something wrong with out politicians on both sides, and certainly our leader to promote such irresponsible behavior.
no help, still only denial,,,,i am so ready to -oo00h- can’t say,,,, they have raised taxes on cigarettes to get ppl to quit smoking and are raising again next month one more dollar, all so they can better health care,,, well ,,, why not helping those that you and i both know qualify for health care and ssi ( I HAVE EPILEPSY,,have had since childhood) , AND START THERE!!!! if they use their brains , that alone will close alot of files and paperwork, hours, and overtime pay. stop throwing our case away only to make us keep re applying and using up more of their hours and our money. if i was in jail, i would get treatment and maybe even come out with the SSI that i know AND THE STATE of LOUISIANA knows i qualify for. it is way past time we get our bonuses, our health care, not the kind the think we should have to cut down the budget, if that is so , then why don’t they put us on their insurance policy, SHAME SHAME SHAME ON LOUISIANA, BOBBY JINDAL, SENATORS AND CONGRESS MEN WHO REPRESENT US. THEY OWE ME, I HAVE MEDICAL BILLS TO PAY,,, YOU KNOW WHAT,,, THEY HAVE MEDICAL BILLS TO PAY. SHAME SHAME SHAME,,,,,WHERE IS MY RECOVERY MONEY****NO I WILL NOT APPEAL, TAKING TOO MANY TAXES AS IT IS NOW,****welcome to the white house, just not mine. don’t send ppl to knock on my door to support your plan or any including jindal’s office. i will light up my cigarette and while they blow smoke one way at me i will blow mine in their face. then they can run back and use their good ole’ high price insurance you help to provide for them to get treated by their doctor from smoke inhalation. i have no insurance to use to get treated for the smoke they blew up me. your office never responds to my e-mails of concern, ABOUT MY HEALTH PROBLEMS BEING AN EPILEPTIC TRYING TO GET PROPER CARE, so don’t ask me to support something YOU WANT!!!!! WHEN YOU CANNOT TAKE THE TIME TO SUPPORT OR CONCERN YOURSELF WITH SOMETHING I NEED. until then, that shows me how much my state, gov,city, and the U.S. cares about me , i WILL KEEP SMOKING. YOU TAKE 2,497.2 MG OF MEDICATION ***EVERYDAY***AND BE TURNED DOWN FOR SSI AFTER THEY QUALIFIED YOU FOR ABOUT 17 YRS, AND NOW SAY YOU DO NOT, MY BOYFRIENDS EITHER MAKES TOO MUCH MONEY OR I AM NOT CONSIDERED DISABLED ENOUGH. WELL I HAVE ALREADY HAD TO HAVE 17-19 STAPLES IN THE RIGHT SIDE OF MY HEAD FOR ALMOST 6 WKS A FEW YRS AGO DUE TO A SEIZURE. I HAVE ****EPILEPSY******NO CURE******WHY DO I HAVE TO BE PUNISHED FOR THE MONEY MY BOYFRIEND WORKS FOR, HE SUPPORTS ME AND MY KIDS, THAT IS MORE THAN MY COUNTRY IS DOING FOR ME. SUCH HYPOCRITS, ALL, YOU PAY MY DEBT. OF OVER 9,000 IN JUST E.R. MEDICAL BILLS ACCUMULATED SINCE BEING CUT OFF OF SSI, AND TELL ME I DO NOT MEET THE NEEDS, REQUIREMENTS, NOT SEVERE ENOUGH, OR THE WORST TO ME MY BOYFRIEND ****NOT MY HUSBAND****MAKES TOO MUCH MONEY. THEY OWE ME BACK PAY, CURRENT PAY, COVERAGE OF ALL PAST AND PRESENT MEDICAL BILLS, EVEN IF THEY HAVE BEEN TURNED OVER TO AN ATTORNEY REP. THE HOSP. ,,,, IS THIS THE WAY MY COUNTRY, MY STATE, THE TWISTED LAWS AND LOOPHOLES HELP ME,, WELL, NO WONDER SO MANY PPL ARE ON ANTI-DEPRESSANTS OR COMMIT SUICIDE, WE CAN’T GET HELP. TOO OLD FOR ONE THING, OR TOO YOUNG FOR THE OTHER, BOY, BOY, I GIVE IT TO THIS COUNTRY, YA’LL PLAY IT GOOD, AND I DID NOT SAY MANAGE , I SAID PLAY. THAT IS ALL WE ARE , A GAME, SOMETHING TO SHUFFLE AROUND SO LONG AS THE PERSON WHO GETS IT CAN HURRY UP AND PASS IT TO SOMEONE ELSE, SO THEY DON’T HAVE TO CONCERN THEIR SELVES WITH OUR PETTY PROBLEMS,, WHAT ARE WE –COOTIES– WELL, THEN DON’T ASK FOR OUR TAXES.WHILE I GET DENIED, YOU GET BONUSES, EARMARKS, DONATIONS,ETC..WELL THE ONLY DONATION I CAN AFFORD TO GIVE IS A ROLL OF TOILET PAPER.
This is a surprise.
WASHINGTON, March 16 /PRNewswire-USNewswire/ — The leader of the nation’s largest veterans organization says he is “deeply disappointed and concerned” after a meeting with President Obama today to discuss a proposal to force private insurance companies to pay for the treatment of military veterans who have suffered service-connected disabilities and injuries. The Obama administration recently revealed a plan to require private insurance carriers to reimburse the Department of Veterans Affairs (VA) in such cases.
“It became apparent during our discussion today that the President intends to move forward with this unreasonable plan,” said Commander David K. Rehbein of The American Legion. “He says he is looking to generate $540-million by this method, but refused to hear arguments about the moral and government-avowed obligations that would be compromised by it.”
A NEW STUDY SHOWS THAT SINGLE-PAYER REFORM WOULD BE MAJOR STIMULUS FOR THE US ECONOMY and would provide:
** 2.6 Million New Jobs,
** $317 Billion in Business Revenue,
** $100 Billion in Wages, and
** $44 Billion New Tax Revenues
You can find out more about this study here: http://www.CalNurses.org/
The press release is here: http://www.calnurses.org/media-center/press-releases/2009/january/nurses-to-congress-expanding-medicare-could-reverse-job-losses-and-repair-our-broken-healthcare-system-and-safety-net.html
It is important to recognize the motivations of the individual while pursuing any great centralization scheme.
Individual patients must be assured that there is a such thing as, “Not the best, but good enough for you.”
Individual doctors must understand that they cannot hope to maintain a lifestyle warrented by their staggering workloads and crushing responsibilities; they must lower their expectations, or use their considerable gifts in other career paths.
Individuals working to win federal contracts to manage health care data and the flow of massive tax dollars must recognize the biggest opportunity in 60 years to enrich themselves at the public trough.
Individuals who are in the career of politics must recognize that a tipping point has been reached. The voting majority of Americans is now siding with the Federalists. Individual or States’ rights are outdated and quaint notions.
Elderly individuals must recognize that for the greater good, they must accept shorter, more brutish lives.
We must indeed all give something up. Our world leadership, our economic, technological, and military superiority are just the start.
wisewon, Deron S. Frank-
Thanks for your comments.
wisewon–
Congress is not going to sit down and revise the payment system for thousands of treatments, or create financial incentives for doctors and hostpials to work together in large groups.
Congress doesn’t have the knowledge or the patience to engage in this kind of very detailed wonkery–nor do we want them to.
But the Obama administration completey understands how much waste there is,and they know what the folks at Darmouth have written about regional variations, ineffective treatments, and the need for dcotors and hostpials to collaborate in large groups if we want value for our dollars. The administration knows the Dartmouth research as well as I do.
Have you read the many long reports that Peter Orszag wrote about healthcare when CBO director?
On Healthbeat, back in December of 2008, I noted: “Congressional Budget Office Director Peter Orszag estimated that the U.S. could save up to $700 billion annually in health spending by identifying treatments that do not produce the best medical outcomes. Orszag’s support is key: since then, President-elect Obama has appointed him director of the Office of Management and Budget (OMB)Congressional Budget Office Director Peter Orszag estimated that the U.S. could save up to $700 billion annually in health spending by identifying treatments that do not produce the best medical outcomes. Orszag’s support is key: since then, President-elect Obama has appointed him director of the Office of Management and Budget (OMB)”
Why do you think they insisted on putting a large allocation for compative effectivenss reserach in the fiscal stimulus package? They wouldn’t put that much into it unless they planned to use it. As the most recent CBO reports (December 2008 and January 2009) expalin, comparative effectiveness reserach is useless unless it is given financial teeth.
How will they do this? Medicare will be doing this–I know this becuase I’ve co-ordinated a Medicare Reform Working Group that included, among others Zeke Emanuel (now Peter Orszag’s chief healhtcare adviser.)
When he became Orszag’s advisor, Zeke had to remove himself from the Working Group, but I have a pretty clear idea of what he and others involved in reform in Washington are thinking.
They do understand that Medicare is going broke because of the waste, and they do plan to do something about that. This will pave the way for reducing the waste outside of Medicare.
Medicare has the clout to lead reform. Very few physicians can afford to keep their practice going without Medicare patients. Very few hospitals and surgical centers could stay open without Medicare patients.
So it really doesn’t matter if the “regular docs” are thrilled with the changes. They will like the fact that there will be opportunites to make more money through joining “virtual networks” of large groups. And they will like the fact that Medicare will be paying more for primary care, preventive care and chronic disease management.
Some older docs no doubt have their head in the sand, but most understand that change is coming. (And the AMA no longer represents the majority of docs in this country–not even close.)
Deron S.–
I agree entirely. We must think collectively–everyone has to give up something.
Frank–
My stepson and wife have lived in Germany for years–they just had a baby there.
Their experience has been excellent. And each of them have been hospitalized (in addition to giving birth.)They have no trouble finding doctors and the care has been very good. So if doctors are leaving Germany they don’t seem to be creating a huge shortage.
In addition, I know a German pediatric oncologist who has spent his career in Germany. He came here on a fellowship last year to share what he knows with American doctors–and was appalled by much of what he saw. He is perfectly happy wtih the German system–it’s not perfect, but he feels, much better than what we have here.
And in Germany, where he has a choice between the public sector insurance and the private sector insurance, he (someone in his mid-40s) chose the public sector care because he feels the quality of care is just as good.
They will revise the Medicare fee schedule (with an eye to services that are most effective) but they also will begin trying to reward collaboration that leads to successful outcomes by “bundling payments to doctors and hospitals.” Doctors who agree to particpate in bundling will be able to earn more than doctors who stick wtih the old fee-for-service system, as long as their outcomes are good.
This is something that Medicare can do without legislation (setting up pilot projects) so why would the administration possibly make this very complicated idea part of a piece of legislation that Congress would then have to debate and try to understand?
Finally, no, we’re not going to suddenly save hundreds of billions of dollars by herding 75% of hte nation’s doctors into these “accountable medical systems” in one or two years– nor are we going to suddenly save hundreds of billions of dollars by adjusting fees and co-payd for thousands of medical treatments and products based on how effective they are.
When Matthew talk about “big bang” reform I can’t even imagine what he means. This is not how an industry that accounts for 17 percent of the economy of a huge nation is changed. All fo the structural reforms that can capture real savings will take time. And some of those savings will have to be plowed back into the system to pay more for preventive care, cover the uninsured, provide financial incentives to get both healthcare providers and patients to change . ..
In particular, as I keep saying, covering the uninsured and underinusred will be expensive because so many of them are poor. And poor people are sicker than the rest of us for many reasons that have nothing to do with lack of access to medical care.
Medical care will help–but it won’t lift them out of poverty. The kid in the Bronx suffering from asthma because of the air quality where he lives still will have astham–but at least he’ll be treated for it.
The 45-year-old unemployed alcoholic who has been drinking for 30 years, probably won’t give up drinking when he gets medical care (unless his life takes a turn for the better– we have only moderate success with helping addcited alcoholics) but he might give up smoking (doctors are quite successful in this area). This means that instead of dying at 52, he might live to 67–and during that time he will continue to need healthcare.
The fact that these people will at last be getting care is wonderful–but it will be expensive. That’s why a good part of the money we save by reducing waste will have to go back into healthcare.
)
“This is an administration that is based in reality”
As he starts his healthcare speech citing a totally made up and not even slightly believeable quote that 50% of BKs are because of Medical Bills.
Even far left wing ABC debunked this claim. Obama is nothing but sound bites and propoganda, our healthcare crisis isn’t going to be solved by a teleprompter
Also in respectful response to Frank,
A recent article in Speigel refutes your experience. German doctors are leaving in droves because they receive the worst pay and face the most burdensome bureaucracy in the EU. Hmmm. Perhaps Obama has already taken a look at Germany….
I suppose if we are going to spend money that isn’t there, we may as well spend insane amounts of it….
I would like to say something on the subject of National anything. This gives the government the power to control who gets health care and to know everything involving your illness or injury. So, if we should go that route and take a National Health Care Industry then we also must accept that our information will be common knowlege to our government. Furthermore they can deny health care to “Nonconformists under the National Terrorism Task Force”
It won’t matter if you did what is accused or not just being investigated will give them the power to “Turn off” your health care coverage to make you easier to catch.
I don’t like to fear monger but we MUST get a clear message to the Medical industry, our politicians and the Nation at large that we are not going to take them making a pill for 5 cents a tablet and charging us $5 per tablet. I don’t mind a profit after all this is a Capitolist Nation. However there’s a difference between Profit and Rape!
I love to listen to the “Experts” quoting percentages of people who favor or don’t favor National Healthcare! I agree with the large percentage of Americans who don’t favor what we have been offerd so far! When our President stops looking at England, France, and Canada for solutions to our healthcare and gets on the right boat then maybe we will have a real choice!
Obama should look carefully at Germany to see a system that works for the doctors AND patient’s. They don’t practice treating something AFTER you have it they work on preventing you even being there by letting you know whats currently wrong with you and how to prevent it from getting worse or heading it off altogether. Plus the insurance is so affordable that you could go out collecting aluminum cans and make enough in a day to pay for your share of the cost for your family for the entire year! EVERYONE has insurance in Germany and it is affordable to ALL. I paid $7.50 a YEAR for insurance there and it covered not only health care but my dog biting a postman or my pipes breaking and flooding out the apartments below me! No co-pays no BS it was affordable because EVERYONE payed the same and the medical R&D don’t try to rape the public and get rich off of them. If England has all the answers then why were they still bloodletting when we were practicing frontier medecine? Lets get serious and tell Obama to take a look at Germany and see what it is they are doing right that we aren’t! Their doctors all seem happy and the nurses also and I can as a patient tell you that I was delighted with the quality of health care I got there!
I think we need to stop focusing on individual stakeholder groups (physicians, insurance companies, etc.) and present this as something requiring everyone to give up something. When you attack a single group, of course you’re going to get backlash.
Painting physicians and insurance companies with a broad brush is not helpful, particularly when the role patients (i.e. all of us) play in this mess is ignored.
PS Of course physicians want change to the system. They just don’t want the “change” that involves them becoming less autonomous because they are now employees of large medical groups, or compensation based on performance, and an expectation to practice according to standardized treatment guidelines. They want the other stuff– but physician practice reform is what will save the most money in the long-run. And that’s what physicians oppose.
PPS Doctors from Kaiser and VA are hardly representative of the system. If those are your “regular” docs, that’s further to the point. You need the non-AMC affiliated community physicians that comprise most of the opposition. The Kaiser/VA docs are already on the enlightened path, along with thought leaders. That isn’t who the medical specialty societies mostly represent.
Maggie,
Great post, you get the issues, no question.
But, here’s the thing…
“But the Dartmouth reserach suggests that we can change the way physicians practice if put more of them into very large mutli-specialty accountable care centers where they are paid, not for volume, but for value, and where they collaborate, LEARNING FROM EACH OTHER.”
Dead right. No one in the administration is saying anything close to this. That’s my point. And jd’s. Obama, Orszag ARE shying away from the issue of changing physician practice behavior. And moving towards significant compensation based on process and outcomes, not quantity. But they aren’t saying that. They are dancing around, very delicately, at best. They aren’t doing that with other parts of health reform– cutting rates for insurance companies, forcing discounts on drug prices– but they are shying away from practice reform. You can’t find one piece of testimony or speech that plainly states that the practice of medicine needs to change in any of the directions you mentioned in this post. That’s my point.
Wisewon, Chris, Peter J.D.
Thanks for your continuing, intelligent and provocative comments. (I invite you all to come to http://www.healthbeatblog.org to comment there as well.)
First a general point. I don’t know where you guys got the idea that I only know “thought leaders.”
When I wrote my book I interviewed dozens and dozens of doctors practicing full time– family docs, primary care docs, palliatve care specialists, orthopods, anesthesiologists, spine surgeons, cardiologists, intensivists, general surgeons, opthamologists . . . . all over the country, many in private practice, , working at places like Kaiser, at VA hospitals, etc. In the intro to my book I talk about how surprised I was they took my calls (most didn’t know me—but when I interviewed a doctor, I would ask him or her for names of other docs). Many of them were desperate to talk: “someone needs to know what’s going on.”
Most didn’t complain aobut their income–or fear of malpractice. They complained about how disorganized the system is, about the errors and chaos in their hospitals where too few nurses were asked to do too
many things, about the lack of co-ordination in our healthcare, about the amount of misinformation drug companies were spreading, about the politics of hospitals, about how incompetent doctors–or greedy doctors who oversaw three operations simultaneously–were hurting patients, but were not called to account because they were “rainmakers” for the hospital.
I was impressed by their genuine concern for their patients and their profession. I learned that docs in different parts of the country have very different priorites.
Since writing the book, I have heard from many, many more doctors. Some tracked me down at home through the telephone directory. A number of them tracked me down at home through the phone directory, and quite a few now read my blog and comment on it.
On changing the way physicians practice. As you know I believe that the Dartmouth reserach is crucial. But
when it comes to eliminating the waste–or getting doctors in Florida to practice the way they do in Mineesota –is not that easy because we are talking about changing practice habits IN THE GRAY AREAS OF MEDICINE.
A Dartmouth study in the most recent NEJM talks about how Medicare spending for very similar patients varies widely from one region of the country to another (after adjusting for differences in local prices, race and the overall health of the population) and explains that the cause for the differences
“lies in how physicians and others respond to the availability of technology, capital, and other resources in the context of the fee-for-service payment system. A recent study by researchers in our group provides further insight.
THIS IS THE IMPORTANT PART: Using clinical vignettes to present standardized patient care scenarios to physicians throughout the country, the researchers found that physicians in high- and low-spending regions were about equally likely to recommend specific clinical interventions when the supporting evidence was strong.
BUT– THIS EXPLAINS THE DIFFERNCE
Those in higher-spending regions, however, were much MORE likely than those in lower-spending regions to recommend discretionary services, such as referral to a subspecialist for typical gastroesophageal reflux or stable angina or, in another vignette, hospital admission for an 85-year-old patient with an exacerbation of end-stage congestive heart failure.
And they were three times as likely to admit the latter patient directly to an intensive care unit and 30% less likely to discuss palliative care with the patient and family. Differences in the propensity to intervene in SUCH GRAY AREAS of decision making were highly correlated with regional differences in per capita spending.
Changing practice habits in Gray areas is difficult.
AS I think I said before on this thread there is nothing “cut and dried” here–nothing that an EMR could fix by telling a doc what the “Right Answer” is in these
grey areas. . . (We need guidelines, but they can only be guidelines, not rules. Every human body is unique and will react differently . .
But the Dartmouth reserach suggests that we can change the way physicians practice if put more of them into very large mutli-specialty accountable care centers where they are paid, not for volume, but for value, and where they collaborate, LEARNING FROM EACH OTHER.
We need to give them financial incentives to join these collaborative groups–and pay them bonsues when they approach benchmarks of higher quality, lower cost care.
That’s important. Docs who work alone or in a small practice usually settle close to where they went to med school, and do things the way they were taught to do them in med school for the next 40 years. If they went to a school in the Northeast (south of Vermont and New Hampshire), they probably learned to practice pretty expensive, no-holds barred, do everything possible medicine.
These doctors need to work in settings with doctors who learned ot practice more conservative medicine , who put more emphasis on palliative care, less on the ICU . .
We need to provide financial incentives for doctors to redistribute themselves around the nation–both because we have way to many docs in cities like Boston, driving up costs as excess capacy leads to overtreatment, and because there are other parts of the country where there are too few docs.
Accoreding to the reseachers, getting them to work collaboratively, and getting them to learn how to practice the way they do in Minnesota in those Gray areas would mean that instead of being $660 billion in the hole in 2023, Medicare would have a $758 billion surplus at that point– a cumulative savings of $1.42 trillion.
This is all thanks to reducing annual growth in per capita spending from 3.5% (the national average) to 2.4% (the rate in San Francisco) would leave Medicare with a healthy estimated balance .
Shaving inflation from 3.5% to 2.4% doesn’t sound like mcuh to people who don’t understand the “miracle” (and the “misery) of compounding.
But trust me, I’ve written about money (as a financial jouranlist) for years, and “compounding” is what making money, saving money and losing money is all about.
It’s not as exciting as saying, “Let’s reduce spending by 20% now.” But guys with green eyeshades like White house budget director Peter Orszag gets it. (Most “pundits” don’t.)
Obama also gets it.. (One of the things I like most about Obama is that he appears to be a patient man. Impulse control! (Been quite a while since we’ve seen that in the White House) He’s not going to let anyone push him into a supposed Quick Fix.
He also undestands that adjusting the way physicians practice in L.A. Mismi, Boston and N.Y. is only one part of lifting quality and reducing costs in our Byzantine healthcare system.
We also have to re-direct drug-makers and device-makers toward investing their reserach dollars in affordable, needed drugs and devices–not drugs and devices that they hope to sell for $100,000 that we, as a society, cannot afford. We don’t need $100,000 drugs that give the average patient an extra 3 months of life.
We need to get those DTC drug ads off TV.
WE need to put more emphasis on public health–smoking cessation clinics, etc..
We need to clamp down on docs who take kickbacks.
We need less expensive, less complicated, clinician friendly interoperable heatlhcare IT. (See Kibbe’s excellent posts here on THCB)
WE need to re-educate the public: more care is not better care.
We need to require palliative care in every U.S. hospital over a certain size.
We need to totally change the way we educate med students, putting far more emphais on primary, palliative, pediatric care.
Medicare should be telling medical centers not only how many residents they can have (which it does now) but how many they can have in each specailty. We don’t need more dermatologists and cariologists. We do need many more palliative care docs.
We need to teach med students to work collaboratively. We need to make it clear that medicine is a Team Sport.
(IN med school interviews, we should try to weed out people who are not good team players. )
Since that’s what we need to do, can you see why it can’t be done in one year? Or even four? I’m hopeful that Obama will achieve his stated goal: rolling out universal coverage by the end of his first term.
And assuming he has eight years, we could have a much more rational system by then.
WE can keep spending at 16%-17% of GDP (it now 17% because GDP growth is negative).even though GDP growth is going to be slow.
We are never going to spend as little, per person, as some countries because Americans are accustomed to more technology. And many Americans believe that when it comes to dying you “put up a fight to the end.” Also, while we can roll back physician fees, and proivde loan-forgiveness in med school, docs who were earning $700,000 are not suddenly going to be willing to work for $300,000.
Estravagant CEO salaries in the U.S. have set a very high bar for what well-educated “professionals” expect to earn. (CEO slaries are typically much, much lower in Europe.) I’m hoping for a shareholder revolt that will
cap CEO salaries here–that would help us bring down other mega-salaries that distort the economy and expectations, but again, this won’t happen overnight
Chris,
A familiar refrain from physician groups.
P4P can/should be a mixture of process (are you following best practice for x% of patients with a given diagnosis) and risk-adjusted outcomes measures that mitigates those concerns.
I agree on torts, but you’re missing the issue. When Berwick identifies that the wrong medical practice is being conducted roughly 50% of the time, that isn’t about overtreatment per se, its the wrong treatment. There are too many community physicians practicing what they were taught in medical schools 15 or 20 years ago, and not keeping up with the evolving science of medicine.
You have five times the office staff because physicians are physicians not businessmen. Don’t blame reform efforts, little has been passed over the past 30 years. The practice model is broken, physicians have neither the training nor knowledge in actually managing a business, and in a increasingly complex medical world, this skill gap is creating greater and greater problems. If we moved to a Kaiser-type model, with physicians as staff employees, focused on medicine for reasonable compensation, but paid on their work product (process and outcomes) not just sheer volume– then we’d have a system focused on improved quality and lower costs.
PS Maggie? Chris’ response is what most physicians think– not the handful of physicians in your circle.
Pay for performance makes caring for poor people even less viable. Outcomes for poor people, compliance for poor people, lifestyle for poor people are all miserable. This is true regargless of the medical care. Pay for performance will only reduce the viability of care for the poor. It actually makes caring for the sick less viable, as well…
Like most of these genius designed efforts, it rewards overtreatment of the worried well, which together with the tort issue (which is NEVER discussed here), is the heart of the utilization problem. Doing un-necessary things for the healthy has a really good outcome, by the way.
P4P is the “no child left behind” concept applied to medicine.
Micro management of medical practice by a central committee is not going to have the results you expect. Maggie’s enlighted doctor friends likely don’t actually care for patients. Those of us that do can spot a dead fish by the smell, even it it does look very shiny.
Compared with twenty years ago, we have five times as many office staff just trying to get paid. Shall we double our staff again. Is there never a point at which the layer after layer after layer of red tape becomes a problem for reformers? I will give you one thing, an unbroken record of failure to identify the real problems has not discouraged you.
I see there is a new comment thread on the topic, so two quick parting thoughts here:
1. Maggie, I am 100% with you on the need for new taxes among the top 2%, and for exactly the reasons you give. Where I part ways is that I do not think we should present health care reform as needing that additional tax money in the long run. Instead, the goal of health reform should be that it more than pays for itself. Universal health care should be more than paid for by reforms to the delivery of, and payment for, care. I agree that we can freeze the % of GDP devoted to health care, and I agree that this may be all the Obama administration can publicly present as a starting goal when enacting universal health care. Anything more than that (actually, perhaps even going that far) will create a backlash that would sink UHC. In fact, the smart course of action for the administration and congressional leaders is not to set any specific goal, but to point again and again and again to the inefficiencies, non-evidence-based practices, coordination of care failures, etc. We need to move the public debate.
Us wonks, on the other hand, have a different role in being more explicit about the magnitude of savings and what the end-game is: reduction of health care expenditures from 16% of GDP to something approaching 12%. That can help guide the policy makers even if they can’t be explicit about it because it will make the industry fight that much harder.
2. Wisewon, I of course agree with you (and myself). This is a multi-year task of getting the public to understand….or, if not fully understand, at least accept the idea that there is waste on an enormous scale on the provider/supplier side and not just the insurance side that does nothing for our health and well-being. We will be ready for reform when a clear majority sees this as an injustice–just as a majority now sees the lack of universal coverage as an injustice.
Great comments and thread.
I want to touch upon a point that both jd and I have made before (he did so again in this thread)– there isn’t enough discussion on the need to change physician practice behavior. Wennberg and Berwick’s work needs to be more explicit in the policy dialogue– medicine is too often practiced without the use of evidence, standards of care or best practices. There is an extremely high level of autonomy that has been given to the medical profession– autonomy that the data suggests in increasingly unjustified. Too often the discussion on physician compensation focuses on the total amount– the more relevant question is how they get paid. The level of P4P that is part of the current reform package is woefully low, and as a critical tool in affecting physician medical practices (along with health IT), Obama’s administration has avoided one of the most politically thorny issues– physicians– which unfortunately is also the most important to bring down health care costs. As jd and I have written in the past, part of the political path to medical practice reform requires greater awareness among the public about the lack of quality care too often practiced in medicine. Improvements in quality and lowering costs inevitably involve significant shifts in physician autonomy, accountability and shift in degree of “expert judgment” vs. “cookbook medicine.” These are all shifts that are not embraced by the medical community (Mahar’s enlightened docs friends being an exception) and are rarely discussed in the political sphere out of fear of being pitted against physician groups.
A bold health care reform proposal will take on the issue of physician medical practice, not punting the issue down the road with policy prescriptions of “experimenting with physician payment approaches.” (Orszag’s testimony to the House)
Peter-
Thanks for the kind words–I agree, it turned out to be a good thread.
It’s hard to untangle “defensive medicine” driven by fear of lawsuits and overtreatment driven by fee-for-service payment plus the fact that from the first day of
med school many of our doctors are taught to do more–more tests, more treatments–without considering the fact that every test and every treatment carries some risk. Often, more conservative medicine is better.
And yes, you are abolutely right, for too long we have neglected investment in schools, infrastructure, alternative sources energy while over-investing in consumption (all of those Gucci bags) and our disastrous adventure in Iraq.
j.d.
Thanks for your comments (Peter, I’ll reply a little later)
j.d.– in response to your question, I’m assuming we can keep healthcare spending as a percentage of GDP flat–while covering the tens of millions who are eitiher uninsured or underinsured now and whle providing excellent care to the people now receiving subpar care on Medicaid. (We pay doctors so much less to treat Medicaid patients that it is very very hard for them to find care, and sometimes it is from truly incompetent doctors who cannot build a practice word of mouth–or get a job in a hospital or group practice.
If we can do all of that while still spending 16% of GDP that means we will have eliminated a great deal of waste while getting a much bigger bang for our buck.
My goal then would be to make sue that health care inflation does not outpace GDP growth– so that healthcare spending remains the same percentage of GDP , even while the population ages. (Sweden has accomplished this, and we can too.)
I should add that as part of heatlcare reform I think we need a much bigger investment in public health– the Obama administratoin agrees on this. That’s why they are investing in community clinics. We also need to invest in public health through our public schools-nutritious schol lunches, gyms and gym teachers, playgrounds. The current separation between “medicine” and “public healtlh is uhealthy.
As for the tax increases: we need to redistribute income and wealth downward if we want a stable economy.
The fact that 1% of the populations owns 34% of aggregate wealth and top 20% owns 80% of total wealth is very unhealthy for the economy. People like Jared Bernstein (an excellent economists from EPI and Biden’s chief economic adviser) understand this.
When to much money is concetrated at the top this leads to speculation– too much money is chasing too few things. The result: the stock market bubble and the real estate bubble.
The same thing happened in the 1920s– our last “Gilded Age”– with the same results–reckless speculation that led to an economic collapse.
People like Warren Buffet have written about this and predicted it. (One reason Buffet doesn’t believe in people inheriting money is because you can wind up too much wealth concentrated in the hands of realtively few families.)
Beginning with President Reagan’s tax cuts in 1980, U.S. tax policy has been re-distributing money upward. Meanwhile, the average worker’s wages, adjusted for inflaiotn, have been flat. Even if you add in the value of healthcare benefits and other benefits to wages, the median worker has seen less than a 1 percent rise per year. For those in the top 1%, the top 5%, income has been spiraling–far faster than raxes for that group.
Meanwhile, the middle class has been disappearing while the extremes of poverty and wealth and the bottom and top of the ladder have been climbing. This does not make for a stable society.
See http://www.healthbeatblog.org for two posts where economist Uwe Reinhardt talks about how the U.S. is no longer a democracy, but an aristocracy.
Obama is deliberately raising taxes on the wealthiest 1.8% of the population –if he didn’t do it to raise money for healthcare, he would raise their taxes to make other vital investments in the economy. As Peter says, for most the past 25 years we have invested in consmption (of perishable “stuff” that we often don’t need) and ceating financial paper of various kinds (derivatives etc.) None of this added to the health or what ADam Smith would describe as “the wealth of teh nation.”
We need to be investing in “the public good” (i.e. the wealth of the nation) in the form of safe bridges, good public schools, public health, public transportation, the enviroment, finding alterantive sources of energy, global warming.
This will mean raisign taxes. Basically Obama is beginning to undo the damage done by “Reagonomics”whihc has created a very lopsided economy.
This is one of the best discussions I’ve seen on the THCB. Great comments on all sides. I’ve read all the comments completely through and hope all do the same.
“Despite what you have heard, almost all suits I have heard about are groundless efforts to troll for money.”
Christopher George is correct about this, although I think over-utilization is generated much more from medical income trolling (and as Nate says – over coding) than from lawyer money trolling. Lawyers largely look at themselves as negotiators who know that the cost of in court suits make negotiated settlement more cost (and profit) effective. Law suits are launched so that the plaintiff’s lawyer can activate the discovery process to see if any facts unphold the suit. As with doctors, for every lawyer trained you create a profit center that needs to be fed. We are way over-utilized with lawyers who run around chasing the same legitimate cases and creating the illegitimate ones. Reduce the number of lawyers and I’d think we’d all get a better legal system. Except for the public defender sector that needs more (skilled) lawyers.
jd, there is never a good time to add more taxes, at least in the eyes of the tax payer. But the same people who hate to pay taxes sure do like receiving someone elses taxes (stimulus). The county I live in is about as an anti-tax conservative as you can get, but they just drool when the opportunity comes up to get federal or state grants. If it’s not wise to add taxes in 2009 – 2010 it’s because we’ve not been willing to invest as we went in the growth of this economy. Not investing in infa-structure, not investing in environmental controls, not investing in carbon abatement, not investing in healhcare, not investing in energy solutions, not investing in financial regulation. Well it finally caught up with us because the debt train finally ran out of fuel. What would be the effect if we tax the upper 1.9% more? One less car in the 4 car garage, one less vacation home, a 5000 square foot mansion instead of an 8000, one less European vacation, one less Gucci bag in the closet. In the meantime we can start paying for years of investment neglect in the problems we now have to face. Facing them now means our (your, I don’t have kids) will not have to face them.
Maggie,
Thanks for the detailed and thoughtful reply. I agree with a great deal of what you say and was already aware of some of it from my varied foraging in the health policy landscape.
But I do feel like you missed the core of my points. The first is that we need to keep the long term goal in focus not only for ourselves but for the American people. The fact that other nations do more with less is not part of the public consciousness, nor is Wennberg, etc. I think that to sell the American public on a tax hike without making it explicit at all times that this MUST be temporary until reforms happen to lower the cost of care to a more respectable share of GDP is a big, big mistake tactically.
When you were saying that the cost of care will continue to rise no matter what dream reforms happen, I couldn’t tell if you meant in nominal terms, inflation-adjusted terms, or as a percent of GDP. Of course, we won’t reduce it in nominal terms. I would also say that there will be very few years in which we reduce costs in real terms when you look at total dollars (we are getting older and there are more of us each year, after all). However, I strongly disagree if you meant that we cannot expect national health expenditures to go down as a percent of GDP. And it’s really this that matters when we talk about increasing taxes. Because that discussion is about tax rates, not total value of the collected tax in dollars. As health care share of GDP goes down, tax rates needed for health care (other things being equal) go down as well.
Back to strategy, my point was that we should not compromise our position away before we even begin to negotiate with providers, pharma, insurers, etc. I would insist that costs can and must go down in real terms as a starting point. This should be a general principle of the administration, and any and all media means should be used to promote that. In any specific negotiation you will have to compromise, but if you let the providers/suppliers of care win the argument from the very beginning on whether we need to reduce the share of GDP..well, you’re not going to get very far with reforms.
And I say that as one of those guys who argues we should deficit spend in the short term. You’d think, as a deficit spender, I would be more cavalier about costs. You even suggested that initiating universal health care with deficit spending is irresponsible, seemingly equating that approach with a lack of forthrightness about cost. But as you can see, I am not avoiding the issue of cost. Short-term deficit spending is coupled with an attempt to build the groundwork for deep reform. When you see that I unite these two things, maybe you can acknowledge that there is a method to my madness.
Obama should absolutely be clear that spending an additional $70 billion a year to achieve (close to) universal health care while only bringing in $35 billion in new taxes is unsustainable, especially when cost trends are running 2 percentage points higher than GDP growth. He should be clear about that in the speech that he gives when signing the bill that forces us to deficit spend to fund UHC. He should be clear every week in his radio address, and use the bully pulpit literally for years to talk about the need for reform, so that when it comes time in 2011, 2013 and 2014 to really tuck into the meat of reform, the public accepts that we can and should get health care down to about 12-13% of GDP, and providers/suppliers even accept to a larger degree the international comparisons and Wennbergian insights all of us wonky bloggers do. That would be a field ripe for reform.
I fully accept your view that we will not actually be able to get to a 12% share of GDP for health care anytime soon…but we will get closer to it than if we start with the stance that you seem to be advocating.
At this moment in history, the political groundwork has been laid to achieve universal health care. It can be done this year. The political groundwork has not been laid to achieve deep reforms to the delivery of and payment for health care. Only 5% of the population (I’m being generous!) gets it.
Moreover, at this point in history the economic conditions are the worst possible for adding new taxes to pay for every added dollar of benefits. Even if your approach may have been wise in, say, 1996 or 2004, it is not wise in 2009 and 2010. I do agree that a tax on the top 5% of earners is a good approach, and that’s what I was thinking of when I said that taxes should be few and well-targeted in my earlier comment.
Closing thought: Like you, I am not an economist but have done fairly wide reading in the field. And I would implore you, Bill L and others to take Paul Krugman to heart a little more, an