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The President’s Budget

President Obama announcing the timetable for the phased withdrawal of U.S. forces from Iraq at Camp Lejeune, North Carolina on Feb. 27thEarlier 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. 

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  1. 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.

  2. 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.

  3. 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.”

  4. 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

  5. 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.

  6. 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.
    )

  7. “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

  8. 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….

  9. I suppose if we are going to spend money that isn’t there, we may as well spend insane amounts of it….

  10. 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!

  11. 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!

  12. 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.

  13. 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.

  14. 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.

  15. 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

  16. 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.

  17. 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.

  18. 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.

  19. 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)

  20. 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.

  21. 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.

  22. 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.

  23. 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, and Tim Geithner and Larry Summers to heart a little less when it comes to what is fiscally responsible.

  24. Christopher George,
    I wholeheartedly agree with your take on tort reform, and it cannot be said often enough, here and elsewhere: a US physician has nothing to loose when ordering a noninvasive test, but can risk a lot by not ordering it since it may result in a failure to diagnose lawsuit for the most arbitrary reasons. Ergo, he/she will order the tests (at least most will do so, with varying degrees of superfluousness of the test).
    I think most of your info & take on the European doctors is wrong. I was one myself (I am now in the US for family reasons), and I can tell you (of course all this varies A LOT from country to country):
    “European doctors genterally enter medical school instead of college.” – yeah, but for instance, med. school is 6 ys in Germany instead of 4 ys here, and school is longer for those who want to go to college/university.
    “Their post graduate training is shorter and less rigorous than in the US, for most physicians.” Germany: much longer, less rigorous; France: About equal, maybe more rigorous
    “Once in practice, which may begin up to a decade earlier in Europe, the hours are roughly half that of the typical US doctor ( even less in France ).” I don’t know where you get this info. I have only anecdotal evidence from France where I guest trained for about 10 mos, but you provide no evidence at all. Age at entry into private practice is probably similar in France and later in Germany. Tell me if I am mistaken.

  25. Christopher George–
    First, I’m glad you enjoy the blog (HealthBeat)
    It’s not that I know different doctors in Europe (though I do know a few doctors in Europe, and quite a few patients), but I have looked at the numbers on healthcare inflation in various countires, interviewed
    economists at the London School of Economics on these issues as well as other economists in Europe.
    In additon, physician satisfaction surveys in Europe and Canada show that physicians there are more satisfied than the vast majority of physicians working fee-for-service (and, as you say, working very, very hard) here.
    As you know,many Europeans (including physicians) view us as workaholics. To them, more time with family, much longer vacations, shorter working hours are much more important than accumulating wealth. Just different cultural values. But it explains why doctors in Europe would prefer to work fewer hours and earn less.
    And, for their patients, this works out well. Outcomes are better and overall health of the population is better (even when you just compare Caucasian Americans to Caucasions in other countries.)
    On wealth in Manhattan: I actually know doctors in Manhattan who make over $1 million and send their kids to private schools. But you are right–they are not “top of the heap.”
    Bernie Madoff (and many of the people who invested with him) were top of the heap.
    Btw–I sent my kids to public schools. Sending your children to private shcols is Manhattan is not, by and large, worth the money.
    I taught English literature at Yale for many years; the kids from NYC’s bset public high schools (Stuyvesant and Bronx Science) were, on average better than student from the best private schools in the city.
    Public school kids from NY had learned how to think for themslves, question and analyze. They also immediately understood irony (not something you can teach.)
    Most private school kids hrd learned to regurgitate what the teacher wanted to hear. Many variations within these generalizations, of course. But I purposefully moved my kids from Fairfield Country, Ct. to Manhattan when they were 5 and 7 so that they could go to NYC public schools.
    This turned out very well.

  26. I have no problem with effectiveness studies, so long as it is not part of the current legal/political system which has produced so many horror stories of its own. Hormone replacement therapy, mammography, cardiac stents, cholesterol management, prostate cancer have had a dizzying array of contradictory results in comparative studies with unresolvable impractical recommendations. To give this constantly evolving, inchoate data the force of law is asking for trouble.
    Many procedures believed to be safe and effective now started out as discredited cowboy behavior. Cardiac surgery started that way. Others, such as VP shunting and lobotomy were thought to be miraculous initially, but are now discredited. Medicine has sorted this thing out before without the unhelpful interference of government force. If you prematurely stop this or mandate that you may never find out what actually works.
    Vilification of doctors while politically necessary to neutralize physician influence and to impliment the extraordinary committee for state medical security approach, I think it will not be helpful in the long term.
    Unless the legal and regulatory enviornment changes, our future worry will not be know it all doctors, but know anything doctors or even do you know where I can find a doctor.
    Imagine how many lives would have been lost if the “know it all doctors” that attempted to drastically reduce the availability of CT scanners had had the force of law behind them. It would dwarf the damage done by individual quacks.
    Most of the additional testing done in the US will be discovered to be the result of litigation risk. This must be addressed. “Wealthy” doctors bother you. Why doesn’t John Edward bother you… eye popping wealth vilifying doctors for predominately genetic largely unavoidable Cerebral Palsy. (Why doesn’t he have to give it back, anyway?)
    Our system is unsustainable, but unless the liability piece is addressed, I think failure is to be expected. The concept of “enterprise liability” which you describe is the holy grail for the Trial Bar, and will prove much more expensive than any society can afford.
    You must know different doctors in Europe than I know.
    The limits to growth work which predicted widespread increases in commodity prices has been widely discredited by subsequent events.
    All of these reforms leave the real problems unaddressed.

  27. inchoate–
    Thanks; I’ve e-mailed JOHN at THCB. Hopefully he’ll fix it.
    What anyone trying to read it needs to know is that my long response addressed to j.d. and Matthew is
    repeated (after I respond to someone else) in the middle of my reply.
    When you come to J.d. and Matthew again–just skip over that section . ..

  28. tcoyote
    In the U.S. the wealthiest 1 percent contros 34 percnet of the wealth; the wealthiest 20 percent controls 80 percent of the wealth.
    This is why–even if we didn’t need money for healthcare–we need to redistribute wealth by taxing at the top.
    Compare tax rates and distribution of income and wealth now to the 1950s and 1960s when we had a much more stable economy.
    The consolidation of wealth at the top led to reckless speculation over the past 25 years–too much money chasing too few things, creating stock market bubbles and the real estate bubble. By 2008 both stocks and real esate were wildly overvalued. Thus, the metldown.
    (And I don’t think the stock market has bottomed. Nor has unemployment peaked. As a wise Wall Street veteran said to me recently: “I’ve never been so uncertain. I’ve been wrong before–but I’ve never been this uncertain.” This is scarey.)
    I realize that many conservatives won’t agree with the moral and economic need to redistribute income. But Obama has made it clear this is where he is headed.
    This is a direct challenge to Reagonomics and everything that followed for the next 29 years. Have you read “The Limits of Growth”–a book published in about 1972? It predicted what has happened over the past couple of decades: huge investment in consumption and defense; too little investment in human resrouces–health, education etc. And widening financial gaps between classes.
    I don’t think some conservatives quite get it yet. Obama won. This is going to be a revolution. just as surely as Ronald Reagan began a revolution. And the folks who voted Obama into office on the margin (Latinos, African-Americans and Asians) now know that their votes do count. They’ll be out in greater force next time.
    Going back to healthcare: yes, we spend far more per capita on healthcare than any other developed country in the world. Everone know this.
    The reason? We are the only country that has chosen to turn healthcare into a Largely Unregulated for-profit enterprise. The drive for profits means that every part of our healthcare system is hoooked on growth. But as a
    society, we can’t afford to have the “business of healthcare” to grow. If we are going to have a sustainale system we want spending on healthcare to rise only as quickly as GDP or the average workers’ wages.
    Instead, the cost of care in our money-driven, profit-driven syste spirals, year after year, both in the private sector (private insuers’ spending) and in the public sector (Medicare spending). There have been stretches when private insuerrs did a better job of containing costs, stretches when Medicare did a better job. But neither has succeeded.
    In the U.S. healthcare system, everyone is selling something and selling hard. The greed–plus excess capacity– creates much of the waste.
    But this cannot be undone with a single stroke of the pen. (Actually, I suppose it could be if we simply delcared that as of tomorrow, all doctors are civil servants, on salary, with top slaries capped at $200,000, all hospitals are now nationalized, there will be price caps on all drugs and devices, and U.S. citizens are not allowed to purchase healthcare or healthcare products from anyone trying to sell outside of this system.)
    But we know this not going to happen.
    It will take a great many changes to squeeze the waste out of the system. See my reponse to Matthew–
    and Bob Laszewski’s post: CBO to HealthCare REformers: Naive Reformers Need Not Apply.
    Peter:
    You write–
    “Maybe Obama’s long term goal is to make healthcare spending an
    in-your-face tax that will bring people around to accepting necessary cost cuts and system control.”
    Yes, Obama is trying to make the trade-offs as transparent as possible. And he is saying to Congress–I found 2/3 of the money– now you make some difficult suggestions to find the other third– or suggest how we contain costs.
    Over time, this may make the American public more willing to accept it when Medicare begins to use comparative effectivness information and says “If you want a PSA test, the co-pay will be $80–because as the National Cancer Institute points out, there is no evidence that the test and early treatment based on the test changes the course of the disease.”
    In general, think they’ll begin hiking co-pays for less effective treatments . .
    But keep in mind, Obama is only raising taxes on the wealthiest 1.8%. Eventually, he may raise taxes on the wealthiest 10 percent–maybe 15 percent. But a part of the goal here is to redistribute income while offering needed services to those on the bottom 80% of the economic ladder.
    And Peter, thanks for reocgnizing that I’m still stressing that the system is bloated. I sometimes wonder if some of the people who respond actually read the whole post.
    Devon– You ask “How is in-your-face tax different than in-your-face insurance premiums?”
    The public has no control over rising insurance premiums. All you can do is drop your insurance.
    Obama is giving you a choice: if you don’t like tax hikes, write to Congress, say you don’t want any more tax increases for healthcare, you’d rather see them contain costs. Or begin ratitoning care for people over 80— or whatever it is you’d rather see happen.
    Dr. Rick– You write “We need more money upfront in the short term to get to the profound systemic changes in US health care that we need longer term to achieve much needed sustainability which is central to US economic sustainability (Orszag)
    Exactly– thanks.
    Eric– By definition, healthcare insurance requires that everyone get into the boat together.
    No one can opt out because if the person who opts out gets into a horrible accident (i.e. the smug 22-year-old who didn’t think he needed healthcare insurance, or to wear a seat belt, or to pay into a pool that would help “old people” –like his mother)
    well, that 22-year-old knows–and we know–that we are not going to leave him, paralyzed from the waist down, on the side of the road, to be eaten by insects while he dies of thirst.
    So, no free riders.
    And yes, the young will pay in just as they have paid into Social Secruity–the same percentage regardless of age-and reap the benefits while they are older. This is called generational sharing. And no, social secruity is not facing a financial crisis.
    Finally, people could pay for extras, out of pocket, if they weren’t happy with what the insurance covered.
    But the insurance that we all subsidize–for everyone–would have to be a comprehensive, rich package.
    CTIPA Doc–
    Yes, I agree fee-for-service helps drive overtratment.
    And testing has gotten way out of hand.
    On malpractice and defensive medicine: The Commonwealth Fund report that I link to has a very intersting idea:
    It suggests, first, paying for quality (not volume) by “bundling payments to hospital and docotors who treated the patient, from 30 days before entering the hostpial to 30 days after discharge” and paying them more for better outcomes through that entire episode of care. (Divvying up the payment is complicated, but not impossible. People like Dartmouth’s Dr. Elliot Fisher have ideas on this.)
    Meanwhile, if a patient acccuses anyone of malpractice, the hospital would be sued –not individual physicians–(with the hospital’s attorney’s handling the case) AND the system would ensure that Doctors and Hopsitals who aGreed to work together in these collaborate groups would get much lower malpractice insurance rates.
    Individual doctors would not have to be worried about going through litigation. At the same time, the hospital would have a real financial incentive to weed out truly incompetent or negligent doctors, something they don’t do now–particuarly if the doctor is a “rainmaker” (something I wrote about in my book.)
    Christopher George–
    Let me respond to your most recent comment first. You have our facts wrong bout healhtcare costs in Europe.
    They are not spiraling as fast as they are here.
    Moreover–in this is intersting–for quite a few years, Sweden has been able to keep its healhtcare spendign flat as a percentage of GDP EVEN THOUHGH ITS POPULATION IS AGING FASTER THAN OURS. And when I was at a world-wide healthcare conference in Berlin last year, there was general agreement that Sweden’s was among the best–if not he best healthcare system in the OECD.
    Do you know how many younger women have had unncessary mastectomies because a mammogram showed a small leison that would later go away?
    I suggest you read the book “Worried Sick” about overtreatment in this country by Nortin Hadler.
    The only reason that we have not used comparative effectiveness research to create guidelines for healthcare in this country is because many hosptitals, drug-maker device-makers and doctors have been making a stack of money on the most expensive products and services. They don’t want head-to-head comparisons measuring which are most effective for particular patients because that would create winners and losers.
    And who wants to be a loser with so much money at stake?
    Every other developed country in the world does this sort of testing, and by and large, doctors follow guidelines. Unfortunately, in the U.S. we have allowed a “Lone Ranger” culture to develop with know-it-all doctors saying “no one is going to tell me waht to do.
    I know what I know–and that’s it.”
    These arrogant doctors kill and maim many people with unnecessary testing and treatments. See work down by Welch, Woloshin and Schwartz at Dartmouth.

  29. Wouldn’t it make more sense to have universal healthcare funded by a universal tax on everyone. I mean I am rapidly leaving the tax bracket which has been chosen to “invest” in this, so it doesn’t matter to me financially. This just seems like a politically untenable position. It reminds me of the last administration’s desire to have the lowest tax bracket do all the fighting and dying in the Middle East. What happened to shared burdens?

  30. As I may be aware, there are omissions in your discussion of European doctors.
    First, remember in spite of the rationing, European healthcare costs are rising essentially as fast as ours are. The cost containment problem is not solved. Even with dispondent, alienated medical staffs (or because of?), European healthcare inflation remains a problem. In Europe, you can’t get what you want medically, and guess what?, it is still very expensive.
    European doctors genterally enter medical school instead of college. Their post graduate training is shorter and less rigorous than in the US, for most physicians. Once in practice, which may begin up to a decade earlier in Europe, the hours are roughly half that of the typical US doctor ( even less in France ). This is a huge opportunity cost. It also means that one is typically in your late thirties or early forties before earning the income of an indifferent first year job in law. It also means a much shorter professional career, compared with other jobs.
    Put another way, it would take twice as many doctors here to do the work we currently do, working the hours of a typical French doctor.
    Many of the multi-specialty employed physician clinics which appear to you to be the panecea for our healthcare muddle are somewhat different than you imagine. Remember you talk to the administrative type academics. They haven’t seen a full patient load in twenty years, I bet. They aren’t writing papers about medicine because they excelled at the pratice of medicine. They are writing papers to get out of the practice of medicine.
    The Cleveland Clinic is excellent. It pays its doctors very well. The doctors are treated with respect, and they have professional autonomy and time for research. The Cleveland Clinic doctors have extremely good support staffs that free them for the layer upon layer and layer of carrots and sticks haphazardly designed to get them to do what clueless non practicing doctors on a far off committee somewhere thinks best.
    The avergage doctor doesn’t have the resourses to comply with dozens of ad hoc inititives designed to “improve” his behavior. The real objective is to make it so onerous to do anything, that less is done in the end. Not rationing by age as in Europe, not rationing by money, as in the sixties (supposedly), but rationing by hassle.
    Other clinics, sometimes associated with Universities you have heard from of, have poor pay, revolving door medical staff, endless paperwork, poor passive aggressive staff, and little physician autonomy. Believe me when I tell you no one wants to work in these clinics. DC is filled with clinics like this. They are staffed by physician spouses of ambitious would-be political movers and shakers. The doctor you see when you go there can’t wait for 6 pm to come so he can go home. I know a woman who works for one of these; she has twins, and her meager salary barely covers the childcare expenses after taxes. Soon, she will be a stay at home mom.
    Medical school debt in Europe is non-existant. Most do not recieve an undergraduate degree, so again, no undergraduate debt as well.
    In most European countries, the typical doctor, over the length of his professional career, will never be dragged into court. The legal system does not have the Jackpot aspect that has made trial lawyers the richest demographic in the US and the world. If they do go to court, they rarely lose. Malpractice expense is trivial. This is the most important reason that we are unlikely to reign in utilization. The Obama admistration has proposed a Trial Lawyer for head of HHA. Is there a European country that has done that?
    The Trial Bar is the most powerful lobby in America, they will not back down until the entire country is on the brink of insolvency. Even then, I imagine they will craft narrow immunity for each tiny specialty as each is threatened with litigation to extinction. First will be OB. ER, Orthopedics, General Surgery and Neurosurgery will be next. Despite what you have heard, almost all suits I have heard about are groundless efforts to troll for money. Lots of malpractice and mistakes are made in hospitals. These generally do not, from my observations, account for the lawsuits, however. You can’t have evidence based medicine without an evidence based legal system. Look at the breast implant case. The judge and the twelve jurors were the only people in the courtroom who believed that implants cause lupus. They were probably the least educated and dumbest people in the courtroom. Would it suprise any bright high school student that if ten million women get implants there will be many, even thousands of people that will develop lupus? Honestly, we had the same problem in our QA department. The nurse manager thought it was worrisome that re-intubations (a bad thing) doubled even though the number of surgeries quadrupled!
    (I enjoy your blog, but I am continually astonished to see scant coverage of litigation reform. It is literally the MOST important obstacle to cost control or evidence based medicine. It may be in deference to the role lawyers have in bankrolling health reform, but still… it is the 2000 lbs elephant in the room. )
    Also, remember, over half of the medical school class are women. As medicine becomes a more and more onerous and unappealing career choice, there will be serious manpower issues. Don’t be surprised that when a large fraction of these women decide that their husbands can support the family while they train for a more rewarding career. This is an option most men do not have. Remember also, that an extra dermatologist in NYC does not replace a missing OB in Philly.
    While are taxes are lower than Europe, nothing prevents a citizen from voluntarily paying more taxes. Why have not wealthy Democrats from paying extra taxes, if they think it would help the general welfare? As numerous Democratic nominees have shown, Democrats do not even want to pay the supposedly low taxes that they currently owe.
    Remember that our political process, in spite of the supposed global warming emergency responds by not building nuclear energy and not putting nuclear waste in the state of a powerful senate leader, not putting windmills in the view of a powerful senator, but instead starving millions of far off Africans and Asians ineffieciently converting corn not into food, but into a volume of gasoline, only somewhat smaller or larger than the amount needed to grow the corn in the first place. Imagine the kind of medical decisions that will come out of our political system.
    Lastly Maggie, I was amused when you described doctors as wealthy. If you are familiar with New York City from your days at Fortune, you must know that doctors are at the very bottom of the professional heap in NYC. Good luck trying to find even one doctor’s child in a private school in Manhatten. They just can’t afford it.
    The system is bad. What is proposed will make it worse.

  31. oh dear.
    could a moderator/editor please help Maggie out? It appears she’s gotten herself into some kind of rhetorical do loop, which may prevent her post from getting the attention it merits.

  32. j.d., MATTHEW, PETER, DANIEL–
    First j.d.–
    As you say, I have written extensively about the need to eliminate waste from the healthcare system–in fact I wrote an entire book on the subject: Money-Driven Medicine.
    I haven’t changed my views on how much waste there is in the system–or how much money can be saved.
    But, as you say, it will take time–many years– to eliminate that waste. And in order to eliminate it, we have to spend money on things like IT, comparative effectiveness reserach, restructring the way we deliver care, financial incentives to persude doctors and hosptials to change the way they do things; fnancial incentives to persuade doctors to go into different specialities and practice in the parts of the country where they are needed.. .
    In addition covering the uninsured will be very expensive. –See below where I explain how expensive and why.
    Moreover, even though one out of three healthcare dollars is wasted, we’re not going to reduce spending by 30%. Jack Wennberg (father of the Dartmouth reserach) doesn’t think we’re going to reduce it by one-third.
    Over the past 50 years, we have created certain expectations in our culture that will not be undone in ten years–or fifteen. For instance many Americans believe that when someone is dying “everything possible” should be done. In most European cultures, that is not the case. This is an expensive difference, and insofar as some Americans claim that they believe “everything should be done” for religous reasons, it will not be easily changed.
    And this is just one deeply embedded cultural difference.
    Secondly, the tax hikes are on households earning over $250,0000 the wealthiest 1.8 percent of the population. We need to raise taxes in this tax bracket because if we want to stabilize the economy we need to redistribute income. See response to Peter below.
    MATTHEW and j.d.
    Matthew, with all due deference (and I mean that– you know more about many aspects of healthcare than I do.
    You have been writing about it longer, and I have learned a huge amount from THCB).
    But you’re not a healthcare economist. And yet you speak with such certainy and authority “There is NO reason to put more money in the health care system” — as if I simply don’t know what I’m talking about– and you do.
    I’m not an economist in the sense that I don’t have a Ph.D. But I’ve spent more than 20 years of my life writing about economics, finance and money. When I was at Barron’s I wrote about public sector finance as well as private sector; Medicare funding, the fraud and waste in our health care system, taxes, the deficit; what causes economic collapse.
    Warren Buffett recommended my book about the stock market bubble in his annual report. I say that, not as a boast, but to point out that he liked it because it predicted what is happneing now-(and what he saw coming.)
    I undersatnd the current economic meltdown pretty well because I understand what caused it. I know this stuff as well or better than I know healthcare.
    And this is the context Obama is operating in.
    Let me begin by asking you a question: why do you think Obama proposes raising taxes–specificallly to fund healthcare–if we don’t need to put more money into the system? Do he and Peter Orszag not know what they are doing?
    I’m assuming you have read everything Orszag wrote about healthcare as CBO director. I’d say he understands the problems as well as you or I.
    You say the amount they say they need to raise is small compared to the nation’s total healhtcare bill. This totally misses the financial point. It’s the inflation that is killing us. Our national healthcare bill is rising 6% to 9% a year.
    We cannot fund universeal coverage out of the deficit because if we do so, we will be setting up a system that is unsustainable. We cannot afford to have the cost of healthcare go up by even 5 percent a year, unless GDP is growing up 5 percent. And it isn’t. And it won’t be.
    So we need to put a funding system in place that will generate the money needed to a) cover anyone year after year, and b) make the structural reforms that, over the long term, will eliminate some of the waste and inefficiency, ceating a more productive system.
    Just How Much Can We Save With Structural Reforms?
    Anyone interested in how long it will take, and where we can hope for savings from within t”he system should see these December 2008 CBO rerpots: “Key Issues in Analyzing Major Health Insurance Proposals” and “Budget Options, Volume I: Health Care.”
    . (Bot Laszewski raves about these reports in a post titled: CBO to HealthCare Reformers: Naive Reformers Need NOt Apply” See his discussion and links to the 400 pages of reports here: http://healthpolicyandmarket.blogspot.com/2008/12/cbo-to-health-care-reformers-naive.html
    I’ve read the 400 pages, plus a very good Jan 2008 CBO report. And I’ve written about the three reports. Briefly, let me just quote Laszewski since I know that you do respect him:
    “The work contains an inventory of about all of the health care reform options being discussed complete with a thorough cost/benefit analysis detailing their impact on federal spending. . .
    “There are no one, two, or even ten silver bullets. There are literally dozens of steps that will likely have to be taken in order to achieve the savings necessary to make our system more cost and quality effective.
    “The politically easy stuff won’t get it done. Democrats and Republicans have said that things like prevention, wellness, and wider use of health information technology can free-up the savings we need to make our system affordable even while we dramatically expand the number of citizens covered. But the CBO confirms that these less politically problematic “cost containment lite” proposals won’t be enough: “…approaches—such as the wider adoption of health information technology or greater use of preventive medical care—could improve people’s health but would probably generate either modest reductions in the overall costs of health care or increases in such spending within a 10-year budgetary window.”
    Laszewski continues: “The Baucus Health Plan makes a big deal about saving money from “waste, fraud, and abuse.” But such efforts are estimated by the CBO to save a relatively inconsequential $500 million over ten years. Using pay-for-performance systems, the health care fix de jour, yields only single digit gains while reducing Medicare physician payments in line with productivity gains would save a whopping $201 billion over ten years.”
    But as Bob points out,squeezing this much out of physician payments would be “politically very difficult.”
    It’s one thing to raise primary physican fees while loweriing some specialists fees in a “budget netural way” as the Medcare Payment Advisory Commission has suggested.That will happen–though it will be a tough fight.
    What Bob and CBO is talking about is completely changing the delvivery system. As Jack Wennberg explains in the book he is writing now, to improve productivity (value over dollars) we need to get doctors and hospitals to begin working together in very large collaborative groups– large multi-specialty centers, or at the every least, virtual networks.
    Yet the vast majority of doctors now work in very small practices. And patients are used to that (particually on the East Coast.)
    We need what Jack calls Organized Medicine. But rounding the doctors up, getting them into networks and getting then to actually collaborate with each other–and with hospitals– will require Financial Incentives long before we see any Savings. It will require More Money.
    Why do they have to be in large groups? 1) we can’t measure productivity in small groups 2) it’s the only way they can afford the healthcare IT and efficient back office they need; 3) it’s the only way primary care docs can get the support they need to provide chronic disease menagement, etc.
    For a second point of view on how much heaalthcare reform will cost–and how much we can save, see
    the Comomnwealth Fund report that came out about ten days ago.. http://www.commonwealthfund.org/Content/Publications/Fund-Reports/2009/Feb/The-Path-to-a-High-Performance-US-Health-System.aspx
    It’s long– for a snapshot, I wrote about it here: http://www.healthbeatblog.com/2009/02/the-commonwealth-funds-plan-for-universal-coverage-which-tier-would-you-be-on-part-1.html
    The report is very honest about the costs. And Cathy Schoen, the lead author, knows this subject well.
    She assumes all of the redistribution of dollars that you and I and J.D. agree on: using comparative effectiveness research to eliminate ineffective, unncessary and overpriced services and products;
    redistributing dollars on the physicians’ income ladder–spending more on preventive care, chronic disease management.
    She even assumes that the public-sector plan (Medicare for all) will require referrals for the 100 most popular procedures–cutting back on waste, but adding to administrative costs
    The Commonwealth Fund’s Schoen also assumes that the public sector plan will pay many health care providers signifcantly less.
    She also assumes lowering fees for physicians and hospitals in the areas that the Dartmouth reserach shows are high-spending regions. (This is fair; but politically, I don’t see how it would ever fly. Congressmen and doctors in these regions are very powerful.)
    She also winds up with a two-tier system, which I don’t find acceptable.
    But the point is, even with all of the savings (its a 90-page report– I can’t summarize it here, but if you are interested, see my post) . . .she makes it clear that
    WE WILL STILL NEED TO RAISE TAXES , and EVEN THEN , HEALTHCARE INFLATION WILL OUTPACE both GDP growth and the growth in workers’ wages by a sizable amount.
    ( I personally believe that we can rein in healthcare inflation to about 2 percent a year, but only by really cutting back on cutting edge medicine in a way that patients and doctors will find very uncomfortable–in other words, we can’t do it all at once.
    Why Will Health Care Reform Cost So Much?
    Why will healthcare cost more, even after redistributing dollars?
    1) covering the uninsured adds to the cost of the system. Some people like to pretend that if the uninsured had preventive care and chronic disease management they wouldn’t wind up in the hospital, and the system would save money.
    The truth, as Paul Ginsburg pointed out in a recent report from the CHSC is that, over the past decade, we have saved a great deal of money as the number of uninsured Americans grew.
    The reason: the uninsured die sooner than the rest of us. As a result, over the course of a lifetime, they cost us less. They don’t live long enough to get
    Alzheimer’s or many other chronic diseases that require years of care–and hundreds of millions of health care dollars.
    (The same is true of smokers and the obese. If we actually manage to persuade Americans to stop smoking and somehow solve the problem of obesity, our health care bill goes up )
    None of this means that we don’t want to cover the uninsured, or help smokers. It just means that a higher-quality universal health care system will be more expensive than what we have now.
    Finally, most of the uninsured are poor, and the poor are sicker than the rest of us. ACCESS TO HEALTHCARE WILL NOT CHANGE THAT IN A
    MAJOR WAY. OF all of the factors leading to poor health among low-income people “access to medical care” (or lack of access) is a relatively small factor–15% if memory serves.
    What are the big factors? Environment (which explains the high rates of respiratory disease in the Bronx); stress and “behaviors” that follow from stress: self-medicating with alcohol, drugs, and some compulsive eating. (Though reserach shows that obesilty among the poor is closely tied to environment: fresh fish and strawberries are not available in ghetto grocery stores or are hugely expensive; school lunches in ghetto schools are junk food; no gymns in ghetto schools (or gym teachers) no playgrouds where kids can play during recess; no safe parks in their neighborhoods.)
    Finally, mental illness is a huge problem among the poor. As I said being poor leads to anxiety,depressoin and other forms of mental illness as well as addiction.
    Dr. Steve Schroeder wrote eloquently about this in the Shattuck lecture a couple of years ago. (If we really wanted to help the poor and improve health, we would pour money into public health and launch a war on poverty.).
    So even after we insure the uninsured, they are still gong to be much more likely to suffer from a wide variety of chronic illness (diabetes, lung disease) that will continue to be very expensive to treat.
    Research shows that preventive care and chronic disease management is not all that it’s cracked up to be, especially when working with poor populations.
    And that’s just the beginning.
    2) To have higher quality care, we need healthcare IT.
    But as Peter Orszag has written, it’s not clear that it will save money. At best it might begin to save money after ten years. (And he understands the numbers better than I do.) Geisinger’s expesience — at an extremely efficent healthcare system– suggest that we need to wait 10 years for small savings.
    .
    If we adopt less complicated, less expensive IT– ss some very good posts on THCB have suggested–we might get savings earlier. But still, intial investimetns in healthcare IT will be very, very expensive–particuarly becuase our healthcare system is so fragtmented.
    And we cannot simply declare, by fiat, that all healthcare provideres must join a network tomorrow–or force them to co-operate with each other.
    As both Jack Wennbeg and Don Berwick note, WE HAVE TO CHANGE THE WAY WE EDUCATE MED STUDENTS. Right now we are educating them to compete in the onld copetitive system, while trying to set up a new collaborative system that would be much more productive.
    3)– Universal coverage will create more demand for healthcare, but it will not create more supply.
    People love to talk about “medical homes” providing preventive care and chronic disease management that will save money.
    Who exactly is going to be “at home” staffing these homes?
    Medical students do not want to go into primary care. We also have a huge shortage of nurses. Our hosptials are understaffed.
    Raising fees by 10% or 15% is not going to attract more doctors to primary care. It’s too little money, and it’s not just about money; the working conditions in primary care are horrible,and the lifestyle unacceptable for many young doctors who want to go home on time and see their children.
    To attract doctors to primary care, we will have to forgive med school loans for many students who go into primary care. (very expensive because med school is so expensive.)
    We will need to get them to join large multi-specialty systems where they will have more support–and won’t have to worry about overhead and going home on time. (Otherwise, like many primary care docs today, they will switch apecialitues after about five years.)
    What will be needed to get people to go into primary care and stay there? Loan-forgiveness programs, Financial Incentives to join large groups and higher pay. In other words: MORE MONEY THAN WE ARE SPENDING NOW>
    We also need to pay nursing school professors more. Right now, there are qualified people who would like to go to nursing school, but there are not enough spots because the teachers are paid so little; too few teachers, the schools can’t take the students. . More Money needed.
    4) Then there is the unbiased comparative effectiveness reserach that we need in oder to reduce waste. More money. (Though if we give the research financial teeth we definitely can save much more than it costs. But again, this would not happen for some years. And as the REpublicans in Congress have already made clear, the resistance will be enormous. As Bob L. points out the things that would really save money will be Politically Very Diffiicult.
    I think I know what you are thinking: how is it that
    European countries can cover everyone while spending less per person?
    First, even though these countries spend less per person, healthcare in counries like Switzerland, Denmark, France and Germany is not cheap. In order to cover everyone, upper-middle class and upper-class people pay much higher taxes than we pay here. In Switzerland, you are expected to pay 10 percent of your gross income on healthcare before you get any help from the government
    .
    . But upper-middle lcass Americans will resist paying more to subsidize others. Aa I often say, France has a very good healthcare system become the French believe that nothing is too good for another Frenchman. Sadly, we do not feel that way about each other.
    Finally you suggest that Zeke Emanuel is “railing against incremental reform. ” I know Zeke. (Until he joined the White House he was part of my working group on Medicare reform.) He does not “rail against incrementalism.” He understands, as Dr. Atul Gawande does, that healthcare reform will have to happen in stages. (See Gawande’s recent New Yorker article. This is not “incrementalism” in the sense of nibbling around the edges.
    Zeke Emanuel agrees that Medicare reform can pave the way for universal healthcare reform, that it is complicated and cannot be done in a single stroke. We cannot afford universal coverage without major structural reforms.
    This is why he is now working for Peter ORszag–they are on the same page. (See everything Orszag wrote about
    heatlhcare when CBO director.)
    Most importantly, see the
    most recent,January 2008 CBO report, written by the people who worked for Orszag, explaining why many/most of the structural reforms will not pay off for many, many years.
    We also have to deal with the system we have– the point Dr. Atul Gawande makes in his excelletn recent New Yorker article. (See http://www.newyorker.com/reporting/2009/01/26/090126fa_fact_gawande?currentPage=all
    In the U.S., physicians are accustomed to being paid well–often very, very well.
    In European countries, a phsycians might be paid twice what a public school teacher makes.
    In the U.S., we are never going to roll salaries physician back to those levels. As Gawnade points out, when other countries moved to unviversal coverage, they had to deal with the system they had at that point in time. We do too. You cannot wipe out history.
    In addition, Americans have expectations–about their right to a private room in a hopsital— even if they are not terribly sick and are having elective surgery– and about all sorts of hotel-like amenities, plus quick response to their needs, in term of elective surgery. They do not want to wait three months for elective hip replacement surgery. We can cut back on this, but we cannot completely change expectations.
    Americans believe that more care is better care, that the most expensive care is the best care, andn that every American has a right to “doing everything possible” (even if ultimately futile) if they or a relative is dying).
    Realistically, we are not going to be able to completely change these expectations, however unreasonable they may be. At last not for a very, very long time.This will take much public education.
    As a result, healthcare in the U.S. will remain much more expenisve than in Euroope. And covering everyone–while improving the quality of care–will make U.S. healthcare more expensive than it is now.
    Finally, I applaud the Commonwealth Fund and Cathy Schoen for their courage. Too many liberals like to say: “we’ll worry about how to pay for it later. ”
    Like girls with math-block they refuse to look at the numbers. And then they wonder why the conservatives beat them.
    If you can’t face up to understanding economics, you shouldn’t be in politics.
    Many liberals– Jacob Hacker, Dean Baker, and others– have said “oh, we’ll just pay for it with deficit spending.”
    Obama and his budget director ( Orszag_ undersand that this would be a disaster for the economy. We cannot create a health care system that requires deficit spending year, after yaer, after year.
    Peter–
    Yes, what Obama is proposing is real change.
    For 29 years, we have been redistributing income and wealth upward. As a result 1 percent of the population now owns 34% of aggregate wealth, 20 percent owns 85 percent of wealth.
    This concentration of wealth at the top led to speclation and our current problems: too much money sloshing around at the top led to reckless speculation in financial investments and real estate. The result: the stock market bubble, followed by a real estate bubble.
    By early 2008, both stocks and real estate and mortgage-backed investments were greatly overpriced.
    The melt-down was inevitable.
    Meanwhile, during those 29 years we put off the investments you mention–as well as investments in public education and public health– while pouring money into immediate consumption and war.
    Obama has some very good economic advisers (particiularly Peter Orszag) so I think/hope he will get this right. . .
    But I do worry about the American public losing patience.Obama needs eight years.
    Twenty-nine years of Reaganomics ending with eight disastrous years of Bush digging a very deep hole . . .This damage cannot be undone in four years. The recession/depression will, I fear, last more than four years.
    jd and Matthew–
    First j.d.– the tax hikes are on households earning over $250,0000 t,he wealthiest 1.8 percent of the population. We need to raise taxes in this tax bracket– see my response to Peter above. Below, I respond to both you and Matthew.
    Matthew–With all due deference (and I mean that– you know more about many aspects of healthcare than I do.
    You have been writing about it longer, and I have learned a huge amount from THCB).
    But you’re not a healthcare economist.
    Neither am I in the sense that I don’t have a Ph.D. But I’ve spent more than 20 years of my life writing about economics, finance and money: I know this stuff as wll or better than I know healthcare.
    At Barron’s, for about twelve years, I wrote many stories about money & healthcare: managed care, insuers, drugmakers, device-makers–the economics of healthcare,
    And so I understand why universal coverage will cost more. I also understand the politics: why some liberal reformers want to deny that. At Barron’s, I also covered Washington.
    First see the Comomnwealth Fund report that came out about ten days ago.. http://www.commonwealthfund.org/Content/Publications/Fund-Reports/2009/Feb/The-Path-to-a-High-Performance-US-Health-System.aspx
    It’s long– for a snapshot, I wrote about it here: http://www.healthbeatblog.com/2009/02/the-commonwealth-funds-plan-for-universal-coverage-which-tier-would-you-be-on-part-1.html
    The report is very honest about the costs. And Cathy Schoen, the lead author, knows this subject well.
    She assumes all of the redistribution of dollars that you and I and J.D. agree on: using comparative effectiveness research to eliminate ineffective, unncessary and overpriced services and products;
    redistributing dollars on the physicians’ income ladder–spending more on preventive care, chronic disease management.
    She even assumes that the public-sector plan (Medicare for all) will require referrals for the 100 most popular procedures.
    And she assumes that the public sector plan will pay many health care providers signifcantly less. She assumes lowering fees for physicians and hospitals in the areas that the Dartmouth reserach shows are high-spending regions. (This is fair; but politically, I don’t see how it would ever fly. Congressmen and doctors in these regions are too powerful.)
    And with all of the savings (its a 90-page report– I can’t summarize it here, but if you are interested, see my post) . . .she makes it clear that we still will need to raise taxes, and even then, healthcare inflation will outpace both GDP growth and the growth in workers’ wages by a sizable amount. ( I believe that we can rein in healthcare inflation to about 2 percent a year, but only by reall cutting back on cutting edge medicine in a way that will patients and doctors will find very uncomfortable–in other words, we can’t do it all at aonce. )
    Why will healthcare cost more, even after redistributing dollars?
    1) covering the uninsured adds to the cost of the system. Some people like to pretend that if the uninsured had preventive care and chronic disease management they wouldn’t wind up in the hospital, and the system would save money.
    The truth, as Paul Ginsburg pointed out in a recent report from the CHSC is that, over the past decade, we have saved a great deal of money as the number of uninsured Americans grew.
    The reason: the uninsured die sooner than the rest of us. As a result, over the course of a lifetime, they cost us less. They don’t live long enough to get
    Alzheimer’s or many other chronic diseases that require years of care–and hundreds of millions of health care dollars.
    (The same is true of smokers and the obese. If we actually manage to persuade Americans to stop smoking and somehow solve the problem of obesity, our health care bill goes up )
    None of this means that we don’t want to cover the uninsured, or help smokers. It just means that a higher-quality universal health care system will be more expensive than what we have now.
    And that’s just the beginning.
    2) To have higher quality care, we need healthcare IT.
    But it’s not clear that it will save money. At best it might begin to save money after ten years. Former CBO director Peter Orszag is skeptical. (And he understands the numbers better than I do.) Geisinger
    s expesience — at an extremely efficent healthcare system– suggest that we need to wait 10 years for small savings.
    If we adopt less complicated, less expensive IT– ss some very good posts on THCB have suggested–we might get savings earlier. But still, intial investimetns in healthcare IT will be very, very expensive–particuarly becuase our healthcare system is so fragtmented.
    3)– Universal coverage will create more demand for healthcare, but it will not create more supply.
    People love to talk about “medical homes” providing preventive care and chronic disease management that will save money.
    Who exactly is going to be “at home” staffing these homes?
    Medical students do not want to go into primary care. We also have a huge shortage of nurses.
    Raising fees by 10% or 15% is not going to attract more doctors to primary care. It’s too little money, and it’s not just about money; the working conditions in primary care are horrible,and the lifestyle unacceptable for many young doctors who want to go home on time and see their children.
    To attract doctors to primary care, we will have to forgive med school loans for many students who go into primary care. (very expensive because med school is so expensive.)
    And we will need to get them to join large multi-specialty systems where they will have more support–and won’t have to worry about overhead and going home on time. (Otherwise, like many primary care docs today, they will switch apecialites after about five years.)
    This will be hard, particuarly on the East Coast. Again, financial incentives will be needed: More Money.
    We also need to pay professors in nursing schools more. Right now, there are qualified people who would like to go to nursing school, but there are not enough spots because the teachers are paid so little; too few teachers, the schools can’t take the students. . More Money needed.
    4) Then there is the unbiased comparative effectiveness reserach that we need in oder to reduce waste. More money. (Though if we give the research financial teeth we definitely can save much more than it costs. But again, this would not happen for some years.
    I think I know what you are thinking: how is it that
    European countries can cover everyone while spending less per person?
    First, even though these countries spend less per person, healthcare in counries like Switzerland, Denmark, France and Germany is not cheap. In order to cover everyone, upper-middle class and upper-class people pay much higher taxes than we pay here. In Switzerland, you are expected to pay 10 percent of your gross income on healthcare before you get any help from the government
    .
    Again, covering everyone is expensive. But upper-middle lcass Americans will resist paying more to subsidize others. Aa I often say, France has a very good healthcare system become the French believe that nothing is too good for another Frenchman. Sadly, we do not feel that way about each other.
    Finally you suggest that Zeke Emanuel is “railing against incremental reform. ” I know Zeke. (Until he joined the White House he was part of my working group on Medicare reform. He does not “rail against incrementalism.” H understands, as Dr. Atul Gawande does, that healthcare reform will have to happen in stages. (See Gawande’s recent New Yorker article.
    Zeke Emanuel agrees that Medicare reform can pave the way for universal healthcare reform, that it is complicated and cannot be done in a single stroke. We cannot afford universal coverage without major structural reforms.
    This is why he is now working for Peter ORszag–they are on the same page. (See everything Orszag wrote about
    heatlhcare when CBO director.)
    Most importantly, see the
    most recent,January 2008 CBO report, written by the people who worked for Orszag, explaining why many/most of the structural reforms will not pay off for many, many years.
    We also have to deal with the system we have– the point Dr. Atul Gawande makes in his excelletn recent New Yorker article. (See http://www.newyorker.com/reporting/2009/01/26/090126fa_fact_gawande?currentPage=all
    In the U.S., physicians are accustomed to being paid well–often very, very well.
    In European countries, a phsycians might be paid twice what a public school teacher makes.
    In the U.S., we are never going to roll salaries physician back to those levels. As Gawnade points out, when other countries moved to unviversal coverage, they had to deal with the system they had at that point in time. We do too. You cannot wipe out history.
    In addition, Americans have expectations–about their right to a private room in a hopsital— even if they are not terribly sick and are having elective surgery– and about all sorts of hotel-like amenities, plus quick response to their needs, in term of elective surgery. They do not want to wait three months for elective hip replacement surgery.(Though they would be better off if they did. They might try physical therapy) We can cut back on this, but we cannot completely change expectations.
    Americans believe that more care is better care, that the most expensive care is the best care, andn that as they age Americans have a right to replace every body part (knees, hip, organs). Other countries ration care by age. We don’t. And are not likely to anytime in the next 15 years or so . . .
    Realistically, we are not going to be able to completely change these expectations, however unreasonable they may be. At last not for a very, very long time.This will take much public education.
    As a result, healthcare in the U.S. will remain more expensive than in Euroope. And covering everyone–while improving the quality of care–will make U.S. healthcare more expensive than it is now. In addition the fact that, unlike Europe, we tolerate such extremes of poverty will make caring for our population more expensive.
    Finally, I applaud the Commonwealth Fund and Cathy Schoen for their courage. Too many liberals like to say: “we’ll worry about how to pay for it later. ”
    Like girls with math-block they refuse to look at the numbers. And then they wonder why the conservatives beat them.
    If you can’t face up to understanding economics, you shouldn’t be in politics.
    Many liberals– Jacob Hacker, Dean Baker, and others– have said “oh, we’ll just pay for it with deficit spending.”
    Obama and his budget director Orszag_ understand that this would be a disaster for the economy. The great danger is that foreigners will stop buying our Treasures. At that point, we have to raise interst rates. Then we definitely fall into a 1930s economy–very high unemployment, much lower standard of living. Obama is right; the deficit matters. .
    DANIEL
    This administration is very different from the Clinton administratoin.
    First, while I have a real fondness for Bill Clinton, the fact is that the man lacked impulse control.
    This was fatal. It undermined his presidency and made him an easy target for conservatives.
    Secondly, coming from Arkansas, he did not understand the ways of Washington .Trying to plan healthcare reform behind closed doors helped torpedo it.
    Obama also is inexperienced in the ways of Washington. but Rahm Emanuel is not. Nor is longtime CBO director Peter Orszag who has now become Obama’s unofficial chief economic adviser and healthcare adviser. (Dr. Zeke Emanuel, Rahm’s brother, who has written one of the best books about healthcare around is Orszag’s heatlhcare adviser.) Then there’s Hillary,
    who understands more about the ways of Washington–and the long knives–than any of us would want to.
    Obama wisely has brought experienced people in to advise him. Bill brought in old friends from Ark.and elsewehre.
    (Other people in Obama’s adminsitrationwho have been around for a long time–Jared Berstein, from EPI, now Joe Biden’s chief economic adviser. Then there’s new blood: the new HHS Secretary who I hope will appoint an FDA commissioner and a head of CMS who will shake things up.)
    In addition, Greenspan is no longer in the picture.
    The Maestro did more damage to the economy than anyone since Reagan.. Greenspan had way too much power.
    I doubt the Fed will be leading the way in economic reform in this administration. I didn’t see the head of the Federal Reserve sitting next to Michelle when Obama gave his speech on fiscal stimulus . . (Greenspan did sit next to Hillary at Clinton’s first major speech on the economy.)
    Clinton also made promises he couldn’t keep. He insisted that we wouldnt’ have to raise taxes in order to provide universal healthcare. This just wasnt’ true.
    Former Medicare director Bruce Vladeck told me that, from that moment, he knew healthcare reform was doomed. (And Vladeck understood the amount of waste in Medicare better than anyone. But he knew that, even if we eliminated much of the waste in our healthcare system,universal coverage would be expensive.
    Obama is being very candid from the outset: universal coverage and the reforms needed to make it sustainable will cost more– a lot more. Taxes will have to go up. And even then, he is making only a down-payment on reform–he made it clear to Congress that he has found a way to raise 2/3 (maybe half) of the money that will be needed. Congress will have to find the rest– more tax hikes.
    Obama is telling us that we need more government, more regulation, and that we will all have to sacrifice.
    That is not what Clinton told the nation. Clinton was trying to appeal to upper-middle class suburban Democrats, with promises of less government.
    Obama is doing things that will help people on the lower 40% to 80% of the income ladder, and making it pretty clear that the wealthiset 20% (which includes many of those suburbanites who think of themsleves as “upper-middle class” ) will have to pay for it.
    The key line that we will remember from the Obama administration: “The time has come to put childish things away.”
    Bill was not so stern. Unfortunately, he himself had a propensity for childish things. A very good person in many ways (particularly in his almost complete lack of racism), and very intelligent in many ways, but neverthless someone who never grew up.
    I’ll come back to respond to other comments later
    In the meantime, I hope you keep the converation going.
    thanks–mm

  33. “2. Maggie– are you against letting people opt out of the system for any reason? weatlh, religion, do not believe in Western medicine, etc.?”
    Eric, should Quakers be allowed to opt out of defense(war) taxes?

  34. “How is in-your-face tax different than in-your-face insurance premiums?”
    We don’t get to vote for insurance, hospital, or other provider CEOs. The uninsured are voting in a way though, but eventually we will end up paying for them.

  35. I coninue to believe that healthcare is the biggest crisis and I also continue to believe that the solutions being offered are not bold enough. The money allocated is not a sign of boldness.
    With a system that costs 2.2 trillion dollars and we all know is most expensive in the world….I am not sure why we need to pour so much additional money.
    Should we not find money within they system for pay for it? Do we really need so much money for EHR?
    I did few weeks back an article ” an all out solution to healthcare crisis” which I believe was a strawman for total healthcare transformation.
    I also did an article on EHR/EMR design today at http://blogs.biproinc.com/healthcare which I believe should be and could be done within a billion dollars if done properly.
    rgds
    ravi
    http://www.biproinc.com

  36. President Obama’s budget proposal has one of the largest tax cuts ever for 95% of Americans. Any increases in taxes on the top two income brackets will not take effect until 2011. It will reduce itemized deductions for those making more than $250,000 a year, raise the top rate on capital gains and dividends to 20%, from 15%, and closes the captial-gains loophole so that hedge fund and other private-equity managers have their profits taxed as ordinary income instead of capital gains.
    What the Center for Budget and Policy Priorities has shown clearly is despite major tax cuts from 2001 to 2006, the economy’s performance during the previous administration registered the weakest jobs and income growth in the post-war period, overall monthy job growth was the worst of any cycle since 1945, and household income growth was negative for the first time since 1967. The tax cuts were followed by pronounced decreases in the fraction of GDP devoted to business investment.
    As far as small businesses are concerned, a majority of those affected by the proposed tax increase do not make enough to qualify for the tax increase. Only 1.9% of small businesses file in the top two federal income tax brackets, which leaves 98.1% unaffected by the rate change. And only 650,000 filers with small business income who face one of the top two tax rates are merely passive investors whho have nothing to do with running the business. Overall, only 0.7% of households file in the top two income brackets.
    The President emphasized health care reform as the key to both restoring economic health and ensuring that every American has affordable health insurance. As he said, “let there be no doubt, health care reform cannot wait, it must not wait, and it will not wait another year.”

  37. Deron S., Taxes are not usually optional, whereas premiums are. Young people will be fleeced with this plan. Covering 48 million people is just covering them with a bureaucracy, without delivering a single dollar of care. Healthy people do not need healthcare. In fact they should run the other way.
    We can only hope that the tent will cave in before the circus starts.

  38. Christopher George,
    Future doctors of America will choose medicine if we are lucky enough to move from the excesses of a business model in medicine back to a profession.
    That means physicians on good salaries who know that “more in medicine”is not always better.
    Incrementally relocating more hospitals to underserved areas might help also (meaning closing more of the overbuilt,bloated hospitals in our major US cities)
    Also incrementally closing 1/3rd of US laws schools will not only help the “former professions” of law and medicine”. It will revitalize the entire nation.
    Dr. Rick Lippin
    Southampton,Pa

  39. When Catherine the Great introduced vaccination to Imperial Russia, she set the example by volunteering for the first dose. Does anyone really think that the Congress or the President will volunteer to be the guinea pigs for whatever hairbrained top-down rationing system our overlords at the Supreme Extraordinary Committee for Health Effectiveness designs? This will be a highly political process. Remember that the last version of this under the Clinton administration proposed, as a cost cutting maneuver, not permitting mammography for women below fifty. How many thousands of lives have been saved by not implementing that cost cutting mechanism? Cost effective will quickly become cost cutting.
    Since the Extraordinary Committee on Medical Security will have the power to set medical treatment policy, when they make this sort of error, as any political body will, patients and doctors will have no recourse Remember, currently, that if you don’t like your insurance, you can switch, or pay for it yourself..
    Clerical decisions will overnight make critical aspects of our patchwork system unsustainable overnight. Many critical specialists are in short supply and only one administrative decision away from having their practices made insolvent.
    We all seem to think that a tremendous amount of money is being wasted. We just disagree about which dollars are wasted. What is not understood, is that the system depends on a very small number of critically important surgeons and specialists. Despite the fortune spent on healthplan administrators, hospital administrators, lawyers, salesmen, middlemen of all varieties, and drugs the actual surgeon your dad or mom sees or doesn’t see in the emergency department at three in the morning is working practically for nothing, if the patient is on Medicare. Sooner or later, he will decide not to cover ER patients.
    As the overlords mandate more and more expensive feel good gym memberships disguised as preventative care and classify more psychotherapy, fertility treatment, podiatry, or pilate classes as medical care this pitance will be crowded out and winnowed down.
    Currently, your surgeon is being paid less on an hourly basis than any professional with similar training. We will be left with a system where everyone has insurance, but nobody can find a surgeon at three in the morning.
    Even now, the anesthesiologist for emergency Medicare surgery is paid $16 per fifteen minutes. You can’t get a taxi at that rate. Usually he is the lowest paid person in the operating room. More and more, you will find that there will be fewer doctors to operate in the middle of the night, and more doctors looking to pontificate about health care policy. Pontificate between about 9 and 11 am with a two hour lunch, that is.
    Obviously, our current system is wretched. That does not mean that with hard work, and a lot of money, that we can’t make it much much worse. Currently, if you are insured, you can get the best care in the world. Soon, we will all be insured but no one but the well connected will receive the kind of treatment one gets now.
    This is, in fact, the solution to our financing problem. Soon, doctors will become numbed. Healthcare system will become impossibly byzantine. Vilification in the media, long hours, constantly declining pay, lost professional autonomy, high debt, and being punching bags or ATM machines for the trial bar will leave us with many doctors with little interest in your medical problems.
    Good luck finding an English speaking MD willing to do anything for you then.
    In another post, Maggie wondered why medical school applications were decreasing so precipitously

  40. “in-your-face tax that will bring people around to accepting necessary cost cuts and system control. I’ve always said that healthcare funding should be through a dedicated and visable tax where payers could then decide what level of healthcare they want in comparison to costs/taxes.”
    How is in-your-face tax different than in-your-face insurance premiums?

  41. Only a fundamental restructuring of how we pay for health care services will change the delta on the rise in health care costs per capita. If we continue to provide large fee-for-service reimbursements that reward ever more procedures, especially for imaging, we won’t change the growth rate. Also, there needs to be fundamental changes in professional liability insurance, which currently provides vast disincentives for not ordering every very expensive MRI, CT scan, etc. in hope of “covering your ass” in case a physician or hospital is sued.
    Current estimates are that chronic illnesses (diabetes, coronary artery disease, asthma, etc.) account for roughly 2/3 of health care costs. By changing reimbursements, especially for primary care, to incentivise early and regular visits, appropriate lab tests, through the use of low-cost web-based registries and electronic health records that permit interoperable sharing of data we can begin to effect the seemingly inexorable rise in costs.

  42. 1. the young adults of the country who make up some of the ranks of the uninsured will really pay for this scheme.
    2. Maggie– are you against letting people opt out of the system for any reason? weatlh, religion, do not believe in Western medicine, etc.?
    3. are you against letting people spend their own money for health care services that are legal?
    4. are you in favor of nationalizing dental care with this plan? or is that another piece?

  43. We need more money upfront in the short term to get to the profound systemic changes in US health care that we need longer term to achieve much needed sustainability which is central to US economic sustainability (Orszag)
    Right now thousands of Americans per day are being added to the ranks of the uninsured
    This is no time for petty bickering. We are in a moral crisis in US Health care.Wake up!
    Dr. Rick Lippin
    Southampton,Pa

  44. “did we not learn that from the clinton administration?”
    Not sure of your intent daniel, but I couln’t resist this link:
    http://www.ontheissues.org/Celeb/Bill_Clinton_Budget_+_Economy.htm
    I will add that Clinton’s/Democrats love affair with financial services industry did not do us any favors, but wouldn’t it be nice to get back to balanced budget. How much easier would fixing healthcare be. Much of our problems also came from Greenspan and other “expert” advisors telling congress they were doing the right thing. It also turns out that the SEC was complicit in criminal acts either through neglect, outright incompetence, or in Madoff’s case, possible insider associations, and that Greenspan was spending our children’s future with his free money policies while Bush was fueling the economy with debt.

  45. jd and tcoyote, agree on need to CUT/control costs but my repeated call for single-pay or some form of it has been met with accusations of unrealistic expectations. Yet as everyone on the right rails against over-utilization but don’t have a clue how to get it down, they also oppose more taxes for any use. Maybe Obama’s long term goal is to make healthcare spending an
    in-your-face tax that will bring people around to accepting necessary cost cuts and system control. I’ve always said that healthcare funding should be through a dedicated and visable tax where payers could then decide what level of healthcare they want in comparison to costs/taxes. Is the Obama way the transition we’ve been talking about? I don’t know.
    “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.”
    Is Maggie more in touch with reality than you think?

  46. And the increase in discounts for drugs is for MEDICAID, not Medicare, an error I’ve seen elsewhere. Statutory changes will be required before the feds are requesting or demanding Medicare discounts.

  47. It’s actually a little worse than jd puts it. Of the 23 OECD countries, only Luxembourg and Norway spend more per capita FROM PUBLIC SOURCES on healthcare than we do. (See Health Affairs V27, #6, p. 1719).
    That’s worth restating: per capita PUBLIC SECTOR spending on healthcare is higher in the US than Britain, Canada, France, Spain, Sweden, Germany. Pick a country with “national health insurance” or a “national care system” and we outspend them from tax resources ALREADY, and still have 46 million uninsured people. That’s how bad it is.
    The problem is the terrible mileage we’re getting out of the public dollars we already spend, not the fact that we’re not spending enough. The moral legitimacy of raising taxes to pay for more public spending (regardless of who pays the taxes) is truly questionable.

  48. Maggie. I’m totally with JD. There is NO reason to put more money in the health care system AND we need to add everyone to the same social insurance pool.
    Everything else is the incrementalism that Zeke Emmanuel rails against (correctly). Instead we’re going to have to figure out how to redistribute money within the health care system, and we all know what that means. Why do we need more money?
    And by the way at the current rate of cost growth 65 billion a year is a trivial amount (it’s going up over $150 billion each year)

  49. It’s jarring to see a post in this universe (the leftish policy wonk world) that dwells on the question of how we will pay for universal health care, yet focuses on the need to increase taxes rather than the need to reduce costs.
    Maggie, I know that you’ve expounded at length on many of the core strategies for health care cost reduction, and I understand that we cannot expect to immediately reduce costs per insured by enough to cancel out the additional cost of bringing in 49 million more full-time insured. But I hope this does not become the dominant message from the left: we will pay for universal health care by raising taxes.
    Aside from the low-hanging fruit of Medicare Advantage and drug costs that seem to be targeted in the new plan, we all know that we spend at least 30% more than we need to in order to get the same health care outcomes, even without streamlining the administration of caregivers and payers, or reducing the fees per service. We also know that we can reduce costs by 50% if we engage in the most efficient medical practices (a la Dartmouth Atlas) and streamline administration (particularly as it relates to payment and coverage) and pay providers less for their services/time, without impacting quality and access in the long run. We know that, because we see that other nations do it. It’s not a hypothetical.
    So why do you move in this post from presenting this as the goal, and instead imply that we can’t reduce costs enough to pay for more coverage, and that therefore people should prepare for higher taxes? The US government already pays as much per capita in health care expenditures as other nations do for their entire system (public, private, and out-of-pocket). And other nations give everyone coverage, whereas the government in the US only covers, what, 35%?
    I’m all for realism when it comes to what we can accomplish in the next few years, but to say that we need to pay higher taxes, without saying that this is temporary and only until we are able to reform our system from being the most wasteful in the world, seems to miss the mark and not set us up well for subsequent rounds of reforms that must eventually come. Also, since we are in a deep recession, this is the one time I disagree that we need to pay-as-you-go. I mean, are we not Keynesians here? New taxes need to be few and far between right now, and focused very narrowly so that they don’t harm the economy. Better to give more people coverage in 2009 and 2010, deficit spending to do it, then try to bring the hammer down on costs after that, rather than raise taxes.

  50. Obama’s democratic way will not work any better than the republican’s ways..did we not learn that from the clinton administration? how soon we forget. when will we learn to go with a third party and actually try something new and see if anyone other than these two parties have something better in mind.

  51. President Obama is challenging some long help myths about Republican/Reaganomics; that debt, low taxes, and repeated bailouts for unregulated industries will create wealth for us all. Republicans also think that postponing necessary investments like global warming abatement, infastructure maintenance/expansion, healthcare reform, and energy conversion/conservation will NOT pass the bills on to our children. Debt comes in many forms. They think that somehow not spending on those necessary investments does not make furture generations liable for them. I just hope that 1. his methods are right (Republicans for sure aren’t right), 2. Americans will not loose patience until enough time has passed to prove out Obama’s approach, and 3. The wealthy will not loose sight (as the banks professed in Congressional hearings) that they are Americans first so are committed to helping the country, not just themselves.

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