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A Special Edition of Health Wonk Review

American Health Care Reform:
Observations From Health Care Analysts
Edited by Brian Klepper

Here we are, with the first edition of Health Wonk Review (HWR) in a new decade. It is a pregnant moment, as reconciliation begins between the House and Senate health care reform bills, when the best health wonks are weighing in on how we arrived here and what it will probably mean to have a few key successes and some very significant failures at a time when most everyone in the country who doesn’t have power yearns for real solutions. Joe Paduda summed it up very nicely on Managed Care Matters, “…after all this, we’re going to end up with a bill that won’t work – it will not appreciably reduce health care costs today, tomorrow, ever.” Alas, the result is much more a reflection of what America has become than what health care is about.

And so, I have exercised my editor’s prerogative, and veered away from HWR’s standard format to focus this edition on the best, recent health writing I’m aware of, rather than just summarize the writings of submitters. Please indulge me as I have passed over some strong pieces in favor of a smaller, more selective number of consistently very thoughtful, insightful and meaty writers.

I’m hoping this selection will satisfy readers interested in deeply provocative discussions of the most pressing issues at hand, particularly around reform. There’s a lot to chew on here, and I’d urge each of you to curl up on a cold afternoon and read through every one of these columns.

A Face Full of All That Other Mud

Let’s begin with J. D. Kleinke’s thoughtful meditation on yesterday’s Health Care Blog, Is It 2013 (or 2014) Yet?, on the horrific compromises made in the name, not of problem solving, but of ideology. Referring to the watered down Senate bill, he notes that it

“has been so stripped of government management options and control that it is best characterized as the exact opposite of a government takeover. Rather, the bill now on trajectory to become The Plan is – paradoxically – a privatization of the public health problem of the uninsured, a corporatization rather than nationalization of health care’s rotting safety net.”

And this: “…people…have been using the health care reform stage to act out their bigger grievances, philosophical angst, and political frustrations…Something as literally critical to all of our lives as our health care system – regardless of which way an eventual bill goes (including the remote but real possibility of it just going away) – deserves better than a face full of all that other mud.”

Reform Based On The Principles of Competition

On The Health Affairs Blog (12/22/09), Alain Enthoven rebuts Atul Gawande’s New Yorker article that compares the health care bills’ pilot programs to those of the Agricultural Extension service that “sparked the agricultural revolution that so benefited the US economy in the first half of the 20th century. “

Both Enthoven and Gawande are icons, and justifiably so for their insights into how health care does and should work. Gawande’s June, 2009 piece, The Cost Conundrum, on health care profiteering in McAllen, Tx, was a sensation in DC, and became required reading for White House staffers looking forward to reforms that could impact the kinds of circumstances Gawande recounted so eloquently.

But in this piece, many of us thought his thesis was a stretch, and Dr. Enthoven lays out the case. One of his conclusions: that we need a commitment to structural reforms, rather than just more experimentation.

“If America wants 1,000 pilot projects to blossom and grow into significant improvements in health care delivery, it must reform its system based on the principles of competition and wide, responsible, informed, individual consumer choice of health plans. Experience shows that people will join if they get to keep the savings.”

The Nearly Trillion-Dollar Lake Mead of Money

In There Be Dragons, The Fiscal Risk of Premium Subsidies in Health Reform (12/14/09), Jeff Goldsmith, with unfailing attention to detail, takes us through a variety of health care principles to explain why 1) the Congressional Budget Office’s (CBO) attempts to model the impacts of subsidies on the private health coverage market are, at best, shots in the dark, and 2) its probably not wise to bet on our political system’s ability to say “no.”

He concludes, “All in all, the fiscal risks from an open-ended new entitlement to premium subsidies are likely to be significantly larger than CBO estimates. Instead of neat economic models with ten variables, we need something closer to chaos theory to explain how the nearly trillion-dollar Lake Mead of money will behave when we completely re-engineer its flow pattern…Behavioral economists would add that anxious health insurance and provider executives would behave differently, perhaps, than entirely rational actors, and act aggressively to preserve their franchises and operating margins. I wouldn’t bet the farm on moderation of present cost and rate trends. All the big risks are on the upside.”

The Medical Cost Tidal Wave

In a simple but straightforward column (12/22/09) on the health plan’s blog, Bruce Bullen, the Interim CEO at Harvard Pilgrim, explains how the structural provisions of the Senate’s final health reform bill will worsen current health care cost trends, which have been more than 4 times general inflation over the last decade.

“… expansion of eligibility and other reforms are largely delayed to 2014, but changes having the effect of increasing health insurance premiums will take effect prior to 2014. Before seeing any material benefits of reform, some will see their Medicare payroll tax rate increase, many fully insured subscribers will, beginning in 2011, see the effects of the health insurance premium tax, and everyone in the commercial market will see the cost-shifting effects of Medicare payment reductions and the tax on drug and medical device manufacturers. Medicare Advantage plan enrollees will also see sharp increases in premiums. Since there is no significant cost containment in the bill, these increases will occur on top of normal medical trend. And because the universal requirement to purchase coverage is weak, adverse selection will further increase costs starting in 2014.”

He concludes, “We can focus on insurance reform all we want, but the medical cost tidal wave continues.”

The Unintended Consequences of Hopelessly Complex and Poorly Thought-Out Laws and Regulations

At the Disease Management Care Blog (12/27/09), Jaan Siderov explicates the seemingly straightforward provision of the Senate bill that would require commercial insurers to “rebate” any excess profitability, if they have a medical loss ratio lower than 80%-85%. The rub lies in the definitions of medical costs and administrative costs, and what is contained in each. Under the Senate’s Management Amendment, the National Association of Insurance Commissioners (NAIC) would be charged with defining each term. But so far,

“the NAIC has not done well [clarifying] if the costs of wellness, prevention, care management, or patient-centered medical home support programs are costs that are assigned to the medical costs that make up the medical loss ratio or if they are administrative costs.”

It remains to be seen whether a compromise plan will correct this kind of confusion.

The Evidence In a typically pithy and to-the-point read (12/31/09), Roy Poses crystallizes what many of us have thought about the national squashing of the US Preventive Services Task Force guidelines for breast cancer screening. Here’s a quote:

“…after 30 years and 8 trials, we still have no convincing evidence that mammographic screening for 40-49 year old women saves lives (which is different from reducing deaths due to breast cancer), or reduces morbidity, improves function, or improves quality of life in the screened population.  In the absence of such evidence, how can anyone fault the USPSTF for recommending (not that women not be screened), but that decisions to screen individual people should be based on considered discussion between them and their physicians?”

Dr. Poses calls for better clinical and comparative effectiveness research, another area given short shrift in the current reform proposals.

Who’s Kidding Who

In a policy environment in which half-truths and whoppers are the coin of the realm, nobody pours on the cold water of reality better than Bob Laszewski at Health Policy and Marketplace Review A former Liberty Mutual health insurance executive, Bob’s deep health finance experience has been refined by his long standing in the DC community as a health policy advisor. Throughout the reform process, Bob has written often, and his insights are always to the point. Take, for example, this simple observation from a 12/19/09 post, Coal in Your Christmas Stocking?

“…the Democrats [will] face four health insurance renewal cycles and two elections between 2010 and 2014 when the benefits of the health care bill would finally become effective. That’s four years of new taxes and continuing big health insurance rate increases before voters see any big benefits from what looks like will be a very unpopular bill.”

As I understand it, Bob’s blog is the most widely-read source for DC health wonk types. There’s a good reason for that.

Later

In Health Reform – When Will The Next Shoe Drop (12/22/09) at Managed Care Matters, Joe Paduda lays out an enticing scenario for straightforward, important changes that can’t happen when 60 votes are required, but are eminently doable if the goal is 51. He writes:

“I’d look for a requirement that the Feds negotiate drug prices for Medicare and lower payments for Medicare Advantage plans to start…And it won’t stop there. There is a large and growing concern about the cost of entitlement programs and Part D is particularly problematic. By attacking drug costs and thereby reducing Medicare’s future liability, liberal Democrats will make it very tough for their opponents to use the ‘big spender’ attack angle in November.”

Two On What To Expect

Jane Sarasohn-Kahn, one of our most gifted, industrious and grounded health care prognosticators, has a broad-reaching summary of the certain trends – employee cost-sharing, employer ‘nudging’ of employees toward wellness, health information technology becoming more mainstream among physicians, participatory medicine/online health tools – that will remain in play in “What to Expect When You’re Expecting…Health Reform on Health Populi. She says,

“With the US still in recession, the issue of managing costs will be Job #1 in health care for institutional and business stakeholders, from health plans and employers to pharma and medical device companies.”

Matthew Holt, a Founder of Health Wonk Review as well as The Health Care Blog, and one of the most incisive, if irreverent, health care commentators writing today, suggests five major trends. He wonders how the changes brought about in policy will take shape in the market, and how changes in the political winds will affect the ability to continue reforms. He thinks that HHS’ Office of the National Coordinator for Health IT’s transformation initiatives will have a profound impact on everyone in health care – “’It’s clear that we are not going to simply see mass adoption of the mainstream EMR vendors’ products.” – and that patients are beginning to expect more access to information, especially their own. And that quality of care, especially at the end of life, is finally becoming a concrete, mainstream issue.

The Verdict

Each of these voices describes different facets of a complex process. These are some of the most experienced and prominent health care authorities working today, and they don’t hesitate to conceal their disappointment at what is passing for reform.

It is not enough to dismiss this Congressional health care reform process as just another example of sausage-making. As David Kibbe, Alain Enthoven, Bob Laszewski and I discussed here, America’s health care industry has placed the national economic security in deep peril. An important goal, a commitment to structural changes that can significantly reduce the one-third or more of health care cost that is waste, now appears to have been squandered by a system that welcomes influence over policy in exchange for special interest financial contributions.

It is unlikely that meaningful health care change will be forthcoming after this process. The forces of special interest influences are vigilant.

Nor will the problems that were on the table now disappear just because they’ve been ignored. They’ll fester and worsen until business rises up in revolt to force the issue, or necessity overwhelms the capacity of lobbying to drive public policy. Unfortunately, the process of getting to that inevitable terrible moment won’t be pretty or pleasant.

Brian Klepper is a health care analyst and commentator based in Atlantic Beach, FL.

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C. HolesterolMGJamesRoseMERLYN CLARKE Recent comment authors
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C. Holesterol
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It is unlikely that meaningful health care change will be forthcoming after this process. The forces of special interest influences are vigilant.

Peter
Guest
Peter

Maggie, and anyone else still following this thread. I found a good article by Paul Krugman, but what is more interesting are some of the respones which throw a more realistic light on the so-called, “left’s assumed victory in healthcare”.
http://krugman.blogs.nytimes.com/2009/12/26/numerical-notes-on-health-care-reform/
Given the FPL anyone think $8000 per year (and climbing) for health insurance is acceptable, even with a subsidy?

maggiemahar
Guest

MG, Rose, Peter, Margait MG– Yes, you’re right– tax rates for the wealthiest have fallen over the past 25 years. ( Our tax system has become more and more regressive. And here, I’ll looking at all taxes–not just income taxes.) Meanwhile, incomes at the top have risen sharply. To address the defict, we will need to raise taxes at the top. This will help the economy: having too much wealth consolidated at the top leads to too much money chasing too few things, and the rest is bubbles–stock market bubbles, real estate bubbles. The eocnomy was much more stable in… Read more »

Peter
Guest
Peter

“so we can buy reasonably priced long term care,” Rose, define please. How much will you have to spend in premiums, co-pays, and deductibles, and how much will the subsidy provide? Will your husband actually be able to start that consultant job with this bill? I’m assuming he has that tax free company insurance now which I don’t/won’t even get access to. Would you be willing to pay more taxes so that healthcare, even with this bill, won’t bankrupt the country or are you just happy with the subsidies? “This bill is what it is because, unlike Republicans, Democrats are… Read more »

MG
Guest
MG

James: Stop peddling your ‘Club for Growth’ garbage here. It is largely not the forum for it. – Your Forbes list conveniently was taken in early spring last year before the huge rebound globally in stock prices. Given that the top 10%m in the US own about 80-85% of financial securities/stocks/bonds in this country, they have seen a huge boon to their “estimated value” of wealth again. Most in the US have most of their wealth tied up in their houses and housing prices have not rebounded and only begun to stabilize. – The ‘death tax’ affected around a whopping… Read more »

James
Guest
James

“And folks in the top 1% can afford the hike: From 2002 to 2006 alone, households at the very top of the economic ladder watched their incomes rise by roughly 42 percent.” Maggie: You keep referencing the 2002-2006 numbers during a period of high economic growth. However, what does it look like from the high point of 2008 to where we are today? I daresay that these upper-income taxpayers are not quite as flush as they were before, especially if their assets involved stocks. A number of them may even have been part of the wave of insolvencies. Your fat… Read more »

Margalit Gur-Arie
Guest
Margalit Gur-Arie

Well Peter, this brings me back to my original question. This bill is indeed somewhat hollow, but today, right now, are we better off passing the bill or not? This bill is what it is because, unlike Republicans, Democrats are not a monolithic group blindly following the party dictum. The original proposal had to be devolved to lowest acceptable denominator and while corruption and special interests played a nasty role, there were ideological differences as well. So for now this is as good as it gets. If we “kill the bill”, the political implications are going to be enormous and… Read more »

Rose
Guest
Rose

Peter, You need to look at eligibility criteria in only a handful of states to see that SCHIP and Medicaid only cover the poorest of the poor, with big holes left behind. For example, in my state (NC), SCHIP covers kids whose families fall below 200% of the federal poverty level (until they’re 6 years old) and then 100% FPL once they turn 6. Here, the FPL is about 18K for a family. Medicaid here is almost unattainable for even poor adults unless you’re pregnant (you get it for 6 months), you are a parent of a Medicaid eligible child… Read more »

MERLYN CLARKE
Guest
MERLYN CLARKE

While I didn’t read every single response, my skim of respondents uncovered not a single policy “maker,” i.e. member of Congress or the administration, to say nothing of the principles in the health care legislative process. For all the complaints about members of Congress not having read “the bill,” probably more serious is that neither have they read the expert literature on the subject. Some issues–and I would include healthcare reform–are far too important and demanding to leave to Congress. Unfortunately, we seem to have no way around the body, and thus we have the disaster that is about to… Read more »

Peter
Guest
Peter

“That means that in 9 years, your premiums double.” My premiums will still double in 9 years with this bill IF I CARRIED INSURANCE. But you see I opted out of the corrupt game a number of years ago so my pemiums are MY premiums, which I bank. “That leaves children suffering from pre-existing conditions without insurance.” SCHIP? “That leaves the very poor without insurance.” Medicaid? “that gives Medicare time to begin to lead the way in cutting waste in the system” What, and reduce incomes for the financial supporters of both parties. You’ve already admitted that’s why we got… Read more »

maggiemahar
Guest

Peter– First, I’m not a Democrat–I consider myself a “progressive” or a “liberal” to the left of most in the current Democratic party. And I have voted for Republicans– Lowell Weicker, a politician of great intergrity– and, more recently, Bloomberg. As for Obama, there wasn’t much he could do. Our legislative body has been corrupted by campaign contributions for decades. This made it impossible to pass health care reform in 1994. This time around, the House passed a respectable if far from perfect bill. The public option would have forced private insurers to offer more affordable, better insurance–or lose customers… Read more »

Peter
Guest
Peter

Maggie, at whose expense (other than the top 1%) will insurance companies exact a painful toll to pay for dropping prepexisting and other hurtful policies? I won’t qualify for Medicaid, Medicare or a subsidy, and I won’t get any less costly treatment from providers. My group will be the profit center that nothing in this bill protects from all the gougers that lobbied to have this legislation protect their incomes, while the governenment enforces my participation in assuring health stocks stay robust. Unlike you I don’t view this as a must win to protect Democrats and Obama. Their actions during… Read more »

Patsy Westall
Guest
Patsy Westall

Thanks Brian for a complex (it would have to be) but enlightening take on what is to come. It actually makes me want to go back to retirement! But that would not make this go away so might as well hang in.

Brian Klepper
Guest

I regret that I missed and so failed to include Maggie Mahar’s excellent piece on the potential achievements of the Senate bill. I reviewed it this morning after Joe Paduda pointed it out. I learned, among other things, about the amendment introduced by Joe Lieberman, Jay Rockefeller and Sheldon Whitehouse that “would strengthen the [Independent Medicare] Commission and let it [immediately] use financial carrots and sticks to insist that hospitals begin providing better value for Medicare dollars.” This is a vitally important move that would turn an impotent, for-show only provision into one that would profoundly benefit the system and… Read more »

maggiemahar
Guest

Joe & Margait Joe–Thanks for the mention. And let me mention a few other bloggers: Merrill Goozner, Bob Wacther, Gary Schwtizer, Ezra Klein, Paul Starr and Jon Cohn. And that’s just a short list. I also like the folks Brian covered. Btw, for those interested in that sort of thing, Ezra Klein and Jon Cohn are the most-read bloggers among policy wonks and policy-makers in D.C. On the legislation,let me clarify my position: I saw the glass as “half empty/half full” when there was still hope that more of the House bill would be included in the final legislation. I’m… Read more »