Tag: CMS

Five Big Ideas that Shaped Health Reform

Sep 18, 2010• 6

By BILL KRAMER

During the Great Health Reform Debate of 2009-10, much of the public discussion and media analysis focused on the political battles, the legislative process and specific elements of the health reform bill. We talked a lot about daily public opinion polls, the futile search for bipartisanship, the political implications of the Massachusetts special election and the impact on the upcoming mid-term elections. We also learned more than we probably wanted to about filibuster rules, reconciliation bills and CBO scores. And we were inundated by detailed descriptions and analyses of the public option, abortion, payment reductions to Medicare Advantage plans, excise taxes on “Cadillac” health plans, and many other specific policy issues.

Future historians, however, will want to look more deeply for the policy frameworks and political forces that shaped the health reform bill. From a high level vantage point, there are Five Big Ideas that established the fundamental framework for the bill. With some exceptions, these ideas were not the subject of much public discussion or formal debate in Congress, but each of them shaped the reform bill in fundamental ways. As Ezra Klein and others have observed, much of the form of the health reform bill was established long ago.

1. Managed competition

Why didn’t we go down the path of a single-payer health system?

For many years, a single-payer system was the holy grail of the liberals, and it was the driving force behind the campaigns of many of the current reform advocates. To the disappointment and frustration of those advocates, however, the battle had already been fought and lost long before the 2009-10 debate. In 1978, Alain Enthoven published a two-part article in the New England Journal of Medicine entitled “Consumer Choice Health Plan: A National Health Insurance Proposal Based on Regulated Competition in the Private Sector.” The title said it all. It was a proposal for national health insurance (i.e., providing coverage to everyone) through a structured marketplace of private insurers and providers. As Enthoven described it in a 1993 Health Affairs article, “The History and Principles of Managed Competition,” his concept built on earlier work by Paul Ellwood, Walter McClure and Scott Fleming, as well as the experience of the Federal Employees Health Benefits Plan (FEHBP). In the 1992 Presidential campaign, both of the candidates endorsed this approach to health reform, and it was one of the foundation elements of Bill Clinton’s reform proposal in 1993. In the work of many policy experts since then, it became the de facto consensus approach.

Building a Better Mousetrap

Sep 13, 2010• 23

By JOHN C. GOODMAN, PhD

The story was front page and above the fold in The New York Times. Six teachers in Newark are leaving the traditional school system to start a public school of their own.

If the product was something other than education, this would have been no news at all. I would guess that the vast majority of businesses in this country were started by people who walked away from an employer, convinced that they could make a better product on their own. Teachers rarely have the opportunity to do the same, however. They are usually trapped in a system that does not allow innovation or experimentation and is ordinarily hostile to entrepreneurship.

What does all this have to do with health care? A lot. Doctors are just as trapped as teachers. And that is the most important defect in the health care system.

This, of course, is not the conventional view. The received wisdom in the health policy community is that doctors have too much freedom, not too little. Witness the wide variation in medical practice patterns — from city to city and region to region — all seemingly unrelated to medical outcomes. How can anyone defend that? Certainly not me. Where I part company with so many of my colleagues is that they blame the doctors for this problem — I blame the third-party payers.

Were we to look into the matter, I’m sure we would find wide variations in the practice of teaching from school to school, district to district and state to state. Yet I still maintain the teachers are essentially trapped. This may appear to be an oxymoron, but it’s really not. Both in education and in health care, the practitioners have a great deal of freedom to waste resources. But they have virtually no freedom to profit by discovering innovative ways of lowering costs and raising quality.

Consumers to Pay More Under Reform

Sep 10, 2010• 32

By MERRILL GOOZNER

The latest analysis of health care reform – out this week from bean counters at Medicare – shows reform will raise health care spending slightly over the next 10 years, not reduce it as promised by President Obama. That won’t make selling it on the stump any easier. Yet there’s a glimmer of hope in the out years of the 10-year projection that the plan will begin to “bend the cost curve.”

Here’s the real bad news for reform supporters. The private insurance market will absorb most of the increase, and most of that will fall on individuals. Employer contributions for their workers’ private insurance will actually fall $120 billion in 2019 from previous projections because of reform.

Individuals will get hit two ways. First, the actuaries at CMS are projecting a huge 9 percent increase in out-of-pocket expenses in 2018 and 2019, after the so-called “Cadillac tax” goes into effect. This is a steep excise tax on high-cost insurance plans. To avoid tax penalties, experts expect employers with such plans – which may only be high-cost because they are filled with sicker and older beneficiaries – will reduce coverage by increasing co-pays and deductibles.

A second factor driving out-of-pocket expenses higher for individuals under reform will be the insurance mandate, which will drive many people to seek coverage through the new state exchanges. CMS predicts over 30 million people will be getting insurance through the exchanges in 2019, substantially more than the 24 million projected by the Congressional Budget Office last March, when reform passed.

The Accidental Socialists

Aug 30, 2010• 62

By DAVID DRANOVE

Over the next few years, the U.S. healthcare system will be in the hands of academics from Cambridge, Massachusetts. New CMS Czar Donald Berwick was a member of the Harvard Medical School faculty. Joe Newhouse, who has been the senior adviser to Medicare for as long as I can remember, holds appointments in three different schools at Harvard. David Cutler, Dean of Harvard’s Undergraduate College, seems a good bet to lead the Independent Medicare Advisory Board. Countless of their colleagues and former students have taken key policy making positions in Washington.

I know most of these scholars. They are brilliant as a rule and are acting in the truest sense of public service. None of them are socialists in the usual sense of the word; they do not believe that the government is an efficient provider of most goods and services. I don’t think they want the government to provide health care either. They have never called for government ownership of hospitals or suggested that physicians join the civil service. But whether they realize it or not, they are the vanguard of a movement bringing socialized medicine to America.Continue reading…

Medicaid EHR Incentives – A Learning Experience

Aug 30, 2010• 12

By MARGALIT GUR-ARIE

By now almost everybody that has any remote interest in Health Care is aware of the much publicized incentives made available to health care providers for the adoption and meaningful use of certified EHR technology. The most quoted number is $44,000 to be paid by CMS to Medicare physicians. Practically every EHR vendor website is adorned with a Flash banner “educating” doctors on this cash windfall, and practically every HIT detractor is warning that the incentives are just a pittance compared to the real costs of ownership of a certified EHR. Very rarely does anybody go into the intricacies of the available incentives for Medicaid providers, which are almost 50% higher than Medicare and involve clinicians providing care to our most vulnerable citizens. However, there is much to learn from the structure of the Medicaid incentives program.

The HITECH statute sets forth a “net” average allowable cost for purchasing and implementing an EHR at $25,000 for the first year and $10,000 for subsequent years. Of this “net” allowable cost, the Secretary of HHS is authorized to pay Medicaid Eligible Providers up to 85% in stimulus incentives for a total of 6 years. It appears that the Government is about to pay you 85% of your EHR costs for the next 6 years, which is a pretty good deal. Looks, however, can be deceiving. As any early adopter of EHR knows, the total cost of ownership for an EHR over 6 years is well over the “net” allowable of $75,000 set forth in the HITECH Act, and Congress knew that too. This is why the statute instructs the Secretary of HHS to determine the actual average allowable costs of EHR:Continue reading…

If Reform Fails

Aug 19, 2010• 35

By MAGGIE MAHAR

If conservatives manage to kill health care reform legislation, what will happen next?

I really don’t want to go there.

First, I’m convinced that conservatives won’t be able to repeal the Affordable Care Act (ACA). Democrats will hold onto the Senate, and President Obama still has a veto. If necessary, he will use it to protect the bill. Meanwhile, the majority of the public either favors the legislation or want to “wait and see” how well it works. Most voters would be utterly disgusted if Congress returns to the health care debate this fall. It was ugly the first time around; virtually no one wants to watch re-runs on C-Span. In the months ahead, Americans hope that their elected representatives will do just three things: create jobs, create jobs, and create jobs.

Secondly, if conservatives somehow succeed in crippling the reform bill, we will find ourselves back in a world of laissez-faire health care where medical spending continues to spiral by 4.5% to 9% a year (just as it has for the past ten years), thanks to a combination of climbing prices and rising utilization.

Here, I’m not talking about how much insurance premiums rose: reimbursements that private insurers, Medicare and Medicaid paid out to hospitals, doctors and patients over the past ten years have been climbing by 4.5% to over 9% annually.

In some years, Medicare reimbursements were growing faster; in other years, payouts by private insurers levitated. Over the same span, Kaiser reports that premiums for a family plan rose by an average of 13.1% a year.

The Other Medicare Report

Aug 17, 2010• 22

By JOHN GOODMAN, PhD

The release of this year’s Medicare Trustees report was unprecedented. As noted in previous posts here and at my blog here and here, Medicare’s chief actuary not only refused to sign off on it, he disowned it — encouraging readers to ignore it and focus instead on an alternative report, prepared by the office of the Medicare actuaries.

So what’s the difference in the two reports? It all relates to the health reform bill that passed last spring. The formal trustees report shows health reform dramatically reducing future Medicare spending. In fact, it is so dramatic that even the White House seems reluctant to talk about it — perhaps because it’s prima facie unbelievable.

Consider this: In 2009, the trustees reported that (looking indefinitely into the future) Medicare had an unfunded liability of $89 trillion. This year, the trustees report that number has fallen by more than half to $36.6 trillion. If the numbers are to be believed, health reform has already saved us $53 trillion — a sum more than three times greater than our entire gross domestic product!

A Bizarre Report

Aug 10, 2010• 11

By JOHN GOODMAN, PhD

I have been watching the release of the Medicare Trustees reports for many years and I have never seen anything as strange as what happened last week.

Although these reports are normally carefully embargoed, Health and Human Services Secretary Kathleen Sebelius released parts of it (the parts most consistent with the administration’s spin) several days in advance. Then Sebelius, Treasury Secretary Timothy Geithner and other trustees, all with happy faces, appeared for the formal release last Thursday, where one person was notably absent: Medicare’s chief actuary, Richard Foster.

Enterprising reporters who researched all the way to the end of the report (page 281), where Foster’s sign-off signature would normally appear, found instead a statement disowning the entire report, encouraging readers to ignore it, and diverting everyone’s attention to an alternative report prepared by the office of the Medicare actuaries.

As noted the other day at my blog, I think I can safely say this has never happened before in the history of Medicare.

Can CMS Be a Venture Capitalist?

Jul 26, 2010• 2

By PAUL LEVY

Lisa Suennen, a venture capitalist, writes this post about the provision in the national health care reform act that created the Center for Medicare and Medicaid Innovation (CMI). This agency has $10 billion to “research, develop, test and expand innovative payment and service delivery models that will improve the quality and reduce the costs of care” for patients covered by CMS-related programs. Lisa notes, “What is great about CMI is that they have the authority to run their programs much more like a business would without many historical governmental constraints. ”

I don’t want to be a stick in the mud, particularly as my able friend Don Berwick takes charge of CMS, but I want to point out that previous efforts by the government to be innovative in other fields have failed because:

(1) Venture funding embodies risk-taking. Government usually does not do this because there is a political imperative never to be blamed for misspending taxpayer money. The bureaucracy, therefore, systematically eliminates ideas that are untested.Continue reading…

Op Ed: Dr. No to Run CMS

Jul 12, 2010• 32

By JOHN GOODMAN, PhD

Let’s do a thought experiment. Suppose you were a U.S. Senator and the President’s nominee to head CMS appeared at his confirmation hearing:

Wearing a Che Guevera t-shirt, sporting the image of a psychopath who apparently enjoyed killing people, or
Fondly clutching a copy of Quotations from Chairman Mao, written by a man who presided over the genocidal murder of more people than any other person in the history of the world.

When I was at Columbia University, my fellow students did these sorts of things. I soon learned they were not evil. They simply could not think clearly about moral issues involving collectivism. I view Don Berwick in much the same way.

President Obama took advantage of a short Congressional recess to appoint him to run Medicare and Medicaid without even a hearing. Although the President blamed Republicans, even some Democrats were unhappy with his snubbing of normal Senate prerogatives — something Obama criticized George Bush for doing with the appointment of John Bolton as UN Ambassador.