Categories

Tag: Congress

Health Care Reform’s Deeper Problems

Uscapitolindaylight

Congress’ health care reform debate has highlighted how American governance is broken and the difficulty of addressing our national problems.

Take, for example, whether health care is in crisis at all. Conservative commentators argue that America’s health system is fine, that our excellent care simply costs more than other countries’ poorer quality, and that most uninsureds can afford coverage. They ask why we should revamp a great system for the two or three percent of Americans who get less.

This misrepresents reality, though. Care and outcomes are often superior in other developed nations. In America, the ranks of the uninsured and under-insured have skyrocketed, from insurance costs that have grown four times general inflation for a decade. Health coverage is employers’ most unpredictable major cost, a threat to their businesses’ competitiveness, and they have increasingly offloaded costs onto employees. So while  the marginalized uninsured are an important problem, declining coverage for the mainstream is the greater worry. Most know that, even with insurance, any major health problem can spell financial ruin.

As businesses and individuals have been priced out of health coverage over the last four years, commercial health plan enrollment has plummeted by as much as 20 percent, or about 36 million people. The Kaiser Family Foundation reports that 40 percent who lose group health coverage probably become uninsured.

Fewer people buying coverage means less money to pay for health care products and services, so the industry is experiencing an unprecedented financial decline. With reforms looming, it has fiercely advocated for universal coverage, which would provide stable funding for a larger patient population. Meanwhile, the industry has opposed changing business mechanisms that encourage waste, even though experts agree that one-third or more of all health care cost is unnecessary or inappropriate. But this raises an important question. Why not spend less by recovering wasted dollars, and then improve access?

The industry has pressed its goals through lobbying, which lets special interests exchange campaign contributions for policy influence. The non-partisan Center for Responsive Politics reports that, between January and June, the industry gave Congress more than $260 million. One lobbyist commented, “A person can reach no other conclusion than this is a quid pro quo [this for that] activity.”

The funds have gone mostly to Democrats, the party in power now, and are producing their contributors’ desired results. The current proposals expand coverage, but do little to reduce cost, failing to heed any of health care’s management lessons from the last 25 years. For example, they won’t re-empower primary care, which other nations have found will maintain a healthy populace for half the cost of our specialist-dominated approach. They fail to make care quality and cost transparent, which would let health care finally work as a market, and help identify the best health care vendors. They continue to favor fee-for-service reimbursement, which rewards delivering more products and services rather than rewarding results. And they all but ignore our capricious medical malpractice system, which most doctors say encourages defensive practice.

These problems and their solutions are structural, and are well understood within the industry. If reform does not pursue these structural approaches, health care will continue to drag down the larger economy. Our current problems will remain and intensify, at enormous cost.

Out of this experience, the American people should become aware of a couple of harsh truths.

First, so long as Congress willingly exchanges money for influence, American policy will favor special interests rather than the public interest. We’ll be unable to meaningfully address our national problems: energy, the environment, education, and so on.

Second, so long as partisans distort the truth to discredit their opponents, rather than focusing on our very real problems, America’s future will continue to be compromised.

Which is to say that we have deeper problems than an inability to fix health care.

Brian Klepper, PhD is a health care analyst based in Atlantic Beach. David C. Kibbe MD MBA is a physician and Senior Advisor to the American Academy of Family Physicians.

David C. Kibbe MD MBA is a Family Physician and Senior Advisor to the American Academy of Family Physicians. Brian Klepper PhD is a health care analyst.

More by these authors:

The Case for Taxing “Cadillac” Healthcare Coverage

With President Obama’s plan for healthcare reform recently being dealt a tough blow by the Congressional Budget Office over soaring federal deficit projections, I am beginning to wonder if it is time for the President to modify his stance against taxing “Cadillac” healthcare coverage offered by employers.  It’s no secret what Senator Max Baucus, the Democratic Chairman of the Senate Finance Committee and one of the most powerful people in the healthcare reform debate, thinks President Obama should do.  Senator Baucus has been a vocal advocate of taxing healthcare benefits.  He recently told reporters that taxing employer-sponsored benefits is “the best way to raise money for an overhaul of the healthcare system.”  He has also been somewhat critical of President Obama’s decision to not tax healthcare benefits by saying, “Basically, the president is not helping us.”

In recent days, the Congressional Budget Office (CBO) estimated that the House Democratic legislation would add more than $230 billion to the federal budget deficit.  On the Senate side, Senator Baucus, who has been working with Senate leaders to formulate another plan, has pointed out the difficulties his committee has had with funding reform without some other type of significant revenue.

One way that raises enough revenue to cover well over the $230 billion figure projected by the CBO is through taxing employer-sponsored health benefits.  The nonpartisan Joint Committee on Taxation estimates that taxing employer-sponsored benefits above the value of the Federal Employees Health Benefits Plan (FEHBP), adjusted for inflation, would generate nearly $420 billion over the next 10 years, which would easily fund the difference in the budget gap.  Many other estimates place this number considerably higher.  Furthermore, many experts believe that this policy is a key way to reduce costs, because tax-free benefits encourage more spending on health care.

About 18 months ago, as I worked with a committee that I chaired in Tennessee called the Rolling Hills Group to create a structural model for national healthcare reform, I ran into the same problem that President Obama is facing today.  How do you pay for reform?  After considering several options on how to finance universal insurance, our group kept coming back to the same, single solution – the same one that Senator Baucus is a proponent of, taxing “Cadillac” healthcare benefits.

Under our proposal, we created a basic level of coverage similar to what members of Congress are offered today, known as the FEHBP standard option plan.  This plan is very generous and has been successful in holding down costs compared to other plans.  In order to make sure our plan was budget neutral, we decided we would no longer allow what we consider “Cadillac” coverage benefits to be tax free.  For example, in 2009, under our proposal, any individual policy worth more than $5,871.84 or any family policy worth more than $13,445.64 would be subject to a tax.  Anything less than this amount would be tax free.  For individuals, any amount above the base value of the plan would be considered income.  While for companies, any amount above the base value of the plan would no longer be deductible as a business expense.

We had this idea vetted by the Moran Company, who said that our plan is actuarially sound and budget neutral for the federal government once fully phased in.  Just as a note, in our plan we also derive revenue from Disproportionate Share Payments (DSH) and hold down up front costs by phasing in the reform over a 10 year period.  Disproportionate Share Payments is funding that hospitals receive for treating indigent populations.  Thus, it is reasonable to decrease DSH payments as the uninsured population decreases.

If taxing “Cadillac” coverage raises enough revenue to make healthcare reform budget neutral and encourages less spending on healthcare, why has such an attractive option for reform been pulled off the table amidst the President’s insistence on urgency?  As is usually the case with healthcare reform, the answer may be in the politics.

In recent weeks, several articles have outlined strong opposition by labor unions to the taxation of their healthcare benefits. In the Washington Post, the AFL-CIO stated its opposition to taxing “Cadillac” coverage.  Michael Sullivan, the President of the Sheet Metal Workers Union, has also adamantly stated his opposition to taxing healthcare benefits by saying, “Any bill that taxes health care benefits is dead on arrival.” Understanding these political difficulties, but still seeing the taxing of benefits as a viable way forward, lawmakers have demonstrated that there may be room for compromise.  Senator Baucus himself has hinted that he might consider grandfathering in the taxation of health benefits that are part of a collective-bargaining agreement, which would allow union plans to remain tax-free until new contracts can be negotiated.

Labor unions are not the only ones who have come out against the taxation of “Cadillac” plans, as many large corporations have exhibited significant opposition as well.  However, if healthcare reform is going to happen this year, Congress and President Obama may want to take a harder look at taxing “Cadillac” healthcare benefits as a means of raising revenue and achieving their other healthcare priorities.  I think it is fair to say that if Obama explains to the American people that the Government is only going tax the most lavish of benefits, he might find greater support from the American public for the change in health care that he promised to bring and that this nation so desperately needs.

Clayton McWhorter is a former President and chairman of HCA and current chairman of Clayton Associates and the Rolling Hills Group.  He is the founder of the group SHOUTAmerica, a Nashville based organization that uses social networking and other internet-based technologies to push for change in the healthcare system.

Say we get some sausage–then what?

sausage (sô´sǐj)
n. A highly seasoned minced meat usually stuffed in casings of prepared
animal intestine.

MPainter

Congress is obviously in the thick of the sausage making. The August recess is pending. Bills may or may not be moving. The legislative process, especially at this point, is not particularly pretty or, to be honest, as thoughtful as we all might hope. It is the process, though, right? There was essentially no way around something like this intestine stuffing, especially in an effort to fix health care–such a large sector of the American economy. And in spite of the messy work and depending on the day, the observer and the poll, it nevertheless seems likely that something will come out of the kitchen, right? It is also probably safe to say, though, that any reform law is not going to be the panacea–the ultimate health and health care fix. Instead, if a law indeed passes, it's clear that we're going to spend the next five, 10, 15 years adjusting, backtracking, redesigning and working toward better care. In other words, the implementation is going to matter, and it's going to matter a lot. On July 30 in Washington, D.C. at the Hart Senate Office Building, the RWJF-funded High-Value Health Care Project led by Mark McClellan of the Engelberg Center at Brookings hosted a panel discussion focused on just that–the implementation. Specifically, Mark, Carolyn Clancy of AHRQ, John Tooker of the American College of Physicians, Steve Findlay of the Consumers Union and Jim Chase of Minnesota Community Measurement talked to a large Capitol Hill audience about what it will take to make health care deliver sustainable high value. 

Continue reading…

Health Care Reform Coming Out of Senate Finance?

We’ve been getting lots of news these past few days leading to optimism that a bipartisan health care bill will soon emerge from discussions between the “Coalition of the Willing.” That term refers to the three Republicans and three Democrats trying to find common ground in the Senate Finance Committee.First, let me be clear that I have the greatest respect for Senators Baucus and Grassley and their four colleagues. Theirs is the kind of bipartisan approach that all of Washington, DC should be following on any number of issues.And, as I have posted here before, I am concerned that in their efforts to find compromise they are headed for a health care bill that is based on a formula of cost containment “lite,” minor paring of Medicare and Medicaid provider payments, and at least $500 billion in new taxes. I don’t see much changing fiscally if that is the final result in a health care system that is already unsustainable and on the way to spending upwards of $35 trillion to $40 trillion over the next ten years as it goes to 22% of GDP by 2018.From what we have heard, their bill would hardly "bend" any curves.

Continue reading…

Op-Ed: Sustainable Healthcare Reform

President Obama made a risky wager when he decided to let Congress take the lead on crafting health care legislation, rather than presenting his own reform package. Congress is not known for taking bold, decisive leadership on tough issues. Normally, it reacts and gridlocks; it doesn’t lead.

As Congress takes its usual August recess without acting, it appears that Obama’s strategy has failed. But, has it? Is there a deeper strategy? What’s really at stake here?

Obama reportedly reasoned that Congress will do better in the long-run if it protects its institutional prerogative as law maker and doesn’t take on the appearance of being the President’s rubber stamp. This is a plausible calculation. The last time Congress was asked to respond to a President’s health care reform proposal during the Clinton years it did so by throwing the whole package in the trash can.Continue reading…

Speculators Bet Reform Won’t Hurt Industry

Uscapitolindaylight

Speculators seem to be betting that a watered down health insurance reform bill won’t hurt health insurers, hospitals, drug makers or medical device and supply manufacturers.

Stocks for almost all of these health sectors and for exchange trade funds that track health stock indexes turned higher last week. Why?

1. Congress is not going to get health bills through the Senate or the House in face of strong opposition by a minority of Democrats in both houses. This means opponents of the health insurance reform bills will have at least 45 days to convince members of Congress and the public that the bills favored by the president and his hard left supporters in Congress are a bad idea.

2. It is very unlikely that Congress will create a public option health plan, or Government HMO (Fannie Med). The votes aren’t there. This is a bit bullish for health insurers over the short term. White House talk about taxing insurers that offer gold plated health benefit plans makes no sense because few do. If such taxes were enacted, insurers would stop offering or administering such plans, and self-insured employers probably would drop them as long as union contracts didn’t lock them into such plans.

3. If the very liberal Coastal Democrats who lead Congress and most of the five commitees drafting health insurance legislation want to get the support of Democrats from Western, Midwestern and Southern states, they’ll have to up Medicare payments to providers in those states. This is bullish for hospital chains, which operate mostly in the fly-over states.

4. The Congressional Budget Office Saturday threw cold water on the idea of putting MedPac, a panel of self-interested health care and medical experts who would be subject to tremendous political pressure from Congress, in charge of deciding what insurers would cover and how much they would pay for procedures. The panel would save only $2 billion out of trillions over 10 years, the CBO guessed. And it was being generous to the idea that MedPac would save anything. This is good for drug and medical device makers, because it lessens the threat of new price and utilization controls on their products.

5. While www.intrade.com bettors think there’s at least a 46% chance that some kind of health insurance reform will be enacted before year end, the polls are showing Americans are increasingly opposing the bills before Congress. The politicians who created the laws and regulations that make Medicare, Medicaid, SCHIP and state and federal regulations of health insurance markets unworkable failures are promising to fix the health markets. They have less and less credibility every day.

6. Proposals to tax millionaires to pay for covering the uninsured and increasing benefits for others are in trouble, if not dead on arrival.  The economy’s in no shape to be stalled by tax hikes, and there appear to be enough Democrats opposed to the tax to stop it.

7. While the so-called Blue Dog Democrats are stalling health insurance reform for economic and ideological reasons, the Congressional Black Caucus has made it clear that it won’t support a bill that the Blue Dogs will support. Throw in the opposition by anti-abortionists who don’t want the legislation to use taxpayers money to pay for abortions, and you have a pretty complex political problem for President Obama, Sen. Majority Leader Harry Reid (D-NV) and Speaker Nancy Pelosi (D-CA). While the Speaker claimed Sunday that she has the votes to pass health insurance reform, few believe her.

Some Democrats are saying that drafting health insurance reform bills is 70% to 80% done and it won’t take long to get a bill. Other Democrats are saying they want to take the time to write good legislation. The question is, can the Democrats and a few Republicans resolve the last 20% to 30% of the issues that need to be agreed upon to get a bill? It doesn’t look very good for health insurance reform at the moment, but some kind of a bill may pass in the next year or so, if not this year. Presidents Reagan, Clinton and Bush II all enacted major health legislation in their third and later years in office. All three bills have been financial and health care disasters.

Charts for health insurers are here.

Charts for hospital chains are here.

Charts for drug makers are here.

Charts for medical device and supply makers are here.

Charts for long-term care stocks are here.

Chart for health stock exchange traded funds are here.

Click on a chart to see a gallery of charts for a stock or ETF. Disclosure: I own BDX and options on STJ.

Don Johnson blogs at The Business Word Inc. Between 1976 and 1986 he was editor of Modern Healthcare magazine. As its top editor, Don helped build Modern Healthcare, a Crain Communications Inc. publication, into the hospital industry’s leading business magazine and one of the top magazines in the country.

More by this author:

A Health Insurance Premium Tax Would be a Chicken Tax

The Congress has looked at taxing about everyone and everything to pay for half the cost of a health care bill.

They’ve considered sugary soft drinks, beer, “millionaires,” and “gold plated” health benefits to name a few. Every time they come up with one it gets shot down by the interests it would offend.First, as I have asked on this blog before, why do we need to use at least $500 billion in new taxes to pay for half the cost of a health care entitlement expansion bill? We will spend somewhere between $35 trillion and $40 trillion on health care in this country over the next ten years. Many experts contend there is as much as 30% waste in what we spend.Advocates of a health care bill say we need it to reduce the cost of health care in this country that will otherwise bankrupt us if we don’t fix it.

With as much as $10 trillion to $12 trillion in waste, and cost containment as the stated goal, why do we need to raise people’s taxes $500 billion to pay for an expansion of coverage?But since it is clear that the Congress and the White House have all but given up on real health care reform that would really “bend the curve” they are adamant they are going to raise taxes to pay for at least half the cost.

Continue reading…

Live from Aspen: the moderates’ view on Obama health reform

6a00d8341c909d53ef0105371fd47b970b-320wi Paul Krugman’s article today excoriates the Blue Dogs and a former dog Billy Tauzin in particular. He also (as I did a week or so back) wonders where the Dogs were when the Bush tax cuts were bumping the deficit more than the proposed health reform bill will and redistributing wealth from future poorer taxpayers to the very rich in the process.

Funnily enough I’ve been at the Aspen Health Forum where the self-same Billy Tauzin used his not inconsiderable Cajun charm and a dollop of PhRMA’s money to buy me (and a bunch of others) a whisky and a s’more on Saturday night, and took part in a couple of panels I watched on Sunday. We had a couple of brief chats, one about his cancer treatment and another about getting big Pharma to behave better. He claims some progress there (voluntary restrictions on DTC, better posting of clinical trial data, reductions in marketing excess to docs). I suggested that there was more progress required both in pricing policy and PR. He said it was hard, I told him that was why they paid him the big bucks.

Continue reading…

Health Reform and Obama’s Leadership

6a00d8341c909d53ef0115712a5173970c-100wi

By all accounts this is crunch time for President Obama on health care reform, and things couldn’t be more tenuous. In the past several weeks, we’ve seen unified Republican opposition to his ideas, a revolt against reform from leaders inside his own political party, and the head of the non-partisan Congressional Budget Office testifying that the only direction he is bending the cost curve in is sharply upward.

As a physician who supports the President’s vision to improve the quality, access and lower costs, I’ve been following this debate closely. I’ve also been wondering what the debate about health reform tells us about the President’s leadership style. While I see him continuing to communicate his vision eloquently, there are two key leadership qualities Obama seems to lack that may prevent him from achieving his goals for reform.

Continue reading…

Commentology

Anonymous

I'm retired now, but as a former lawyer, I simply must speak out in opposition to the various health care proposals that are being bandied about. It used to be said that what was good for GM was good for America. I submit that the more appropriate slogan in this day and age is that what's good for lawyers is good for America.

Right now the American system of health care proudly denies service to 40 to 50 million people, depending on your source. The great majority of them don't need health care anyway. Our system has always worked on the free market ideal that if you have what it takes, you'll achieve your goals. If you don't, then you can fall by the wayside. This philosophy has made this country great for over two centuries. Why change it now?

Continue reading…

Registration

Forgotten Password?