Obama was called a liar during his recent address to a joint session of Congress. Actually, he was not fully truthful
about the implications of cuts to Medicare. Obama repeated that his
health reform plan includes payment cuts for private Medicare Advantage
(MA) health plans:
The only thing this plan would eliminate is the
hundreds of billions of dollars in waste and fraud, as well as
unwarranted subsidies in Medicare that go to insurance companies —
subsidies that do everything to pad their profits and nothing to
improve your care. … So don’t pay attention to those scary stories
about how your benefits will be cut… That will never happen on my
watch. I will protect Medicare.
Obama’s claim that the cuts will trim insurer profits but not Medicare benefits was meant to calm nervous seniors. As I and others
have pointed out the proposed cuts will in fact reduce benefits to some
degree, contrary to the President’s assertion. But seniors, in
general, should not be concerned. First, only about 23% of Medicare beneficiaries are enrolled in an MA plan.
Seniors care about death panels (apparently) but they usually really care about drug prices and costs. Part of the political rationale for the Republicans passing Medicare drug coverage in 2003 was to deny the Democrats the ability to bundle seniors’ desire for drug coverage with a universal coverage bill. So far the Republicans have to say the least muddied the waters as to whether universal coverage is a good thing for Medicare recipients—or at least the ones that don’t care about their kids or grand-kids.
But there’s one minor trick. The deal with big Pharma that’s part of HR 3200 cuts the donut hole in half. That’s real money for seniors.
And when the cuts to Medicare Advantage become apparent, that donut hole is going to affect many more seniors who now are getting good benefits from Medicare Advantage and are pretty unaware about what’s about to happen to those benefits, according to this recent Silverlink/Suffolk University poll. (Hint, many Advantage plans will get much less generous).
In that case, knowing that there is something in the bill that helps them might change some seniors’ minds. Right now the Silverlink/Suffolk poll does not make happy reading for the Administration:
The survey also polled Medicare recipients on healthcare reform. Despite high levels of satisfaction and relatively strong amounts of optimism, nearly half of Medicare recipients polled (48%) say they do not believe the Obama administration is looking out for their best interests when it comes to healthcare reform. The remaining are split, with 28% believing the administration is looking out for them and 24% unsure.
We were stunned (yes, we're naïve and idealistic) to read in The Kaiser Family Foundation newsletter and The Wall Street Journal article last week that CMS (surprise) and the now former the Bush Administration (no surprise) were proposing a ban on reference-based prescription drug pricing under Medicare Part D.
Health and Human Services Secretary Tom Daschle has said the Obama Administration will work to see that health care “will be guided by evidence and effectiveness, not by ideology.” This proposed ban is in direct opposition to that commitment.
Reference-based pricing drives appropriate clinical decision-making, appropriately decreases health care costs, and appropriately empowers consumers in the health care decision process. It is one of the few rationally applied cost control tools we have. It should be a model – not a pariah.
The NY Times’ Robert Pear has an article on the politics of the Obama Administration introducing a public plan as part of FEHBP.
As you might expect a boat load of Republicans who were told in grade school that private is good and public is bad are concerned about this causing the demise of private health plans–even though that would clearly benefit the country. Of course Pete Stark is quite happy to say that it’s not that Medicare underpays (as Charlie Baker said here last week), but it’s that private plans over pay.
So why is that the case? Well you knew that I couldn’t resist the appearance of my favorite lobbyist. Here’s what Karen Ignagni says, and — this is the shocker– it’s half true.
Karen M. Ignagni, president of America’s Health
Insurance Plans, a trade group, said the consolidation of the hospital
industry in the last seven or eight years had increased the market
power of hospitals, thereby reducing the ability of insurers to
Actually it’s been more
like twelve to fifteen years since big players started merging (IFTF’s
Ellen Morrison wrote a great report about that in 1994 called "The Six Americas").
By the late 1990s Sutter, for example, was facing down Blue Cross of
California on price and winning. And of course in Boston Partners was
getting bigger and bigger, and facing down Blue Cross and the other plans. (Leading occasional THCB contributor and Beth Israel Deaconess CEO Paul Levy to become a big whiner, according to Partners Chairman Jack Connors). So Karen is telling the truth.
I guess we knew it, but here’s the confirmation in the analysis of the first 18 months from CMS.
The summary: DM companies in Medicare Health Support enrolled healthier than average populations; they had limited to no impact on improving their patients’ care, satisfaction or outcomes; and didn’t save any money.
I wonder how Disease Management is going to fare in the future. It’s clear that this "occasional remote intervention" model needs to change.
The new Health Affairs is out and with it a lovely piece of vintage Vladeck.
In a review of a new book on Medicare by old Brookings warhorse Henry Aaron and fast rising UT Longhorn star Jeanne Lambrew, Bruce Vladeck soon turns off the main topic (their book) and onto his favorite–the inevitability of the outcome when Medicare tries to do something about health care costs, and the inability of the political system to do much about it.
Policy analysts make fun of politicians who claim they can balance the budget by eliminating "waste, fraud, and abuse," but with a straight face they then propose to control health care costs by making the system more efficient. Efficiency has hardly anything to do with it. What health care costs are all about is market power and the distribution of monopoly rents. Every other industrialized nation understands that and does something about it. U.S. providers and insurers understand it, too, which is why the more sophisticated providers resist any efforts to aggregate power on the buyers’ side. But the mainstream of U.S. policy analysis just doesn’t seem capable of even framing the question, let alone solving it.
Of course despite me convening panels with Valdeck on them a couple of times, he probably doesn’t think THCB is mainstream policy analysis 🙂
But just last week I said:
As I’ve been saying for a long time, to rationally rationalize the
health care system, we need to make cardiologists in Miami behave like
cardiologists in Minnesota with a consequent impact on the incomes of
doctors, hospitals and stent & speedboat salesman in high cost
areas (Yes, Jeff, I do mean Louisiana, New York, Los Angeles and Boston
too). If the Federal Health Board has teeth, that’s what it’ll do, and
the AMA, AHA, AdvaMed, PhRMA et al know it. Which is why the PhRMA front organizations have been railing against cost-effectiveness for so long.
We know the question. Sadly we also probably know the answer. Vladceck’s short piece is great fun, nonetheless.
I doubt anyone would disagree with the statement that America’s health care costs are too high, continue to grow at an unsustainable rate, and reform is critical to control costs, get everyone covered, and improve quality.
In the wake of the election, I see one positive and magnanimous press release after another coming from the health care special interests. The press is full of daily stories touting the coming health care reform efforts as different this time. The stakeholders understand things are different, know we have to do something, and are ready to cooperate, goes the reasoning. Really?
Having returned from Seattle, the persistent itching from the sand-fly bites of Roatan has awakened me at 5 a.m. So I’m commenting on three pieces of news, which I’ve commented on before here and at Spot-On.
First, United HealthGroup has introduced two new things this week. One is is a consumer portal/WebMD competitor called myOptumHealth, which gave a sneak preview (and was a sponsor) at the Health 2.0 Conference in October.
At first blush I like the look of what they’ve pulled together, although the about us section doesn’t exactly tell you much about who owns Optum! But the really interesting product United launched this week was aimed right at me. It’s an option to repurchase your individual health insurance without being re-underwritten and rejected.
In a 36 hour span I left the mountains of Copa Ruinas in Western Honduras, had dinner in South Beach, Miami and after stopping off to see that Health 2.0 central in SF hadn’t collapsed, ended up in Seattle. I woke up early (had to get that in there to match the title) and hustled off to the main symphony hall because it’s the 25th anniversary of the Group Health Center for Health Studies. (The research arm of Group Health Cooperative of Puget Sound)
There the question of the day is, why haven’t integrated group practices (like Group Health & Kaiser) spread across the nation? And is there something that the new Administration can do to help make it so?
I have been struck by the optimism regarding private Medicare presented by health plan executives during the recent earnings season and the analysts failure to press them on just how their numbers will add-up to sustain the long-term viability of a private Medicare strategy.
The typical private Medicare health plan operates on a medical cost ratio in the mid-80s. Let’s assume 86% for medical costs and the remaining 14% for overhead, profit, and taxes.
Government-run Medicare operates on about 3% overhead. One can argue that many federal Medicare costs are paid for elsewhere but that is the number the private plans have to compete against. So private Medicare plans spend 14% on overhead and Medicare charges
itself 3% — that’s an 11% disadvantage for the private market right
out of the box.