I have joined in a coversation about Part D with some other old farts and a couple of young punks (but very smart young punks — I was strugling to learn how to pick my nose at their age, and they’re health policy whizzes!) at TPMCafe. The section is called Drug Bill Debacle
Also don’t miss this cracker from a surgeon, Me and my HSA in which she shows why it’s great for her, but terrible for America!
So while I was making my lunch and walking the dog everyone’s "favorite" THCB commenter Ron Grenier called me and talked, and talked, and talked. What was he talking about? Your guess is as good as mine, but let’s just say that he talks exactly like he writes! Oh, and apparently he’ll be doing a radio-show soon, Actually he’s make a very good Sean Hannity-type pontificator, although he’s probably a little too non-profane to make it in the rough and tumble world of loony conservative talk-radio.
But for those of you who thought he was an invention of the loony left to make the loony right look bad–nope he’s real!
This is taken straight from a hard to navigate PDF document created in 2000 by MedPac (and advisory body on Medicare for the Congress). It’s a good primer on what happened, especially to drug coverage under the by now forgotten Medicare Catastrophic Act. I reprint it here because there’s some confusion over that issue and I don’t want to have to do more writing myself when they’ve explained it so well!
Policymakers previously approached the issue of adding Medicare prescription drug coverage: in 1988, with the Medicare Catastrophic Coverage Act (MCCA) of 1988, and in 1994, with the Health Security Act. Both efforts failed, but for different reasons and under different circumstances.
Medicare Catastrophic Coverage Act of 1988
In 1988, Congress added a catastrophic benefit to Medicare that would have provided comprehensive coverage for outpatient drug expenses greater than $600 in 1991 with a 50 percent coinsurance, and those greater than $652 in 1992 with a 40 percent coinsurance. The coinsurance was to be lowered to 20 percent in 1993. The intent was to revise the deductible annually, providing 16.8 percent of beneficiaries with benefits each year. The new coverage was to be entirely financed by Medicare beneficiaries through an increase in the Part B premium and a supplementary surcharge. The surcharge was to cost higher-income beneficiaries those with incomes greater than about $40,000as much as $800 in 1989 and $1,050 in 1993 (Congressional Quarterly 1988, Coster 1990). Opposition to the new benefit was fueled by confusion about the specifics of the financing (many lower-income beneficiaries thought they had to pay the full surcharge), as well as other concerns.
First, enrollment in the program was mandatory, but many beneficiaries would never receive any benefits because their drug costs would never exceed the cap. Second, beneficiaries who already had drug coverage, from either Medigap or an employer-sponsored retiree plan, would be required to pay twice for the same benefit; these people also were the ones most likely to pay the maximum premium surcharge (although it is likely that retiree insurance premiums would either decline due to Medicare coverage or be a wrap-around benefit). Third, beneficiaries were required to start paying the supplemental premium in 1989, two years before the full benefit began. The law was ultimately repealed in 1989; few benefits had taken effect by this time.
My weekly column is up over at Spot-on, and despite trying hard to avoid it, I’ve been forced into the murky waters of Medicare Part D and HSAs. There are no comments there, so feel free to come back here and comment. In addition there’s a new section on Medicare Part D and the Drug Debacle over at TPMCafe which I will at some point contribute to, when Josh Marshall hits the correct button on his keyboard.
HSC is out with another study on local markets, and this time it’s looking at specialty hospitals. Not a new tune. HSC finds that purchasers in three local markets where there are plenty of specialty hospitals believe that the hospitals add to overall healthcare costs without improving quality. While purchasers may get lower prices from the new hospitals, they perceive that more procedures are recommended by physicians driving up their number of procedures and therefore overall costs. In addition, traditional community hospitals have been forced to compete by building new facilities, the costs of which get passed onto purchasers in the end, and have been raising their prices for services that specialty hospitals do not offer to compensate for their losses where the specialty hospitals have taken their business.
Yup, it’s all a scam. A war between docs and hospitals with the payers (and the taxpayer) picking up the tab. Of course, as discussed multo–times on THCB, if this was done within the context of some type of fixed budget, then maybe specialty hospitals or teams would be found to be the best way of delivering care. But in a FFS-based cost-unconscious system, they’re just adding to the death of health care affordability by a thousand cuts.
In a remarkable front page story, the London Times has an excellent article on why assisted suicide should be legal in any rational country, as it is in Oregon and apparently Switzerland. The story is called Why a retired GP chose to end her life seven years before time and it shows how a determined lucid retired physician from the UK made the right choice for herself, but was forced to travel far from home to do so. Luckily her children supported her through the process, and they present a united front to those who’d interfere in the rights of those who want to make this choice. She wrote more than 100 letters explaining her actions.
On a personal note, my own grandmother made a similar choice and committed suicide when she felt the infirmities of her old age was making her life unbearable. She wrote me a loving letter that I received after her death, but unfortunately society wasn’t ready then to allow her to do it in a more public way, or to let us know it was coming. I wish that I’d had the opportunity with her that the GP’s children had with their mother.
(This entry bumped up to top because of fun UPDATE)
Apologies for my later start this morning, those of you who follow my knee problems will perhaps be as pleased as I am to know that I spent the weekend snowboarding with apparently no ill effects on it! But it mean that there’s only limited fodder for THCB written over the weekend.
The good news is that while I’ve been slacking, over at Tapped, Ezra Klein skewers the HSA, reminding us that it’s a destruction of the risk pool. I suspect that educating Bush about health care is like the story of David Stockman trying to explain the budget to Reagan, and realizing that he never had a clue about the difference between real and nominal dollars. One of Ezra’s commenters also points out the obvious–that the HSA will do nothing to reform the underlying problems of the system’s cost explosion, and so is by definition a temporary fix.
Last year, when I bought health insurance for my law firm (me, my family, my paralegal and my secretary) I could get coverage with a five hundred dollar annual deductible for $1,900 a month. I looked through all the options and saw that a plan with a $5,000 annual deductible was $1,200 a month. If there was one with a $10,000 deductible it would maybe cost maybe $900 a month (guessing). With health-care inflation running at 8-10% a year that policy with a $10,000 deductible would soon be prohibitively expensive.
Meanwhile over on his Managed Care Matters blog, Joe Paduda skewers the CDHP, with a big assist from Alain Enthoven. Remember kids, the CDHP is the bastard child of a one night stand between a benefits consultant with nothing to sell and a right-wing think tank that can’t do basic math.
CODA: In the transcript of the debate between Enthoven and Reggie Herzlinger on the KaiserNetwork site, Reggie’s comments have all been excised. I wonder whether there’s censorship of some kind here, or whether she was so embarrassed at what she said that she asked for them to be pulled…anyone who knows the truth please get in touch!
UPDATE: Reggie apparently did ask the Kaiser people not to publish her remarks. So was she chicken embarrassed, or was it a bad hair day, or was she selling her schtick to someone else for an exclusive?
Writing (unfortunately behind the fire-wall) in the NYT, John Tierney attacks the Republicans as being the Party of Pain. With their attempts to stop the Oregon assisted suicide law, and the relentless attack of the DEA on pain doctors, the Republican conservative Christian establishment that captured the DOJ in 2001 continues to defy rationality. Tierney is hopeful, however, following the Supreme Court’s ruling in Oregon’s favor.
Of course we never needed to engage in this ridiculous vendetta against pain doctors anyway. In his harrowing long and excellent issue brief on the subject Ron Libby at Cato points out that Oxy wasn’t that big a deal anyway
A final problem with the DEA’s claims of an OxyContin epidemic is the agency’s inflated estimate of risk of death. In 2000 physicians wrote 7.1 million prescriptions for oxycodone products without aspirin or Tylenol, 5.8 million of them for OxyContin.55 According to the DEA’s own autopsy data, there were 146 "OxyContin-verified deaths" that year, and 318 "OxyContin-likely deaths," for a total of 464 "OxyContin-related deaths."56 That amounts to a risk of just 0.00008 percent, or eight deaths per 100,000 OxyContin prescriptions 2.5 "verified," and 5.5 "likely-related." Even those figures are calculated only after taking the DEA’s troubling conclusions about causation at face value.
So this is just a classic case of the DEA acting like the drunk looking for his keys under the lamp-post because that’s where the light is. And who suffers? Obviously the doctors in jail or ruined. And it’s not a issue for just a few pain doctors. Libby points out that between one in five and one in three pain doctors has been investigated by the DEA or local authorities. Would you keep doing your job if there was a one in three chance that you’d be investigated, maybe have your assets seized, and possibly be sent to jail for very long time just for doing it?
And why is it being done? Well the DOJ and local police departments get to keep all the money from asset forfeiture. In other words this is essentially theft with patients, doctors and the taxpayer picking up the tab
Tierney hopes that there’ll be a resolution to this:
The Supreme Court’s decision is a victory for patients and their doctors – including, I hope, some of the ones in prison for violating the federal legal theory that has now been rejected by the court. The doctors should go free, and Republicans in the White House and Congress should restrain the drug warriors who locked them up. When this year’s budget is drawn up, it’s the D.E.A.’s turn to feel pain.
These loonatics need to be stopped and whatever my political differences with Tierney and the Cato crowd I applaud them for getting this in the public eye. Unfortunately I think he’s being far too hopeful that any good will come of this given the number of theocratic fascists social conservatives still in the Administration and heading to the Supreme Court, and the current DOJ attempt to promote laws already overthrown by a (slightly) more liberal Superme Court.
In this book review of a couple of finance books in the New York Times, Neil Genzlinger is close enough to being right to remind us why we need to figure out the underlying problems in the health care system.
But as far as radical new ideas, the visionary approach would have been the blunt one: forget retirement planning. Hakuna matata. In the future, whether you have $15 million socked away or $1,500, nothing will matter – not food, not shelter, not golf, not active-senior communities – except health care benefits. Medical science, which already offers rebuilt knees and transplanted livers and faces, will soon offer new everything, but at a staggering cost. The Health Care Cabal will issue a one-page retirement plan: “In exchange for all your assets, including your children (and all their future earnings in perpetuity), the H.C.C. agrees to replace your parts as needed, while supplies last.” And everyone will sign it, because here in the have-it-all era, death is simply unacceptable.
While we’ve been focused on what’s wrong with Part D’s implementation, Joe Paduda reminds us all about one of the other problems with Part D. It’s that by it’s nature a voluntary benefit is going to attract adverse selection. In other words, the only people signing up for it so far — and barring the dual eligibles who were involuntarily alloted into it there haven’t been too many, and DSS reports that there won’t be that many more — are the ones with big drug costs. So by definition eventually the plans will start losing money.
For now the PDPs are being covered against that risk, and the very generous taxpayer will make up the difference. But later on the taxpayer may not be so generous (as with Medicare Risk in the late 1990s) at which point the PDPs will start to exit.
This, by the way, is exactly the inverse of the problem with HSAs, where all the healthy people will leave the insurance pool, leaving those behind in a death spiral.
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