Tag: Health Care Reform

Behind the Curtain: Wendell Potter on the Industry’s Management of Care and Reform

Jul 10, 2009• 11

By BRIAN KLEPPER

Stop what you're doing and take out a half-hour to watch this week's superb Bill Moyers' 3-part show, especially the extended interview with Wendell Potter, former CIGNA VP Corporate Communications, for a frank, insider's discussion of how major health plans have worked over the last decade.

Also be sure to watch Moyer's very brief final commentary, describing a dinner that was planned by the Washington Post to connect lobbyists with high-ranking officials working on the health care reform process. His conclusion: we won't get anywhere with health care or any other national problem until "the money-lenders are tossed out of the temple and we tear down the sign they've placed on government, the one that reads 'For Sale.'"

Fantasy League Baseball — Beltway Series Edition

Jul 10, 2009• 12

By MICHAEL MILLENSON

Bob Laszewski’s Health Care Affordability Model has the same connection to the reality of the current battle over health care reform as a Fantasy Baseball League does to the actual outcome of a major league baseball game; i.e., none.

Actually, while those who play Fantasy Baseball – might we call them “baseball wonks”? – are affected by what happens in the real world to the players they have selected, they have no illusions of reciprocity. Laszewski is a brilliant analyst whose examination of the various political proposals for health-care reform have become a “must-read.” But in making his own proposal, Laszewski, a strategy consultant based in Washington, has managed to completely ignore the fact that reform is an intensely political process.

“The Health Care Affordability Model…could be attached to virtually any health care reform plan now on the table,” he writes.

No, it couldn’t. Just like managing a Fantasy Baseball team has no connection to managing real major league players. Given Laszewski’s timing, his proposal is somewhere between almost irrelevant and completely so. Which is not to say his ideas are wrong.

Has Harry Reid Torpedoed Reform?

Jul 10, 2009• 13

By ROGER COLLIER

Health care reform ran into new BIG trouble this week with a series of comments from Senate Majority Leader Harry Reid.

On Tuesday, Reid leapt into the middle of reform negotiations, telling Senate Finance Committee Chairman Max Baucus that Democratic leaders had major concerns about the draft Senate Finance bill’s proposed taxation of some health benefits and the exclusion of a strong public plan.

The immediate result was the effective suspension of bipartisan negotiations on the Senate Finance draft, with Republican Senators Chuck Grassley and Orrin Hatch both saying that bill markup would have to be delayed indefinitely until the conflict was resolved.

Yesterday, Reid tried to soften his comments in conversation with Senate Republicans, but later indicated that taxing health care benefits was still unacceptable, leaving Senate Finance members wondering how else to help pay for the trillion dollars (or more, perhaps much more) that they estimate as the ten-year cost of reform.

Reid’s comments reflect the findings of a series of straw polls in which various senators’ constituents were asked if they supported taxing health care benefits (Surprise! They didn’t want any new taxes), as well as an aggressive union-led campaign against the idea.

Reid’s intervention may very well have torpedoed reform. It leaves Senate Finance with few choices for funding reform, and virtually none that are likely to attract any bipartisan support.

Even if Senate Finance members are able to find other funding solutions, killing taxation of health care benefits will remove from the Senate Finance draft one of the very few provisions that might have resulted in slowing of overall health care cost increases. Leaving tax deductibility of benefits in place will continue to encourage the belief in those lucky enough to have generous employer coverage that health care is “free,” and in turn pander to providers eager to invest in high-priced resources that increase costs for everyone else. Meanwhile, Reid’s insistence on a strong public plan as an alternative cost control mechanism is likely to end support from moderate Republicans and centrist Democrats and to generate huge (and well-funded) opposition from insurers and providers. And, as the Clinton administration discovered sixteen years ago, any slowing of legislative momentum can be fatal to reform.

Roger Collier was formerly CEO of a national health care consulting firm. His experience includes the design and implementation of innovative health care programs for HMOs, health insurers, and state and federal agencies. He is editor of Health Care REFORM UPDATE.

Why Congress Should Consider Bob Laszewski’s Health Care Affordability Model

Jul 9, 2009• 40

By BRIAN KLEPPER

ALP_H_BK_0010 Over the last few months, I have become increasingly disheartened over the prospects for meaningful health care reform.

First, the process is terribly conflicted, and it shows. In the first quarter of 2009, the Center for Responsive Politics reported that the health care industry contributed $128 million to Congress. Now that the tide has turned, this has gone mostly to Democrats who, as it turns out, are just as receptive as their Republican predecessors.

The Affordability Model

Jul 8, 2009• 28

By ROBERT LASZEWSKI

Capital_2 Most health care experts agree the reason our system is so
unaffordable is because of all of the waste and unnecessary care—up to
30% of what we spend.I will suggest that it will take the
genius of individual creativity to separate the 70% of this health care
system that is the best in the world from the 30% that is waste.So
far, the Congress has focused more on entitlement expansion then
fundamentally reforming the system and tackling the real
problem—getting all the excess costs out. The result so far is
expensive health care proposals and no real reform.How can we actually make the health care system affordable as we expand coverage? I will suggest a three-pronged attack:

The Tri-Committee Health Reform Bill: Implications for Children

Jul 6, 2009• 7

By JOCELYN GUYER

A little more than two weeks ago the three major committees in the
House with jurisdiction over health reform put out a draft legislative
proposal, known as "The Tri-Committee bill." We've now read the 852-page document
a few times, and think it would make giant strides in providing access
to coverage to millions more people and transforming the country's
health care delivery system. Of particular note for kids, it includes:

Major expansions in access to affordable coverage for their parents and other adults. (Click here for just a few of the articles showing a clear link between how children fare and the health and stability of their parents.);

Continued coverage of children through Medicaid with its strong, child-specific benefit package;

Increases in Medicaid reimbursement rates; and

A
guarantee that no child born in a U.S. hospital leaves without
insurance. (For more details on these and other provisions, see our Fact Sheet on the Tri-Committee bill.)

HELP! IS THE CBO GETTING SUCKERED?

Jul 6, 2009• 8

By ROGER COLLIER

In a comment on my previous post on
the Senate Health, Education, Labor, and Pensions reform bill, tcoyote
explained some of the political thinking behind what seem like totally
spurious cost projections. While I can readily accept tcoyote’s explanation
of the pols’ efforts to ignore reality, I’m still politically innocent
enough to want to know what the HELP bill might really cost. So I spent
some time looking at the Congressional Budget Office report on the bill.

Here are a few things I noticed:

The “ten-year projection”
starts in 2010, although the bill does not require insurance exchanges
to be implemented until 2014. The result is that the projection includes
only six years of reform (plus a lengthy transition period), NOT ten
years.

The CBO projections
include a $58 billion “credit” for the impact of the HELP bill’s
proposed new long-term care program (the so-called CLASS Act). However,
the “credit” accounts for the difference between premiums and benefits
over the 2010-2019 period on a cash basis only. If conventional accrual
accounting were used, CLASS would show a net cost for the period.

No Country for Old Men

Jul 6, 2009• 58

By JEFF GOLDSMITH

As we enter summer, the health reform process is moving into its Newtonian phase: irresistible forces meeting immovable objects. In both health cost and access, the trend is not our friend. There is ample evidence not only of intolerable inequities, but also intolerable waste and inappropriate use of expensive clinical tools. President Obama embodies the need for change. He has assembled a very talented and politically savvy crew of helpers. He confronts the sternest test of any Presidency, fixing a poorly tuned and fragmented health system that is, by itself, larger than either the French or British economy.

Careful What You Wish For

Jul 4, 2009• 25

By THE INCIDENTAL ECONOMIST

On the left are those who would like health reform to include a strong public plan, one that could negotiate large provider discounts, driving down the cost of medical care. On the right are those who think health insurance should be provided only privately. I’m neither left nor right. I consider myself a realist and an empiricist.

A reasonable reading of the political tea leaves suggests that health insurance for the non-elderly will remain largely a private affair. (See the Debating the Public Option in The American Prospect by Paul Starr, Robert Reich, and Robert Kuttner.) Therefore, I’d like the private insurance market to work well. I’m also very familiar with the Medicare experience (and its problems) with both public and private provision of insurance.

So is Kerry Weems, the former acting administrator of the Centers for Medicare and Medicaid Services (CMS), the agency that oversees Medicare and Medicaid. Weems was interviewed recently by John Iglehart, the founding editor of Health Affairs, a respected journal of health policy (Doing More With Less: A Conversation With Kerry Weems, Health Affairs, 18 June 2009). Based on his experience managing Medicare and Medicaid, Weems had some interesting things to say, some of which I summarize below.

In general he paints an ugly picture of a public plan. If you’re hoping health reform includes a strong public plan you should be careful what you wish for, and you should read the interview to see what problems a public plan might have. This is not to say a public plan is better or worse than private plans. It is just to say that one should expect that a public plan will likely experience certain types of problems. Now on to the summary of the Weems-Iglehart interview.

On Congress. Congress has not treated CMS well because funding it is not as sexy as funding other agencies overseen by the same appropriation subcommittees: the National Institutes of Health and the Centers for Disease Control and Prevention. A consequence is that CMS has insufficient resources to fight waste, fraud, and abuse. For example, according to Weems,

“CMS’ annual expenditures [are]…more than the economies of all but twelve nations, and CMS carries out its responsibilities with a staff of 4,600 people. Social Security is of comparable budget size and handles its dollars with about 66,000 people…”

On Medicare Advantage. Weems feels that private plans under Medicare advantage can offer “better care at lower or the same costs” as traditional fee-for-service Medicare.

On Payment Errors. Medicaid has a payment error rate of 24 percent, meaning that the payments paid to providers are either incorrect or unverifiable 24 percent of the time.

On Waste, Fraud, and Abuse. Investigations of waste, fraud, and abuse under Medicare and Medicaid have yielded a return of $17 for every $1 spent. However, far too little is spent in the fight. Therefore, a considerable amount of waste, fraud, and abuse exist under Medicare and Medicaid. (See the recent stories on fraud in Miami, Detroit, and Denver.)

On a Public Plan under Health Reform. Weems thinks a public plan is “a bad idea because the government has a difficult time selecting only those providers who deliver high-quality care. There is a risk that a lot of resources will be wasted on poor care.

On Political Pressure. CMS administrators get a lot of pressure from Congress to treat certain providers more favorably than they might deserve. Such political meddling is a handicap in properly administering a public insurance plan.

On Physician Payments. The American Medical Association (AMA) has considerable influence on physician payments through its Resource Based Relative Value Scale (RBRVS) Update Committee (RUC). Weems thinks the resulting payments have “contributed to the poor state of primary care in the United States.” (Weems’ anti-RUC statements sparked a blogosphere debate (hat tip: Kate Steadman of Kaiser Health News). Rebecca Patchin, Chair of the Board of Trustees for the American Medical Association wrote on the Health Affairs blog that CMS is under no obligation to follow the RUC’s recommendations and she cites examples where it has not done so. On the Health Care Renewal blog, physician and Brown University professor Roy Poses asks “why does CMS rely exclusively on the RUC to update the RBRVS system, apparently making the RUC de facto a government agency, yet without any accountability to CMS, or the government at large?”)

On balance, it is clear that Weems is not impressed with the public provision of health insurance under Medicare and Medicaid. Some of the sources of problems could in principle be remedied. However, if Congress were to implement a public plan under health reform there is no assurance it would not suffer from at least some of the problems that plague traditional Medicare and Medicaid. I think the most challenging are political pressures, including rent seeking on the part of providers, and a potential inability for a public entity to selectively contract based on quality.

The Incidental Economist holds a joint appointment at a major research
university and a federal government agency. In his current position,
he studies economic issues pertaining to U.S. health care policy with a
focus on Medicare. His writings can be found at www.theincidentaleconomist.com

HELP! This is Unbelievable

Jul 4, 2009• 36

By ROGER COLLIER

Key members of the Senate Health, Education, Labor, and Pensions Committee announced on Thursday what they claimed were dramatically improved cost and coverage estimates for the latest version of their health care reform bill.

Headed by Democratic Senator Christopher Dodd, HELP members (in a Muzak-marred conference call with reporters) stated that the revised bill would cost only $611 billion over ten years, a figure apparently computed by the CBO, and that with a further expansion of Medicaid would provide coverage for 97 percent of Americans.

Key features of the bill provided during the conference call included a public plan option, subsidies for lower-income individuals buying insurance through an exchange mechanism, and a play-or-pay employer mandate.

Sounds good? We’ll have to wait for details, but two big problems are already apparent.

The first BIG problem is that the ten-year cost estimate of $611 billion excludes the cost of Medicaid expansion. With Senator Dodd’s admission that the HELP Committee expects this to provide coverage for 7 percent of Americans (the difference between the 97 percent coverage with Medicaid expansion and 90 percent without it), the total cost balloons to far more than a trillion dollars. A rough calculation of Medicaid costs for 20 million Americans at present funding levels gives a total of $80 billion a year – or $800 billion just for Medicaid expansion, presumably to be shared with state governments already on the verge of bankruptcy.

Even assuming that Senator Dodd misspoke, and the at he intended his percentages to apply only to under-65 Americans, the ten-year estimate for Medicaid expansion is still over $700 billion—with no provision for medical inflation. And, given the financial condition of most states, most of this cost would have to be borne by the federal government.

The second BIG problem is the absurdly modest levy—$750 for businesses with more than 25 workers and $375 for businesses with fewer than 25—to be imposed on employers not providing employee coverage. It’s hard to believe, in the middle of a deepening recession, that many employers will not choose to pay the $375 or $750 levy rather than buy insurance at $3,000 or more (just for the employee, with no family coverage), with additional government subsidies needed to bridge the funding gap.

The CBO has apparently assumed in its estimates that there will not be a big change in the extent of employer-sponsored coverage over the ten-year period, but this seems unrealistic. While we have not seen a “rush to the exits” in Massachusetts so far, the longer-term experience of Hawaii may be more meaningful. Immediately after Hawaii passed its mandated coverage law, the uninsured rate was below 5 percent, but as a series of recessions hit Hawaii’s economy, the rate increased to 8 percent in 1998, and close to 10 percent today. Only the truly naïve can believe that numerous US employers won’t either choose the far cheaper levy option or—as in Hawaii—find other ways of ducking the employer mandate.