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POLICY: Medicare agreement-is it a charade?

So while the news says that the bill is out of conference on Friday and has enough backing to get through, Ted Kennedy basically said  on Sunday that the Medicare bill wasn’t going to make it past him in the Senate. Frist and Hastert meanwhile are trying to broker a bill, without upsetting their conservative wing who (correctly) believe that this bill is a recipe for more cost-unconscious spending in Medicare.  On the other hand as explained at length already here and here, the liberal Democrats and some liberal Republicans like Olympia Snowe are opposed to (or at the least very wary of) the introduction of cost controls or competition/premium support. Jeanne Scott has written a full newsletter this weekend about Medicare (and if you haven’t subscribed yet….). What does she make of all this?

    Just Between You Me. Never ever step on Bill Thomas’ toes!  The sometimes curmudgeonly, but always very powerful, Ways and Means Chair, is reported to believe that the proposal does not do enough to make Medicare fiscally sustainable. And he definitely was not happy that a deal had been cut over his head. Walking with his feet, Thomas left the conference room, threatening to fly home to California rather than accept the imposed deal. Later he was reported meeting with House Energy and Commerce Committee Chaircritter W.J. "Billy" Tauzin (R-La.), hoping to draw up an alternative to the Frist and Hastert’s proposal. The Republican criticism raises the possibility that, if Mr. Frist can’t hold his own party together for the deal, that it won’t survive a yes-or-no vote in the Senate, let alone a filibuster situation demanding 60 votes to cut off debate. Don’t hold your breath on passage by this coming Friday.

    So Where are We After All of This? Conservatives say the cost containment and market components of the bill do not go far enough to hold down spending as baby boomers strain the program’s spending. Liberals say the reforms threaten the very existence of Medicare and constitute the first step toward privatizing one of the most popular government social programs. Don’t hold your breath, but there may be life in the old gal yet.

My sense is that Medicare remains unreformable given the parity in the Congress and the huge political gulf between the Conservative House Republicans and the old style Liberals in the Senate.  But given that the election next year is going to be about Iraq and the economy, I’m not sure that Bush is willing to over-ride his fiscal conservative allies on the fiscal issue in order to get a bill through at any cost. Meanwhile, the bill’s lack of popularity with many seniors is probably enough to sustain a filibuster, so that Ted Kennedy can claim that he saved Medicare.

My guess is that nothing gets by this week. And thus I’m now officially short one of the PBM stocks (in a tiny and cautious way!).

Update The Business Word has another take on this, and I’m glad to say that Donald Johnson over there has been blogging much more regularly of late.  But he too believes that the bill may not happen.  I’m sure we both agree that it’s disapointing that what is a necessary reform for Medicare (adding drug coverage) has been so politicized.  However, AARP’s endorsement may not be such a great thing, especially given the questionable popularity of the bill amongst middle income seniors.  Here’s Jeanne Scott on AARP’s last intervention in Medicare drug coverage:

    And AARP May Screw Seniors Yet Again: AARP (formerly the American Association of Retired Persons, now just plain old “AARP”) may put the screws to seniors again, just like it did in 1988 when it killed the first Medicare Rx proposal. In 1988, AARP orchestrated a highly misleading campaign to convince seniors that they were being unfairly taxed to support the new Rx program  — that law called for a 10% “surtax” to be paid on the federal taxes owed by seniors. Every grandmother in the country was told she would have to pay a “tax” when in fact fewer than 12% of all seniors would have paid any tax (10% of “0” is still “0”), and only a handful would have paid more than they might have received back. AARP did this then because it wanted to save its highly profitable “Medi-Gap” insurance business and could care less about its senior members. AARP now may give the “new and improved” Medicare its seal of approval and in return get guarantees that its for-profit subsidiary operations will have an opportunity to participate.  The AARP orchestrated phony “senior sticker shock” of 1988 may be conspicuously absent when seniors face a real sticker shock in 2006.

PHARMA: Stock update and Medicare

While the PBM stocks have been going up, the same thing is happening to the big pharma stocks, as you can see in this chart of a pharma stock index , and in the performance of Merck’s near 10% surge in the last 3 days. There’s more in this Forbes article.

However, the legislation may have been sent out from the conference committee, but it has three major pieces undecided. These include the issues of competition, long-term cost control and Health Savings Accounts.  If they couldn’t get a solution out of the two moderate Democrats on the committee, is there really a chance that this will get past Ted Kennedy? Lefty economist Paul Krugman explains why not.

So I’m still pondering shorting the PBMs…..

POLICY: More on uninsurance

A while back the Bloviator and I had some discussions parsing out the 2002 uninsurance numbers. There was some controversy (that the two of us settled to our satisfaction, at least) about those numbers from the census bureau to do with how many of the 43 million it counted as uninsured were uninsured for the whole year. Now Health Affairs has published a Commonwealth Fund-sponsored article by Pamela Short and Deborah Grefe at Penn State that examines in great detail uninsurance between 1996 and 1999. While this data is of necessity a little old, you must remember that we were in an employment boom then–so things were as good as they were ever going to get for employment-based insurance in the modern economy–and also that things are worse now.  Still, onto the highlights.

The authors looked at large slice of the non-Medicare under-65 population which had approximately 225 million adults.  (It excluded immigrants, newborns and some others). Out of that 225 million number 84 million (37%) were uninsured at some time in the 4 years. Of those 84 million roughly 15 million (or 6% of the total) were more or less uninsured the whole time. As for the rest, the authors use a fairly complicated 6 way breakdown which I will grossly over-simplify into the fact that 50 million were uninsured for 5 months or more during that four year period. Roughly 32 million of that sub-group (64%) were uninsured for at least a year or more. If you are counting along at home that leaves another 20 million who had one or more short breaks in their coverage of less than 5 months.

So in my assessment, what’s new about this research? 

1) Well it’s usually assumed that at any one time 20 odd million are uninsured for a whole year (a little less than half the 43 odd million uninsured at any one time).  But if you take this rolling view rather than the snapshot, you have 15 million hard-core uninsured essentially for ever and another 32 million who’ve had a year or more uninsured in a four year period.  So rather than the 43 million oft-quoted snapshot number, some 57 million have been uninsured for more than a year in a four year period. These are the hard core uninsured and they measure nearly 25% of adults. And incidentally that is more people than voted for any one candidate in the 2000 election.

2) Counting this crudely, and making some assumptions, there seem to be three groups; one that is nowhere near getting insurance, One that is swinging between government programs like Medicaid, some employer based insurance and no insurance, and a smaller group that is cobbling together a patchwork of employer insurance, individually-bought insurance and uninsurance. The first two groups are the lower income ones.

The authors conclusions are that separate policy solutions are needed for each group–unless we have universal coverage.  That’s true in so far as it goes, but the authors know and (restrained by the terms of this data study) don’t state that the peverse dynamics of the individual insurance "market", the cost of COBRA coverage, and the difficulty of maintaining Medicaid coverage, all combine to make viable policy solutions targeted to sub-groups of the uninsured almost impossible to create.  The only actual options for universal insurance are :
a)some kind of employer-mandate, or
b)some kind of individual-mandate, both backed-up by government schemes either in terms of premium support for the poor or guaranteed insurance (e.g. Medicaid expansion). Or
c) of course single payer, Medicare for all.

There is clearly no political will for any of these reforms now. But perhaps if word gets out that not only is one in seven people uninsured now, but over one in three of us might be in this jam sometime in the next four years, that political will might become more apparent. One thing we do know: voluntary universal insurance is a fiction.

PBMs: No one’s listening to me?

Despite my doubts as to whether we’re going to get a Medicare drug bill, the market has decided a) that we will and b) that the PBMs are going to benefit the most from it. The last two days have seen a 10% rise in the PBMs stock price, and in the last 2 months they’ve gone up above their all time highs of 2 years ago. Somewhere a little north of here, I feel a pullback is imminent–perhaps I can just get word to Ted Kennedy and we can split a short position together?

TECHNOLOGY/INDUSTRY: More Tenet-related scuttlebutt

Not that it’s my natural proclivity, but I am enjoying the rumor-mongering abilities that writing this kind of a blog gives me. You’ll recall a while back that I came upon some rumors that Tenet had hired a company for its JCAHO reporting that may have put at risk its ability to remain certified to treat Medicare patients.

The latest I’ve heard is that this company is having problems with a related product. Apparently they found out that no (database) tables were being created for 7 types of medical errors that hospitals report using their software (e.g. medication errors, falls, etc.).  The error was part of a production release sent out over a month ago.  In other words, the 10 hospitals using the product could have (and probably did) reported adverse incidents using the system for over a month and the data for those incidents (that would be used to defend themselves in court, identify risky situations, prevent medication errors, etc.) would be lost. Apparently the head of QA recently left and another senior QA guy followed suit, resulting in a "go along to get along" QA department. 

This is a perfect example of how rushing software to market (without testing, let alone a detailed technical design document) can lead to big mistakes. Apparently this company develops on an ad-hoc basis, often sending out production releases every week.

PBMs/POLICY: Will tentative Medicare deal stick?

I noticed that the PBM stocks took off like a rocket at the end of the trading day yesterday. The news was that a tentative deal Medicare has been reached by the committee negotiating a compromise Medicare bill. PBMs are likely to add millions of members under the version of the bill that may be passed. However, of course this slight optimism is tempered by the fact that neither the hard-core Democrats like Ted Kennedy nor the fiscally-conservative Republicans are likely to sign on to this compromised version of the bill, because it either will lead to the death of Medicare as we know it, or the bankrupting of the Federal government–depending on your point of view.

In any event, I’m not sure that adding a large number of members via a government-funded program which may make them low-margin contractors is the best solution for fast future growth for PBM bottom lines.

TECHNOLOGY: Two quickies

While you get your teeth into the long post about Canada that I put up late yesterday, here are two interesting follow-ups to technology issues already tangentially discussed in THCB.

1) Patient-Physician email–Here’ s a thoughtful article about the overall issue from the Seattle Times. It dovetails with the Oregon article I posted about on Monday, and makes the obvious point that even if email enhances productivity, in a fee-for-service environment it’s unlikely to be adopted unless it has payment for the doctors attached.  The docs at Group Health in Seattle don’t get paid that way, so they see the issue as how best to use their time rather than how best to maximize their billings.

2) VOIP (voice over Internet)–The extremely careful reader of the iHealthbeat column on synchronization I referenced last week would have noticed a bullet point about Vocera’s attempts to use health care as a testing ground for its voice over Wi-Fi product, which intends to replace paging and phones within hospitals. Well it looks like someone at the San Jose Merc was reading, or had been bugged by Vocera’s PR firm.  Their comprehensive story about the installation at El Camino hospital is well worth a glance.

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