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.
Above the Fold
Washington Post’s “Salon” Disaster and Health Care Reform
As a former citizen of the Washington Post newsroom, the recent disaster about the newspaper’s “salon” project is heartbreaking and embarrassing.
I won’t belabor the issues many others have so thoroughly covered, including today’s “apology” by publisher Katharine Weymouth, which feels a bit short of fulsome.
Instead I want to point out something that’s gotten lost in the media frenzy: That
the topic of the first “salon” [sorry, I find I have to use quotes when
referring to that] was to have been health care reform.
As an independent journalist [among other things] and participant in
the “health 2.0″ movement, I find this particularly distressing.
The fact that Weymouth and her team identified health care reform as
the first ripe target for a scheme to bring together “the powerful
few”: CEOs/lobbyists, “Congressional and Administration officials” and
Washington Post health care reporting and editorial staff” demonstrates
the peril faced by the group with the biggest stake in health care
reform.
I refer, of course, to patients.
A Declaration of Health Independence
When in the course of human events, it becomes necessary for individuals to dissolve their professional bands of medical dependency and to assume among their obligations the primary responsibility for their own health to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of humankind require that they should declare the causes which impel them to seek Health Independence.
We hold these truths to be self-evident, that all people are created equal, that they are endowed by their Creator with certain inalienable Rights, that among these are the freedom to direct ones own Life, to provide for ones own Health and to die with dignity—that to assist in providing such rights when otherwise unattainable, health professions are instituted among people, deriving their roles solely from the consent of the people they serve—
The other Michael Jackson mega-mix
Never ones to be shy with an interesting view into celebrity pharmacology (and truth be told responding to a little tickle from me) the inventive folks at PharmaSurveyor have added Michael Jackson to their celebrity drug cocktail page.
It’s an interesting way to show the dangers of multiple drug regimens, and a great way to show off PharmaSurveyor’s computational capabilities of analyzing multiple drug regimens at once. (PharmaSurveyor calls those assessments surveys). You can find it on www.michaeljacksondrugs.net which has a static picture of Michael Jackson’s survey and links to the interactive one on PharmaSURVEYOR.com. (FD I’m an advisor to PharmaSurveyor with a few stock options)
Is Wal-Mart Leading the Charge on Health Reform?
Last Wednesday’s headline in the Wall Street Journal may have surprised you. It read: “Wal-Mart Backs Drive to Make Companies Pay for Health Coverage.” The article discussed Wal-Mart’s open support for an employer mandate requiring all but small businesses to provide care for its workers, a stance that other retailers have opposed for obvious reasons.
I’ve been following the story of Wal-Mart and health care reform for the past several years. While some see this move as the company’s way of trying to level the playing field between it and other retailers, it nevertheless has taken several actions over the past decade to make health care more accessible and affordable.
Wal-Mart’s transformation began in 2006, when then CEO Lee Scott shook hands with Andy Stern, the head of the Service Employees International Union. In the past, such a handshake would have been unimaginable. Wal-Mart had earned a reputation for failing to provide its workers with health care, and the SEIU was one its strongest critics.
That changed with rising health care costs. Wal-Mart, like labor, recognized the need to provide affordable health care. The Scott/Stern handshake was a call for affordable care for all Americans by 2012.
This handshake can be seen as a bookend to another handshake decades ago, described by Malcolm Gladwell in a 2006 New Yorker piece. This first handshake was, like this one, between two powerful men representing labor and industry:
“The president of General Motors at the time was Charles E. Wilson, known as Engine Charlie. Wilson was one of the highest-paid corporate executives in America, earning $586,100 (and paying, incidentally, $430,350 in taxes). He was in contract talks with Walter Reuther, the national president of the U.A.W. The two men had already agreed on a cost-of-living allowance. Now Wilson went one step further, and, for the first time, offered every G.M. employee health-care benefits”
Thus, American health care: –employer based, brokered by private insurers, and provided by doctors on a fee-for-service basis. The kind of care that has created the fragmented market that most of are a part of today. The kind that has left 48 million Americans uninsured and millions more underinsured and just one illness away from bankruptcy. The kind of health care that led Wal-Mart the SEIU and the Center for American Progress to write a letter to the White House today in support of change.
As reported in the Journal, Wal-Mart has taken sincere steps to provide health care to its employees. Today, as a result of cutting the time of eligibility in half and increasing choices of plans, 52% of Wal-Mart U.S. employees are covered by the company. That’s compared to 45% of the rest of the retail industry.
Wal-Mart hasn’t just stepped up to increase coverage for its employees–in 2005, it became the first company to offer $5 generic prescriptions–a breakthrough price for people who previously needed to decide between taking their meds or eating dinner.
Wal-Mart has also been in the lead in opening walk-in clinics in its stores. Although the recession seems to have slowed the initial enthusiasm for retail medicine, the idea, in principle, has the potential to offer convenience at a very affordable price for people who have minor ailments like sore throats.
Finally, Wal-Mart has also recently started offering an electronic medical record to doctors. While it remains to be seen whether it will sell, you have to give credit to the big box retailer for taking the initiative.
Whether you like or loath Wal-Mart (and all of us seem to fall into one or the other category), its efforts to shape up American health care shouldn’t go unnoticed. In fact, I would dare “real” health care groups, like the American Medical Association, to show that they can match Wal-Mart’s initiative and drive to improve health care. So far, all we’ve seen from the AMA in the past few weeks has been a lot of lip service trying to assure us that they’re on the side of reform while behind closed doors, the Association’s members are still fighting about its future. And remember, the AMA represents at best 20-30% of doctors in this country, which is one reason why the New York Times’ Nicholas Kristof urged “President Obama, don’t listen to the A.M.A. on this issue. Instead, for starters, call your doctor!”
Sunday reading-Jon Cohn on French & Dutch health care
Jon Cohn has a long article in the Boston Globe about how the French and Dutch get health care about right at half the American cost with none of that unpleasant Canadian or Britishness that FoxNews loves to complain about. Given that (if we get reform even vaguely right) we’ll look more like Holland or Germany that Canada, it's your essential Sunday reading.
Of course Jon is slightly too nice as ever. One minor point about access to specialty care—it may take longer there than here, slightly. But in the same Commonwealth study Cohn quotes, waiting times for elective surgery were shorter in Germany than they are in the US. And of course no one there gets bankrupted by the cost of medical care.
Broad Agreement that Worker’s Comp Program for War Zone Workers Needs Fixing
Congressional hearings generally follow a script. Lawmakers publicly
vent their outrage, administration officials offer plausible defenses,
and the outcome is inconclusive. But this month's airing of complaints
about the government's system for taking care of civilian workers
injured or killed while on the job in Iraq and Afghanistan was notable
for its unanimity.
Republicans and Democrats, Obama administration officials, private
insurance companies and injured contractors all agreed that there are
serious flaws in the Defense Base Act, [1]
a 70-year-old law that requires federal contractors to purchase special
workers' compensation insurance for employees working in war zones.
The Labor Department, which oversees the system, acknowledged that
it had failed to consistently provide for the needs of the injured.
Insurance carriers complained that tight deadlines and paperwork
requirements were outmoded for the complexities of a war zone. Injured
civilians recounted long, painful battles to get prosthetic legs,
prescription eyeglasses and other basic medical needs.
Careful What You Wish For
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
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.
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 [reformupdate.blogspot.com].
Creative thinking about the CER agenda
This week the Institute of Medicine (IOM) released its list of the top 100 topics that should be addressed in comparative effectiveness research (CER) now — thanks to $1.1 billion in the American Recovery & Reinvestment Act
— that the federal government actually has the resources to do
substantial CER. IOM has prioritized the list by creating four
quartiles, noting that the first quartile is the highest priority
group, etc.
In order for the federal government to make good use of the huge pot of CER money, there are at least five things that they need to do to ensure its value and actually change care delivery.
I’m all for trying to find out whether me-too drugs add any significant
value. However, the greatest opportunities for implementing delivery
system change that improves care effectiveness and efficiency relate to
innovations in how care is organized and delivered, and how insights
are communicated to the broad range of health care actors — most
notably consumers.
That’s why I was heartened by the IOM’s top 100 list — though
certainly I’d move a few up a quartile or two. The list has many
projects that fit my priorities, including a strong emphasis on CER to
reduce health disparities.
