Posts Tagged 'uninsured'

Health-care reform’s have-nots: who has the right to remain without heathcare?

Health-care reform’s have-nots

U.S. Census Bureau data indicate that 7.2 million adults earning less than twice the federal poverty level – about $21,000 for an individual and $44,000 for a family of four – would make too much to qualify for the expanded Medicaid envisioned by the Senate.   People without insurance or who can’t afford their employer’s insurance, if they earn up to $43,000 individually or $88,000 as a family, would receive sliding-scale federal subsidies to help pay for private insurance, which everyone is required to buy.  Well, almost everyone.  If your premiums, even with federal assistance, equals 8% of your income, you could get a “hardship” exemption.  (The exemption is for premiums only, not for co-pays or other charges.)  Who could receive the “hardship” exemption and earn this privilege of remaining without healthcare?

Philadelphia Inquirer, January 4, 2010

Health-care have-nots

Reforms in the pipeline would leave millions of Americans in a bind, given too little government help to buy insurance.

By Rick Schmitt

Michael Rhoads seems just the sort of person who would benefit from health-care reform.

He and his wife, working parents of two children in Southwest Philadelphia, lack health insurance. They earn too much to qualify for Medicaid and too little, they say, to afford private coverage.

Congress is seeking to bridge that gap. But Rhoads says the likely cost of the solution would still be beyond his family’s budget.

“Health care for everyone – that sounds wonderful,” says Rhoads, 35, who works part time as an outreach coordinator for a community health clinic. “In reality, when it comes down to it, it is another big bill that just doesn’t fit.”

Millions of people who are among the intended beneficiaries of health-care reform may face the same dilemma. Many might have to choose between insurance and necessities like rent and food, says Richard Curtis, president of the Institute for Health Policy Solutions in Washington.

“These are not people with discretionary income,” says Curtis. “Asking them to pay any substantial share . . . I worry about that.”

To be sure, millions of vulnerable Americans will get a safety net if the legislation now headed to a House-Senate conference committee becomes law. Both chambers propose raising the income limits for Medicaid and including adults without children for the first time.

Those moves alone would add an estimated 9.5 million childless adults to the state-federal insurance program for the poor under the Senate version. But a big chunk of the uninsured population would just miss the cut.

To illustrate how health reform might affect them, Georgetown University’s Center for Children and Families assessed the prospects for several Philadelphia-area families, including the Rhoadses.

The center, a nonpartisan policy and research organization that is dedicated to improving health coverage for families, used their current earnings and insurance status. Its findings are based on the bill that passed the Senate on Christmas Eve; most political analysts consider it the likely blueprint for any final health legislation that Congress approves.

U.S. Census Bureau data indicate that 7.2 million adults earning less than twice the federal poverty level – about $21,000 for an individual and $44,000 for a family of four – would make too much to qualify for the expanded Medicaid envisioned by the Senate. People earning up to four times the poverty level – about $43,000 for an individual and $88,000 for a family of four – would receive federal subsidies, on a sliding scale based on income, to help them buy policies on a series of “exchanges.”

The exchanges – private marketplaces regulated by the government – would be set up to offer coverage to people who have no insurance or who cannot afford insurance through their workplace. Some small businesses would also be able to purchase insurance for their employees. At the core of the overhaul is a requirement that most individuals and families obtain health insurance or else risk a federal fine. Under the Senate bill, that penalty would reach as much as $750 per person or 2 percent of household income, whichever is higher, although there would be a “hardship” exemption in cases where the cost of premiums totaled 8 percent or more of income.

The families examined for this article most likely would qualify for the exemption – and would be left in the same place they are now: without health insurance.

Rhoads and his wife have spent most of their adult lives without health insurance. Over the years, she has large unpaid emergency room bills. Both of them go to the doctor only when they are so sick that they cannot work.

The couple’s two daughters, 13 and 15, both receive free care under the Children’s Health Insurance Program, a state-federal initiative for low-income families that would continue to operate under the Senate (but not the House) legislation.

Their combined household income is about $40,000 a year – not enough, Rhoads says, to pay $350 a month for the cheapest insurance available from the nursing home where his wife works as a certified aide.

The cost is high enough to make them eligible for a subsidy to buy insurance through the new exchanges. According to the Georgetown University center’s analysis, however, under the Senate bill they would also be expected to contribute about $200 a month, 5.8 percent of their income, toward the cost of the premiums. Copays and deductibles would likely add several hundred dollars more a year.

Rhoads says they still couldn’t afford health insurance.

Danielle Simmons, 23, a medical assistant and student at Community College of Philadelphia, is also uninsured. And she could be in more perilous shape.

Under the Senate bill, she would have to pay 8.1 percent of her income, or about $246 a month, for her share of premiums on a government-subsidized insurance policy.

Simmons, a single parent, says she already has more bills than she can handle. Like the Rhoads children, her 5-year-old daughter qualifies for CHIP. But she pays $840 a month for a Christian preschool. The heating oil bill for the house she shares with her sister is expected to hit $4,000 this winter. She still has $15,000 in unpaid student loans.

Adding another expense, even health insurance, “would not be on my radar,” she says. So she tries to keep on top of her health using her own medical knowledge and self-discipline.

Simmons has lupus, an auto-immune disorder. She keeps the condition under control, she says, through careful diet, zealous attention to hygiene, and prayer.

The potential gaps in coverage underscore how budget considerations have been driving the debate in Washington. While they want to cover as many people as possible, lawmakers are also trying to keep the tab below $900 billion over a decade, a marker set by President Obama.

The Senate bill would cost less – and be less generous – than the House’s on several measures, including subsidies. A study by the Urban Institute last month found that the poorest and sickest families qualifying for subsidies under the Senate bill could end up paying as much as 13.4 percent of their income on health care, nearly double the 7.6 percent under the House version.

To cushion the blow, the Senate would help states set up basic health plans for low-income individuals and families who don’t qualify for expanded Medicaid. How well they might work is far from clear. A comparable program already in place in Pennsylvania, known as adultBasic, has seven times more applicants than it can enroll because of shortfalls related to the state budget crisis.

Mahawah Sillah, who has diabetes and hypertension, is one of those waiting for help. She earns about $41,000 a year as a diet technician at a hospital and has three children. Her income, about 185 percent of the poverty level, makes her eligible for the basic health assistance from the state, but she is stuck in the backlog. (Her children are covered by CHIP.)

Sillah, who lives in Yeadon, also appears unlikely to gain much from the pending federal legislation. She makes too much to qualify for the planned Medicaid expansion. With monthly mortgage and child-care payments, and thousands in legal bills for her husband’s immigration problems, she says she can’t afford the insurance offered by her employer.

The Senate bill would require her employer to kick in some money to help her buy insurance. But she would still face about $200 a month in premiums – double what she says she can handle.

A few months ago, Sillah, 40, landed in the emergency room after a fall that was related to her high blood pressure. The bill, which she says she cannot pay, was $20,000. Collection agencies have started phoning.

Sillah’s prescription for dealing with her own personal health-care crisis: “I screen my calls.”

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Crusading Professor Challenges Dartmouth Atlas On Claims Of Wasteful Health Care Spending

The Obama administration demands four cornerstones of healthcare reform: (1) a Medicare cost-containment Commission, (2) taxing high-cost private insurance, (3) reform of medical payment incentives, and (4) deficit reduction. Each of these cornerstones has serious potential to reduce our health coverage, while the rest of ObamaCare guarantees huge and sustained profits for the insurance, pharmaceutical, and hospital industries.Part of the reform of medical payment incentives cornerstone involves reduction of Medicare payments to hospitals historically shown to have much higher Medicare expenses compared to hospitals in other regions of the country, as documented by the Dartmouth Medical Atlas for many years. Nobody contests that these differences exist, but some doctors contend that many of these hospitals are high-spending because they are in poor, minority, unhealthy, and medically underserved, areas and that Obama’s plan of reducing those hospitals’ payments would drive healthcare quality further down in racially and economically discriminatory way. It would be the medical equivalent of No Child Left Behind. The health plans being considered all reduce funding to public and safety-net hospitals already.

Kaiser Health News, December 3, 2009

Crusading Professor Challenges Dartmouth Atlas On Claims Of Wasteful Health Care Spending

As he raced through the U.S. Capitol this fall, Dr. Richard “Buz” Cooper, a 73-year-old University of Pennsylvania medical school professor, didn’t mince words. He denounced as “malarkey” a reigning premise of the health care debate — that one-third of the nation’s $2.5 trillion in annual health spending is unnecessary — and said that the idea came from “a bunch of clowns.”

The harsh language underscores Cooper’s disdain for highly regarded work — as close to a sacred cow as anything in health care — developed over two decades by the Dartmouth Atlas of Health Care. The work by Dartmouth Medical School researchers shows huge geographic variations in the amount of care that hospitals and doctors provide, with spending in some areas running three times as much as in others. Dartmouth argues much of the high spending is due to extra procedures and tests that often don’t help patients, but bring in more money for doctors and hospitals.

The argument has been embraced by President Barack Obama’s administration and several lawmakers, who have repeatedly said that the nation could save as much as $700 billion a year — if only doctors and hospitals in high-spending areas, such as Philadelphia, Los Angeles and Chicago, would end their profligate practices and adopt the thriftier ways of say, the Geisinger Health Systems, based in Danville, Pa. The House has inserted provisions in the health bill that could punish high-spending hospitals in Philadelphia and elsewhere, while rewarding low-spending facilities in places such as Albuquerque, N.M., Madison, Wis., or Portland, Ore.

The Poverty Factor

But Cooper and some allies say that would be a disaster and hurt efforts by doctors and hospitals to care for the poor. Cooper says the Dartmouth research doesn’t take into account the high cost of helping the impoverished, who often spend more time in hospitals because they don’t have people to care for them at home and often return to the hospital when they can’t afford needed medications.

“There is abundant evidence that poverty is strongly associated with poor health status, greater per capita spending, more hospital readmissions and poorer outcomes,” he wrote in an Oct. 24 post on his blog. “It is the single strongest factor in variations in health care and the single greatest contributor to ‘excess’ spending.”

“Don’t say our failure is that medicine is bad in Mississippi and the South Bronx,” Cooper adds in an interview. “That’s a social problem. We’re bad because we don’t spend enough in areas of poverty.”

Cooper is emerging as the most provocative voice among a small group of health care experts raising doubts about Dartmouth’s methods, which focus on comparing how hospitals treat Medicare patients in their final two years of life. It is from those studies that Dartmouth came to its most far-reaching conclusion: that too much medical care can actually hurt patients rather than help them. But the skeptics say the way hospitals treat Medicare patients can’t be translated into firm conclusions about the country’s overall health spending and trends.

Dartmouth researchers say that Cooper is flat-out wrong. They say that even when you take the socio-economic levels of patients and sicker populations into account, some hospitals spend far more than others without good reason. And they say their studies show Medicare spending is a good indication of how hospitals generally operate.

“It’s impossible to carry on a debate with somebody who does not understand statistics, and seems uninterested in learning,” Jonathan Skinner, a senior author of the Atlas, says of Cooper.

Other critics of Cooper — and there are many — say he has not offered a better way to analyze spending variations among hospitals, but instead takes potshots. They say he tends to embrace data that back up his long-held view that the country needs more doctors, and is too eager to flout professional customs. In December, he was banned from writing for the journal Health Affairs for five years for breaking a rule against sharing articles before publication.

Hospitals Defend Spending

The counterattacks haven’t slowed Cooper down. These days, he’s working with several Democratic members of Congress, including Rep. Allyson Schwartz, D-Pa, whose district includes parts of Philadelphia, and Rep. Shelley Berkley, D-Nev. Cooper’s criticisms are also being cited by the lobbyists for the nation’s teaching hospitals and some state hospital associations, including New York’s. All are trying to ensure the health overhaul bills don’t lead the government to unfairly penalize high-spending parts of the country.

“Our institutions are barely getting by,” says Atul Grover, chief advocacy officer at the Association of American Medical Colleges. “They’re struggling to take care of people who can’t get care anywhere else, and now they’re talking about cutting them, saying they’re inefficient.”

Hospitals in the greater Philadelphia area certainly have reason to worry. Overall, the region’s hospitals billed Medicare $66,974 on average for patients in the last two years of life, according to the most recent Dartmouth data, covering the years 2001 through 2005. That was 25 percent above the state average of $53,373, and 27 percent above the national average of $52,838.

The highest-spending hospitals – such as Temple University Hospital, which Dartmouth says spent $85,538 on the average Medicare patient for the period – say they provide more treatment because their patients are poor and enter Medicare with greater health problems. A Temple spokeswoman says they treat more Medicaid patients than any other hospital in the state. Teaching hospitals in the city note that under Medicare rules they get paid extra.

“Our costs are higher because we have more technology, we have a wider range of programs,” says Ralph Muller, chief executive officer of the University of Pennsylvania Health System, which spent $80,727 on Medicare patients in their final two years of life. “When you adjust for a teaching hospital, a lot of the variation goes away.”

Dartmouth researchers counter that they have compared hospitals with similar patients’ populations and still found wide differences in spending.

“There are a lot of people and a lot of hospitals, particularly in big cities, that feel threatened by the message of the Dartmouth Atlas,” says Skinner. “For them to find a spokesperson who is absolving them of all sin is very appealing to them.”

So who’s right? To help find an answer, the House health overhaul legislation would direct the prestigious Institute of Medicine to research the causes of geographic variations. The institute then would recommend how Medicare can best identify and clamp down on regions where the spending is unjustifiably high. In a partial victory for Cooper and his allies, the bill requires that the institute take into account “socio-economic factors” as well as the health status of patients.

Other researchers’ work is raising questions about Dartmouth’s conclusions. A recent study published in Circulation, the journal of the American Heart Association, followed patients at six California teaching hospitals who had been hospitalized for heart failure. The study found that those who received more treatment from the hospital — through procedures, tests or days as a patient — were more likely to survive than those who got less medical care.

Measuring Waste

Dan Mendelson, president of Avalere Health, a consulting firm in Washington, says some low-spending hospitals may be providing insufficient care, while higher spenders may be giving the needed amount. “What the Cooper analysis does is show why it’s so difficult to change the system,” says Mendelson, a top health budget expert in the Clinton administration.

But many of the nation’s most prominent health economists, including Princeton University’s Uwe Reinhardt and Harvard University’s David Cutler, argue there is substantial variation among hospital spending even when the special needs of high poverty areas are fully analyzed.

“I have yet to meet anyone who really plays around in the health care system who really thinks there’s less than 20 percent waste,” says Cutler, who advised Obama during his presidential run.

More answers are coming. The Medicare Payment Advisory Commission, an independent congressional agency, is performing its own analysis. Early on, it has found that regional spending differences persist even after patients’ health is taken into account. But the disparities are not as wide as Dartmouth’s.

“Before Dartmouth came along, nobody measured anything,” says Skinner. “We did use the methods we thought would work the best, given our very scarce resources. Are they the best measures? No. Are there better measures? Yes. But there is certainly information in these measures that cannot be denied by the people who want to deny them.”

Ultimately, Cooper may be vindicated not for his denunciations of Dartmouth, but for being an early, vocal doubter that the government can pinpoint excessive health care spending with enough precision to justify paying doctors and hospitals less.

“The thing with Buz Cooper is he does raise significant and important issues that challenge the status quo’s thinking and conventional wisdom and he should always be taken seriously,” says Reinhardt, the Princeton economist. “If he goes around the Hill and says, ‘Don’t cut Florida and don’t cut Louisiana and Texas until you know more,’ I would be on his side with that one. If he totally belittles the (Dartmouth) work, I think that would be totally wrong.”

Cooper’s Presentation
“The Crisis of Physicians Supply and the Myths of Health Care Reform” (.pdf)

Reaction To Cooper’s Challenge Against Dartmouth Atlas

Related Links
* Dartmouth Atlas Project (.pdf)
* Dartmouth Atlas Policy Recommendations (.pdf)
* Richard “Buz” Cooper’s blog
* Cooper OpEd: Wrong Map For Health Reform
* Richard “Buz” Cooper’s critique in Health Affairs
* Responses to Cooper’s Health Affairs article – Part 1 and Part 2
* Health Affairs letter banning Cooper from the journal for 5 years
* Circulation article (.pdf)

Interactive Dartmouth Graphic: Regional Differences In Medicare Spending

Tax on high-cost health plans is to strip down employer-provided health coverage, not raise revenue

As this and another recent NY Times piece explain, the Obama administration demands four cornerstones of healthcare reform: (1) a Medicare cost-containment Commission, (2) taxing high-cost private insurance, (3) reform of medical payment incentives, and (4) deficit reduction.  Each of these cornerstones is designed to reduce healthcare spending by reducing our health coverage, while the rest of ObamaCare guarantees windfall profits for the insurance, pharmaceutical, and hospital industries.  The article below illustrates how one of the cornerstones, taxing high-cost private insurance,  will reduce coverage for those with employer-furnished health insurance, and demonstrates how disingenuous is Obama’s claim that “If you’ve got healthcare you like, you can keep it.”  Obama, the Democrats, and the Republicans agree that we can’t afford decent healthcare for everyone, but what we really can’t afford is the profit system in healthcare.

Kaiser Health News, December 3, 2009

New Survey: ‘Cadillac Tax’ Would Force Employers To Trim Health Insurance Costs – Kaiser Health News

By Julie ApplebyKHN Staff Writer

Dec 03, 2009

Two-thirds of employers would raise deductibles, change insurers or scale back coverage to avoid the so-called Cadillac tax on high-cost benefits proposed in the Senate Democrats’ health care bill, according to a survey released today by consulting firm Mercer.

Among things employers might change or drop: flexible spending accounts, which are used to cover unreimbursed medical expenses, and dental or vision policies.

Their actions would tend to shift more costs to workers – but could help accomplish one of the goals touted by economists and policymakers who support the excise tax: slowing medical spending.

Yet some employers have already raised deductibles or taken other steps to bring down premiums and still have expensive packages.

“On the one hand, the majority of employers will respond the way policymakers hope, by reducing benefits,” says Beth Umland, director of research for health and benefits at Mercer. “But the X factor may be employers who hit the cap, but don’t offer overly generous plans. What are their options going to be?”

The excise tax —which is placed on insurers, but is expected to be passed along to employers — could hit up to 19 percent of medical packages offered by employers in 2013, the first year it goes into effect, according to a separate Mercer analysis of data from 3,000 firms.

Whether an employer’s benefits are subject to the tax depends on the combined cost of all medical benefits, including health, dental, vision and other benefits, such as worker and employer contributions to flexible spending or health savings accounts. Workers and employers can put pre-tax money into health savings accounts, helping cover deductibles, for example.

If the combined total of all benefits exceeds annual thresholds of $8,500 for individuals or $23,000 for families, the difference would be subject to a 40 percent excise tax.

The Mercer survey (.pdf) of 465 employers – a nonscientific sample – also found that of the 63 percent who would make changes to avoid the tax:

— 75 percent would raise deductibles or copayments to bring down premium costs.
— 40 percent would add a lower cost health plan as an alternative.
— 19 percent would terminate employer contributions to health or flexible savings accounts.

While employers aren’t yet changing benefits in response to the proposal, analysts say, the excise tax is one of their main concerns.

“One of the top issues is understanding and anticipating the high cost excise tax,” says Michael Langan, a principal at consulting firm Towers Perrin. “We’re finding that about half of the large employers we work with will be at or above those (threshold) limits.”

The tax is controversial, but remains one of the main ways the Senate proposes to offset the costs of its legislation, bringing in $149 billion over 10 years. It has support from many economists, who say an excise tax will help control medical spending over time by discouraging overly generous coverage. The tax could also result in higher wages for workers, economists say, if employers shift to lower-premium plans and use the savings to give workers bigger raises.

The tax – which is not included in the House health bill — is strongly opposed by labor unions. They say it unfairly penalizes workers in firms with higher proportions of older or sicker workers and those that have forgone wage increases to keep better health benefits.

The threshold has been raised from an original proposal, and Senate lawmakers also added higher limits for certain employers, such as those in high-cost states or those in high-risk professions.

Most analysts – including the Congressional Budget Office in a report out this week – say they expect employers will try to reduce their total medical benefit costs to avoid the tax by shifting more costs to workers, pushing harder to get workers to sign up for wellness programs or making other changes to their benefit offerings. The CBO forecast that 19 percent of employer sponsored plans would be subject to the tax in 2016, three years after it goes into effect.

Ken Sperling, global health care practice leader at benefit consulting firm Hewitt Associates, says that employers may first look at scaling back or eliminating flexible savings accounts.

FSAs, as they are called, allow workers to set aside money pre tax to cover such things as copayments for drugs, the cost of prescription eye glasses or contact lenses and other unreimbursed medical expenses. The legislation proposes limiting such contributions to $2,500 a year per worker, but that amount could still put some plans or employees above the threshold.

“Their first reaction will be scale back the FSA so that no employee is above the threshold,” says Sperling, who says employers may also look at reducing or eliminating other benefits, such as dental coverage, which can add about $1,000 a year to family coverage costs.

Employers have already spent the past few years pushing workers to sign up for health management programs — and raising deductibles and copayments to try to slow rising health spending, benefit analysts say. The threat of an excise tax would likely spur on those efforts.

Even if Congress doesn’t approve an excise tax, Umland says workers are likely to continue to pay more for health coverage as employers seek ways to slow the growth of premiums: “This comes down to the essential question, when you shift more costs to employees do they cut back on unnecessary care, or on needed care? Or do they just pay more? The answer is probably all three.”

Also see Bob Herbert’s December 28 NY Times article “A Less than Honest Policy” saying,  “It’s not expected to raise this money directly. The dirty little secret behind this onerous tax is that no one expects very many people to pay it. The idea is that rather than fork over 40 percent in taxes on the amount by which policies exceed the threshold, employers (and individuals who purchase health insurance on their own) will have little choice but to ratchet down the quality of their health plans.”

Senate Health Bill is a Milestone … In Rationing

I find this a pretty convincing argument that the Senate healthcare bill is about rationing, if you define rationing as Ewe Reinhardt did in a recent NY Times piece, meaning decisions by insurers about what will be covered, versus what has to be paid for out-of-pocket. As this article indcates, in the future these decisions by insurers are more likely to be made collectively in response to various pressures including taxes on high-cost plans, government guidelines on effective and cost-effective treatment such as the recent breast and cervical cancer screening recommendations, the bi-partisan Medicare cost-control Commission, and finally reimbursement reform including moving away from fee-for-service and toward payments for doctors and hospitals bundled together for particular medical care episodes akin to managed care.

As this and another recent NY Times piece explain, the Obama administration favors the Senate bill, as it incorporates its four cornerstones of healthcare reform: (1) a Medicare cost-containment Commission, (2) taxing high-cost private insurance, (3) reform of medical payment incentives, and (4) deficit reduction.

If the whole package costs roughly $900 billion over ten years, that roughly $90 billion per year. For comparison, sending 35,000 troops to Afghanistan, at $1 million/individual troop/year will cost roughly $35 billion.

The Atlantic, Nov 21 2009, 11:29 am by Ronald Brownstein

A Milestone in the Health Care Journey

When I reached Jonathan Gruber on Thursday, he was working his way, page by laborious page, through the mammoth health care bill Senate Majority Leader Harry Reid had unveiled just a few hours earlier. Gruber is a leading health economist at the Massachusetts Institute of Technology who is consulted by politicians in both parties. He was one of almost two dozen top economists who sent President Obama a letter earlier this month insisting that reform won’t succeed unless it “bends the curve” in the long-term growth of health care costs. And, on that front, Gruber likes what he sees in the Reid proposal. Actually he likes it a lot.

“I’m sort of a known skeptic on this stuff,” Gruber told me. “My summary is it’s really hard to figure out how to bend the cost curve, but I can’t think of a thing to try that they didn’t try. They really make the best effort anyone has ever made. Everything is in here….I can’t think of anything I’d do that they are not doing in the bill. You couldn’t have done better than they are doing.”

Gruber may be especially effusive. But the Senate blueprint, which faces its first votes tonight, also is winning praise from other leading health reformers like Mark McClellan, the former director of the Center for Medicare and Medicaid Services under George W. Bush and Len Nichols, health policy director at the centrist New America Foundation. “The bottom line,” Nichols says, “is the legislation is sending a signal that business as usual [in the medical system] is going to end.”

Both the Senate bill’s priority on controlling long-term health care costs, and its strategy for doing so, represents a validation for Senate Finance Committee chairman Max Baucus (D-MT). When Baucus released his health reform proposal last September, after finally terminating months of fruitless negotiations with committee Republicans, Democratic liberals excoriated his plan as a dead end. And on several important fronts–such as subsidies for the uninsured, the role of a public competitor to private insurance companies, and the contribution required from employers who don’t insure their workers–Reid moved his product away from Baucus toward approaches preferred by liberals.

But the Reid bill’s fiscal strategy, and its vision of how to “bend the curve,” almost completely follows Baucus’ path from September. Baucus’ bill was the first to establish the principle that Congress could expand coverage while reducing the federal deficit; now that’s the standard not only for the Senate but also the House reform legislation. And, perhaps even more importantly, the Reid bill maintains virtually all of Baucus ideas’ for shifting the medical payment system away from today’s fee-for-service model toward an approach that more closely links compensation for providers to results for patients. In the Reid bill, there is some backtracking from Baucus’ most aggressive reform proposals, but not much.

Almost everything Baucus proposed to control long-term costs have survived into the final bill. And, with only a few exceptions, that’s just about all the systemic reforms analysts from the center to the left have identified as the most promising strategies for changing the economic incentives in the medical system. (The public competitor to private insurance companies championed by the Left would affect who writes the checks in the medical system, but not what the checks are written to pay for.) Most of the other big ideas for controlling costs (such as medical malpractice reform) tend to draw support primarily among Republicans. And since virtually, if not literally, none of them plan to support the final health care bill under any circumstances, the package isn’t likely to reflect much of their thinking.

In their November 17 letter to Obama, the group of economists led by Dr. Alan Garber of Stanford University, identified four pillars of fiscally-responsible health care reform. They maintained that the bill needed to include a tax on high-end “Cadillac” insurance plans; to pursue “aggressive” tests of payment reforms that will “provide incentives for physicians and hospitals to focus on quality” and provide “care that is better coordinated”; and establish an independent Medicare commission that can continuously develop and implement “new efforts to improve quality and contain costs.” Finally, they said the Congressional Budget Office “must project the bill to be at least deficit neutral over the 10-year budget window and deficit reducing thereafter.”

As OMB Director Peter Orszag noted in an interview, the Reid bill met all those tests. The CBO projected that the bill would reduce the federal deficit by $130 billion over its first decade and by as much as $650 billion in its second. (Conservatives, of course, consider those projections unrealistic, but CBO is the only umpire in the game, and Republicans have been happy to trumpet its analyses critical of the Democratic plans.)  “Let’s use the metric of that letter,” said Orszag, who helped shape the health reform debate for years from his earlier posts at CBO and the Brookings Institution. “Deficit neutral; got that. Deficit-reducing second decade, got that. Excise tax: That was retained. Third is the Medicare commission: has that. Fourth is delivery system reforms, bundling payments, hospital acquired infections, readmission rates. It has that. If you go down the checklist of what they said was necessary for a fiscally responsible bill that will move us towards the health care system of the future, this passes the bar.”

McClellan, the former Bush official and current director of the Engleberg Center for Health Care Reform at the Brookings Institution, was one of the economists who signed the November letter. McClellan has some very practical ideas for improving the Reid bill (more on those below), but generally he echoes Orszag’s assessment of it. “It has got all four of those elements in it,” McClellan said in an interview. “They kept a lot of the key elements of the Finance bill that I like. It would be good if more could be done, but this is the right direction to go.”

Reid gave ground on one Baucus proposal that the economists identified as a priority-taxing high-end insurance plans. Like many health reformers, the economists who wrote Obama argue that such a tax “will help curtail the growth of private health insurance premiums by creating incentives to limit the costs of plans to a tax-free amount.” Amid intense opposition from unions, Reid raised the thresholds at which family plans would face that excise tax from $21,000 to $23,000. But given all the pressure from labor, the more striking thing may have been that Reid didn’t increase the thresholds even more; the CBO calculated the proposal, which the House excluded from its bill, would still raise $35 billion annually by 2019. “They held pretty strong,” said one administration health care expert. “It’s not like unions haven’t been making the case that it shouldn’t have been a much higher number.”

On delivery reform, Reid stayed even closer to the Baucus blueprint. The Finance bill laid out a series of measures to change the way providers are paid for delivering care to Medicare recipients; the hope was that once Medicare instituted these reforms, private insurers would also adopt many of them. “The goal here is that the things we do in Medicare will translate over into the private sector, and there is quite a bit of historical precedence for that,” said one Democratic aide involved in drafting the package.

The Baucus delivery reform ideas revolved around two central aims. One was to reward Medicare providers who deliver care more efficiently and penalize those that don’t. The Reid bill upholds the major proposals Baucus offered to advance that goal. For instance, hospitals under current law must report on their performance in treating patients for common conditions like heart problems and pneumonia; under the bill, their Medicare payments, for the first time, would be affected by their ranking on those reports. Hospitals would also be penalized if they readmit too many patients after surgery or allow too many to acquire infections while in the hospital itself. Another provision would begin the process of applying such “value-based purchasing” toward other providers like hospice providers and inpatient rehabilitation facilities.

With physicians, the Reid plan takes a step back from the Finance Committee bill but still a long step beyond current law. The Finance Bill proposed automatic reimbursement reductions for doctors who order up the most care for Medicare recipients with similar medical and demographic characteristics. That was meant to respond to the research showing big disparities in spending on medical services for similarly-situated patients in different communities. But, Democratic sources say, that proposal ran into charges that it would promote rationing-and even function as “a death panel by proxy”-by compelling doctors to arbitrarily reduce care. So the final bill takes a less direct route toward a similar end. It requires Medicare to begin studying the utilization patterns of doctors participating in the program. And then it establishes a “values based payment modifier” that would, in a budget-neutral manner, increase reimbursements for physicians found to deliver high-quality care at lower cost, and reduce them for physicians at the other end of that spectrum. “It will, we believe, have the same net effect [as the original proposal],” said the Democratic aide. “It should change behavior around that threshold.”

The other set of Baucus proposals were intended to promote more coordination among providers. These have survived almost verbatim into the final bill. The bill encourages groups of providers to establish doctor-led “accountable care organizations” to more comprehensively manage patients’ care by allowing them to share in any savings for Medicare they produce. It also establishes a voluntary national pilot of “bundled” payments that would encourage hospitals, doctors and other providers to work more closely together. Another pilot program would test coordinated home-based care for chronically ill seniors.

Finally, the Reid bill maintains the two powerful institutions the Finance legislation proposed to promote these reforms and develop new ones. The one that’s attracted the most attention is an independent “Medicare Advisory Board.” Under the Senate bill, that board would be required to offer cost-saving proposals when Medicare spending rises too fast; Congress could not reject its proposals without substituting equivalent savings. Since the board would be prohibited from offering changes that raise taxes or “ration care,” and since the legislation initially exempts hospitals from its recommendations, it could choose to promote the sort of payment reforms the bill establishes. (More prosaically it might also clear away some of the expensive coverage mandates that Congress imposes on Medicare under pressure from different elements of the medical industry). Given the limitations imposed on the commission, an equally important means to expand these reforms might be a second institution the legislation creates: a Center for Medicare and Medicaid Innovation in the Health and Human Services Department. Though this center has received much less attention than the Medicare Commission, it could have a comparable effect. It would receive $1 billion annually to test payment reforms; in a little known provision, the bill authorizes the HHS Secretary to implement nationwide, without any congressional action, any reform that department actuaries certify will reduce long-term spending. While the House bill omitted the Medicare Commission (a top priority for Obama) it included the innovation center.

No one can say for certain that these initiatives will improve efficiency enough to slow the growth in health care spending. Some are only pilots; others would affect only a small portion of providers’ revenue from Medicare. CBO typically evaluates them skeptically: it generally scores little or no savings from most of them. Former CBO director Robert Reischauer, who signed the November 17 letter, says that’s not surprising. “CBO is there to score savings for which we have a high degree of confidence that they will materialize,” says Reischauer, now president of the Urban Institute. “There are many promising approaches [in these reform ideas] but you…can’t deposit them in the bank.” In the long run, Reischauer says, it’s likely “that maybe half of them, or a third of them, will prove to be successful. But that would be very important.”

While generally supportive of Reid’s approach, McClellan, the former Medicare administrator under Bush, offered several specific ideas for strengthening it. He says the Senate should improve the capacity of HHS to more quickly evaluate whether the payment reforms are working, and also to provide data and technical assistance to new physician groups like the accountable care organizations that will be attempting to better coordinate care. “Ideally you’d both be able to tell the organizations involved and Congress what is working or not, and give the organizations the feedback and data they need to know whether they are doing a good job,” he says. McClellan also believes that the plan needs sharper sticks-tougher penalties on providers who don’t provide efficient and effective care. “There are a lot of carrots and not so many sticks,” he maintains. Of course, tougher penalties might provoke more opposition from provider groups like hospitals and physicians now tenuously supporting the legislation.

[[McClellan stands at the forefront of centrist Republican thinking on health. Even the more ideologically conservative health care thinkers to his right generally don’t oppose long-term reform ideas like bundling payments (John McCain promoted that during his presidential campaign). But they tend to view them as insufficient or tangential to the real problem. Their view highlights a fundamental difference between the parties’ on health care. To save costs, Democrats mostly want to change the incentives for providers. Republicans mostly want to change the incentives for patients by shifting toward a model where insurance covers only catastrophic expenses and people pay for more routine care from tax-favored health savings accounts. In essence, the Republican view is that the best way to hold down long-term costs is to directly expose patients to more of them. Few Democrats accept that logic though and it has little influence on either chamber’s legislation.

Another Republican cost-containment priority missing from the bill is meaningful medical malpractice reform. (The bill only encourages states to think about it.) Nichols, of the centrist New America Foundation, would like to see that included as well. Its omission is one reason he says he gives the plan a “b” rather than an “a”; the other is he’d like to see mechanisms to more quickly diffuse into the private insurance system reforms that show promise in Medicare. Democratic sources say a group of centrist Democrats led by Virginia Senator Mark Warner is trying to devise a package designed to do just that, perhaps by expanding the role of the independent Medicare advisory commission.

The attempt in all these ideas to nudge the medical system away from fee-for-service medicine toward an approach that ties compensation more closely to results captures how much the health care debate has shifted toward cost-control. So far, the rise in health care spending has proven almost invulnerable to every previous attempt to tame it, like the managed care revolution in the 1990s. Even if Obama signs into law a final bill embodying all these reform proposals, many skeptics wonder if they can bend, much less break, the seemingly inexorable increase in health care spending. Reischauer understands that skepticism, but isn’t able to entirely suppress a kernel of optimism that this latest reform agenda may prove more effective than its predecessors. “One never knows whether we’re turning the corner or if this is just playing the same old game for another inning,” he says. “But I sense there’s something different out there. I think the medical profession and its leaders have read the handwriting on the wall and are trying to evolve.” If so, the ideas the Senate will begin voting on tonight could mark a milestone in that journey.

NY Times David Brooks exposes rotton underside of Obama health speech

HR 3200, the House health measure, is fatally flawed by its reliance on private insurance companies, but whatever value it might have had was thrown out the window by Obama’s health speech.  Obama simulataneously said that health “reform” could not add a dime to the federal deficit, yet taxes could not be raised to cover additional expenses.   Half of HR 3200’s $1 trillion in ten-year expenses are to come from additional taxes on incomes above $350,000, but Obama stated that “Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this ($900 billion) plan.”
Where will these Medicare/Medicaid savings come from?  Obama has talked about eliminating the overpayments to HMO-based Medicare Advantage plans, a good thing, but the Congressional Budget Office estimates this ten-year saving as about $150 billion.   But what about the rest?  Preventative and primary care,  comparing drugs and treatment for effectiveness, systematic care of chronic disease, and electronic medical records give us better care, but don’t save much money.  And measures that could save big money are off the table: getting rid of insurance companies (Single Payer),  government-negotiated drug, procedure,  and hospitalizetion prices,  and putting doctors on salaries so there is no incentive to over-treat us (or under-treat us).
So as Brooks says, Obama’s formulation of no increased deficit and no increased taxes means “health reform” is now open to all possible cost-containment plans to strip it down to a shadow.  This is probably fine and responsible in Brook’s conservative eyes, but at least he’s done us the service of removing whatever illusions about Obama that might still exist.
New York Times, September 11, 2009
Op-Ed Columnist

The Dime Standard

By David Brooks

On Wednesday night, Barack Obama delivered the finest speech of his presidency. The exposition of his health care views was clear and lively. The invocation of Teddy Kennedy was moving and effective. The rumination at the end about the American character and the role of government was the clearest summary of Obama’s political philosophy that he has yet given us.

Best of all for those of us who admire the political craft was the speech’s seductive nature and careful ambiguity. Obama threw out enough rhetorical chum to keep the liberals happy, yet he subtly staked out ground in the center on nearly every substantive issue in order to win over the moderates needed to get anything passed.

First, Obama rested the credibility of his presidency on what you might call the Dime Standard. He was flexible about many things, but not this: “I will not sign a plan that adds one dime to our deficits — either now or in the future. Period.”

This sound bite kills the House health care bill. That bill would add $220 billion (that’s 2.2 trillion dimes) to the deficit over the first 10 years and another $1 trillion (10 trillion dimes) to the deficit over the next 10 years.

There is no way to get from the House bill to deficit neutrality. The president’s speech guarantees that the more moderate Senate Finance Committee bill will be the basis for the negotiations to come.

The Dime Standard also sets off a political cascade. Since the Congressional Budget Office is the universally accepted arbiter in such matters, the Democrats have to produce a bill that the C.B.O. says is deficit-neutral, now and forever. That means there will be a seller’s market for any member of Congress, Republican or Democrat, who has a credible amendment to cut costs. It also means the Democrats will have to scale back coverage and subsidy levels to reach the fiscal targets.

Second, the president accepted the principle of capping the tax exemption on employer-provided health benefits. The specific proposal he embraced is a backdoor and indirect version of the cap. But what’s important here is the movement and the concession on principle. Soon moderates and Republicans will produce amendments to impose a cap directly. These amendments will credibly raise revenue and reduce costs. The administration will now have no principled argument to reject them.

Third, the president accepted the principle of tort reform to reduce the costs of defensive medicine. Once again, the specific proposal Obama mentioned is trivial. The important thing was the concession on principle. There are already amendments being drawn up to create separate malpractice courts and to otherwise reform the insane malpractice system. The president is going to have a hard time rejecting these amendments just because they might reduce campaign donations from tort lawyers to the Democratic National Committee.

Fourth, the president introduced the public option to its own exclusive Death Panel. As Max Baucus has said, the public option cannot pass the Senate. On Wednesday, the president praised it, then effectively buried it. White House officials no longer mask their exasperation with the liberal obsession on this issue.

Fifth, the president also buried the soak-the-rich approach. The House Ways and Means Committee came up with a plan to raise taxes on the rich to pay for health reform. That’s dead, too. Health reform will be paid for by changes within the health care system. The president underlined his resolve to cut $500 billion from Medicare and Medicaid. This is a courageous move that moderates appreciate.

Finally, people in the administration and moderates in Congress would like to beef up the “game changers.” These are the wonky but important ideas like bundling hospital payments and increasing price transparency that might lead to a more efficient system down the road.

In short, the president can read the polls just like anybody else. He has apparently recognized the need to pull back to get something passed. He is, characteristically, trying to rise above old divisions in search of a pragmatic sweet spot. He has opened up many opportunities for intelligent Republicans and moderate Democrats to constructively offer amendments to improve the bill and bring it closer to fiscal sanity.

Which is not to say that this is effective health reform. The only risible parts of the speech came when Obama said that parts of the system work (they don’t; they’re unsustainable) and when he said he would be the last president to take on health care (we still await a president willing to take on fundamental perversities in the system).

For whatever reason, President Obama has decided not to be that president. He has decided to expand the current system, not fix it. His speech on Wednesday, and the coming legislative changes, make it much more likely he will achieve his goal.

Schwarzenegger and the budget crisis: it’s easy to target those least able to fight

Los Angeles Times, August 1, 2009

Schwarzenegger and the budget crisis: easy to be hard

Funny, isn’t it, that when the governor scours the state budget for waste, fraud and abuse, he only seems to find it in programs for the old, the young, the poor and others unable to raise campaign funds or muster political opposition.

Like those seniors and disabled people in the state’s In-Home Supportive Services program. IHSS allows them to stay out of nursing homes or other facilities far more expensive for them, their families and ultimately the state and its taxpayers. Clients don’t get direct state payments, just basic care such as meals and changes of clothes and linens. But beware; there could be hundreds of seniors scurrying from county to county under assumed names, trying to rack up as many sponge baths as possible. So California will now crack down by fingerprinting them.

Or those CalWorks recipients, who probably just signed up for welfare to get job training. Well, there are no jobs out there right now, so they must be abusing the system. We showed them — by cutting funding for job training. And then there are the people raking in all that subsidized Medi-Cal and Healthy Families care. They just want to get the state to pay for cheap preventive care so it doesn’t have to pay for expensive emergency care. Nice try. We’ll cull recipients by centralizing the eligibility process, because everyone knows it’s better to run government from Sacramento rather than closer to home.

California had to cut. But there’s a double irony at work. First, the point of the social safety net is to be there when it’s most needed — to ensure that during times of widespread unemployment and financial distress, the people on the edge can avoid falling into an abyss; that’s vital to them, of course, but good for the rest of us too, because it costs more to retrieve the fallen than to keep them out of the abyss in the first place. And second, after they are cut, human service programs get branded as wasteful and fraudulent and get cut again, because they don’t have a California Teachers Assn. or a California Chamber of Commerce standing up for them.

Certainly there are instances of waste and fraud in government. Fingerprinting IHSS providers, who are paid with taxpayer funds, makes some sense. But fingerprinting the home-bound clients? If that’s not an example of new wasteful government spending, it’s hard to know what is.

Meanwhile, instead of cracking down on tax fraud, California is furloughing its tax workers, who will have less time and fewer resources to collect taxes owed. It’s retaining redundant Cabinet offices, which oversee fully staffed state agencies. And in the name of erasing waste, fraud and abuse, it’s leading a devastating march through the path of least political resistance.

How Healthy is Healthy San Francisco?

SF Bay Guardian, Wednesday, July 22, 2009

How healthy is Healthy SF?

The program is a pioneering effort — but will budget cuts damage it?


San Francisco is getting national attention for its attempt at universal health care. President Obama even applauded the city’s efforts in a speech: “Instead of just talking about health care, [San Francisco has been] ensuring that those in need receive it.”

But Healthy San Francisco — a pioneering effort to do at the municipal level what the federal and state governments won’t — is running into some troubling problems, made worse by Mayor Gavin Newsom’s budget cuts.

The program was initiated by Tom Ammiano, now a state assembly member, with backing from organized labor. Ammiano’s goal was to provide easy access to affordable health care for all of S.F.’s 60,000 uninsured. A local version of a single-payer program, he argued, could provide accessible primary and preventative care, alleviating the need for indigent patients to use the overcrowded and expensive San Francisco General Hospital emergency room as their primary medical provider.

Healthy San Francisco was launched on July 2, 2007, at two Chinatown clinics. It has grown dramatically, and now provides services to more than 34,000 residents at 27 clinics.

Although Newsom sat on the sidelines while Ammiano pushed the legislation, the mayor has now unashamedly claimed the program as his own to promote his gubernatorial campaign. On his Web site he boldly declares that “he’s created the only universal health care program in the country” — with no mention of Ammiano.

The $200 million-a-year program is partially funded by an employer-mandate requiring businesses with more than 20 employees either to provide health insurance or pay a fee to the city. The fees are broken down according to the size of the business; as of January 2009, employers pay between $1.23–$1.85 for every hour an employee works.

Like any traditional health insurance program, Healthy SF has annual fees and point-of-service charges paid by participants. The remainder of the program is funded through state grants.

Opposition to HSF surfaced immediately. The Golden Gate Restaurant Association sued the city even before the program started, alleging that the employer-spending mandate is a violation of federal law.

Kevin Westlye, the association’s executive director, claims his beef is not with the health care system, just with the employer mandate. He suggested that the city raise its sales tax to pay for the program — or that the financial burden should fall on the backs of the billionaires that run privatized health care and pharmaceutical companies.

But the city has only a limited ability to raise taxes, and any tax hike would require voter approval. The employer mandates and fees were much more politically feasible.

Deputy City Attorney Vince Chhabria, who is representing the city on the case, argues, “It is difficult to imagine, in these budget times, that San Francisco could provide universal coverage without employer health care spending requirements.”

Federal courts sided with the GGRA initially, but the Ninth Circuit Court of Appeals agreed that the employer-spending mandate was legal. The GGRA appealed to the United States Supreme Court; the court will announce Oct. 5 whether it will hear the case.

That’s not the only litigation facing HSF. A group of low-income residents are suing the city, saying that the system’s annual fees and co-pays are too high. The program’s fees are scaled to the federal poverty level, which is currently set at an annual income of $10,830. A single person making between 101 percent and 200 percent of the federal poverty level — that is, between about $11,000 and $20,000 a year — pays $180 a year for HSF membership. People earning between $40,000 and $50,000 pay $1,350 a year.

There are also co-pays of $10 for medical visits and $5 to $25 for prescriptions — again, typical of health insurance plans.

Bay Area Legal Aid and the Western Center on Law and Poverty are representing three San Francisco residents who say those fees violate federal and state mandates, which stipulate that the city must provide free health care to those who can’t afford to pay. Healthy San Francisco is only one element of the lawsuit; it also claims that San Francisco General Hospital charges low-income people too much and that the city’s medical bills and collection practices aren’t fair.

One of the plaintiffs is Robyn Paige, a San Francisco resident with spine, foot, and hip injuries. Paige contends that she can’t afford the co-payments on her multiple medications each month and must either go without pain medication or borrow money. Lisa Qare, 21-year-old resident with MS, had to wait three weeks for medication for an eye condition that developed as a result of her condition.

A $10 co-pay may not seem like much, but when a patient needs several doctor visits a month and must pay $5 to $25 each for multiple prescriptions, it adds up. “As a result,” Michael Keys, a Bay Area Legal Aid lawyer, told us, “those who can’t afford the charges are falling into medical debt or skipping services or medication.”

And, not surprisingly, the cash-strapped city is having trouble finding enough staff and facilities to meet all the needs. Nancy Keiler, a Mission District resident and HSF participant, complains that clinic visits are too short, and that “the doctor is too hurried and has too many patients.” (That’s a common complaint about private health plans, as well.) After waiting three hours, another HSF participant had to leave without her prescription to get back to work on time.

The long lines and waits will only get worse in the face of budget cuts. Pink slips were already handed out to several hundred San Francisco health care workers and 1,000 more may be laid off this fall.

Robert Haaland, who works with the Service Employees International Union Local 1021, told us the staffing cuts will make the situation much worse. Martha Hawthorne, a public-health nurse, said she thinks that there won’t be enough providers to provide good care — and that many health care workers losing their jobs will have to enroll in HSF themselves, putting even more strain on the system.

Ammiano, the author of the plan, is concerned too. “I’m very worried about it,” he said. “It seems to me now that if there’s this budget pain, there will be impacts to San Francisco.”

Nathan Ballard, the mayor’s press secretary, tersely denied that HSF will feel any budget pain. Asked about critics’ allegations, he said, “They’re wrong. We are going to expand Healthy SF this year.”

Earlier this month, insurance giant Kaiser Permanente joined HSF — meaning that the health care giant will now participate as a provider in the program. Haaland voiced concern about that move, calling it “privatizing through the back door.”

Mitch Katz, the city’s public health director, agrees there are flaws to the system, but defends its success. “It is by no means a perfect program,” he said, “but we’ve made a big impact.” With national health care costs rising three times faster than wages (some believe that health care costs are rising five times faster than wages) the nation is starting to seriously talk about overhauling the entire system. San Francisco is being considered as a model for national health care reform.

Labor leaders have lauded the basic formula of HSF and pushed for the federal reforms to use it as a model. As San Francisco Labor Council executive director Tim Paulson said in a prepared statement, “In San Francisco we demonstrated that legislation providing public health access and corporate participation creates a real path to universal health care coverage.”

Research assistance by Gabrielle Poccia



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