Monday, November 17, 2008

The "It's a Wonderful Life" approach to "scoring" health care reform

The post-election discussion of health care reform has been focused on what the new president and Congress will do. In the shadows, though, are an unelected few with enormous influence over the outcome. Presidents and lawmakers defer to them. Get their blessing, and legislation moves forward. Earn their disapproval, and legislation stalls.

No, I am not talking about a hidden cartel of Washington insiders that secretly pull the strings. The people I am talking about work for our elected lawmakers.

The Congressional Budget Office (CBO) is a non-partisan agency, created by Congress to provide non-partisan advice on federal budget policy. One of its roles is to provide estimates to Congress on the cost (to the federal government) of proposed laws.

This is how the process works:

Proposed legislation is sent to the CBO for a "score". A "favorable score" means that CBO decides that the law will save the government more than it will cost. An "unfavorable score" means that CBO decides that the bill will cost the government more than it saves. The CBO score matters, because under "pay as you go" rules created by Congress, higher spending on entitlement programs, like Medicare, must be offset by cuts or "revenue increases" (taxes) somewhere else.

(By now, you are probably thinking that I am getting into some really arcane Washington insider stuff, but stay with me.)

The CBO was created for good reason. Members of Congress know that they can't trust themselves to honestly predict the costs of bills in which they have a vested stake. The problem is that CBO's influence is so great that good ideas often do not go forward if they receive an unfavorable score.

For example, say a member of Congress introduces legislation to increase Medicare payments to primary care physicians. If the CBO concludes that paying more for primary care will save the government more than it costs, the bill would get a favorable score and move forward. But if the CBO conservatively calculates that paying primary care doctors more will increase Medicare expenditures, the legislation will likely stall - unless Congress finds budget "offsets", such as cutting fees paid to non-primary care physicians, to pay for it (easier said than done).

The same would be true of proposals to expand coverage or make other improvements in health care delivery.

David Kendall of the Progressive Policy Institute writes that CBO's "conservative" approach to budget scoring could stymie health care reform, because CBO will be reluctant to count savings from changes in health care delivery. Without "score-able" savings from delivery system reform, there may not be enough money to cover the uninsured. As an alternative, Kendall suggests that CBO first projects the high health care spending that will occur without any delivery system reform and "if the savings from reform exceed the projections, the extra funds can be automatically applied to coverage for the uninsured."

This "It's a Wonderful Life" approach to budget scoring makes eminent sense. It wouldn't require that advocates of delivery system reform prove to the CBO that changes will lower federal spending; only that federal spending would be higher without them. It would, for instance, allow ACP to make the case to CBO that health care spending will be higher if reforms aren't enacted to increase the numbers of primary care physicians.

This is precisely what ACP plans to do. On Wednesday, we are releasing a new white paper, How is a Shortage of Primary Care Physicians Affecting the Quality and Cost of Medical Care?, that makes the case that without primary care, costs will be higher and the quality of care lower. I will write more about this paper on Wednesday's blog post.

Today's questions: From your own experiences, do you think that health care spending will be higher if something isn't done to reverse the decline in the numbers of primary care physicians? Why or why not?


Jay Larson MD said...

Those who do not learn from history are doomed to repeat it.
George Santayana

Predicting the future cost of healthcare is impossible, but our recent history of technological advancement points towards ongoing significant increase in healthcare cost. Dr. Peter Orszag of the Congressional Budget Office (CBO) projects that total federal Medicare and Medicaid outlays will rise from 4 percent of GDP in 2007 to 12 percent in 2050 and
19 percent in 2082—which, as a share of the economy, is
roughly equivalent to the total amount that the federal government spends today. The bulk of that projected increase in health care spending reflects higher costs per
beneficiary rather than an increase in the number of beneficiaries associated with an aging population.

Primary care has documented health cost saving compared to specialty care. So the argument goes that as the number of primary care physicians decrease and the number of specialty physicians increase, healthcare costs will go up higher and faster.

Owen Linder said...

Medicare Advantage was progressively changing from capitated only to capitated plus risk adjusted for six years until it was 100% risk adjusted two years ago. It still pays a set capitation but more importantly the primary care physician is central to the health care and he/she is incentivized to oversee everything by being rewarded according to the patients severity, complexity and chronicity of illness. One must be willing to submit to audits often. But it is worth it. And all minor adjustments aside American doctors will only choose primary care if they are going to make as much as specialists. The medical home is not projected to bring parity with specialists. It brings more quality to the table but cost as much to implement as it is projected to bring in. Mediare Advantage is a completely different paradigm. It is the best way bring about the 30 % savings over current practices. There is a strong sentinel effect. The strong incentivized sentinel will not work for all primary care physicians. There will have to be many tiers and models of care in reformed health care. For instance fair acknowledgement of reality says specialists with superior knowledge of obscure systemic diseases should become the incentivized primary care physicians of patients within their purview. Owen Linder, MD FACP