Monday, July 20, 2009

Winners and losers under the House's health reform proposal

On Friday, the CBO released new estimates of H.R. 3200's impact on coverage and the federal budget. CBO's estimates allow us to "follow the numbers" to locate the winners and losers.

The biggest winners? People who can't get insurance because they can't afford it or because they are sick. CBO estimates that 97% of Americans would have coverage by 2019. Also, persons eligible for both Medicaid and Medicare, who will benefit from a new prescription rebate program, and beneficiaries who would get expanded prescription drug coverage to cover Part D's infamous "doughnut hole."

Where would most people get coverage? Through employer-based (private) insurance, not the public plan option. Here is CBO's breakdown. By 2019:

- The number of uninsured would drop by 37 million compared to current law (from a projected 54 million uninsured to 17 million uninsured).

- The number of persons covered by their employers would increase by 2 million, from an estimated 162 million to 164 million persons.

- The number of people covered through the health exchange would go from zero to 30 million persons. (Of these, CBO previously estimated that 8 t0 9 million would be in the public plan.)

- The number of people covered by Medicaid and SCHIP would increase by 11 million, from a projected 35 million to 46 million. (This is mainly due to the bill's requirement that Medicaid cover everyone up to 133% of the FPL.)

- The non-group (individual) insurance market would see a decrease of 6 million persons, from a projected 14 million persons to 8 million persons. This is likely due to the fact that the bill requires that all insurers, including those in the individual insurance market, abide by rules relating to acceptance of patients with pre-existing conditions, guaranteed renewability, and modified community rating.

The other winners? Physicians, who would benefit from higher spending at time when most other "providers" will be subjected to payment cuts. The CBO has this to say:

"Provisions that would result in the largest savings include permanent reductions in the annual updates to Medicare's payment rates for most services in the fee-for-service sector (other than physicians' services), yielding budgetary savings of $196 billion over 10 years ... [emphasis added in italics].

The provision that would result in the largest increase in Medicare spending would change payment rates for physicians' services to replace the 21 percent reduction in payment rates scheduled for January 2010, under the existing "sustainable growth rate" formula, with an inflation-based update. In subsequent years, rates would reflect separate updates for "evaluation and management" services and for all other services. CBO estimates that those changes would cost $228 billion over the 2010-2019 period (before taking into account interactions). Including those interactions, the net cost of the changes in physicians' payment rates would total $245 billion." [emphasis added in italics.]

CBO also estimates that Medicare will spend $6.4 billion more on designated services by primary care physicians.

The CBO's estimates could be wrong, since modeling behavior over 10 years is an uncertain science. Still, the "bottom line" is that the bill would provide affordable coverage to almost all Americans. They will get their coverage mostly from employer-based private insurance. No one would be turned down or overcharged because of a pre-existing condition. Physicians will benefit from the hundreds of billions of dollars being spent to end the Medicare SGR cuts, while payments to insurers, hospitals and drug companies would be cut by hundreds of billions of dollars. Primary care doctors would get even more.

Today's question: What is your take on the CBO's report?


Jay Larson MD said...

Millions, Billions, Trillion hopefully the CBO was not using a slide rule.

On the serious side, if HR 3200 can result in increased insurance coverage and elimination of the SGR, that is a good start. There are still many other flaws of the health care system that need to be addressed such as malpractice reform, reducing conflict of interest, and reducing the cost of medications and diagnostic imaging. Shifting the skewed RVU system from procedure based to cognitive based will be needed also. Eliminating the SGR will not bring back internists that have left practice. Increasing availability of health care insurance does not help patients if there are no internists or other primary care docs to go to.

Robert J. Sobel, M.D. said...

Every day we continue to waste time as third parties struggle to alter our prescribing habits. Their end is obvious: Only inexpensive drugs should be utilized. The CBO estimate on savings from drug rebates is almost nil. Nothing in this bill will eliminate the current brand-generic dichotomy. Furthermore, it will encode this in a standardized, clinical effectiveness construct. It is impossible that continuation of this structure will save costs without eventually coming back at physicians.

We are not short on quality in our health care system. Access and affordability are the issues at hand. As long as new drugs and technologies are left outside of the fee schedule of Medicare, it is physicians and taxpayers who will pay dearly. As well, the centralized structure that must be created will stifle flexibility and continue to leave us fighting the strange battle to get approval for unaffordable drugs.

Unless we introduce Regulated Royalties, I am at a loss for understanding how we are really reforming health care. We are simply shifting the responsibility of policing from the chaotic private sector to a rigid public sector. I still don't understand why we should support the public option. We should aggressively restructure the private health insurance industry (not publically traded, state or regional based, more accountable than they currently are while hiding in ERISA protection). Medicare is already the model used by the private sector for guiding payments. No one is arguing for it to have competition. This idea of competition via more payors confuses the true nature of health care enterprise.

I appreciate the ability to participate in these discussions. I believe we will continue to see evolution in the shape of reform and would strongly encourage a more active stand against the current administrative hassles and pharmaceutical profiteering that characterize our current predicament.