The ACP Advocate Blog

by Bob Doherty

Friday, February 26, 2010

Jim Bunning throws doctors a curve ball

Last night, retiring Senator Jim Bunning (R-KY) single-handedly held up passage of legislation to stop a devastating Medicare payment cut that will go into effect on Sunday. Unless the Senate finds a way to clear the legislation this morning by a unanimous voice vote - considered unlikely because Bunning has stated that he will not withdraw his "hold" on the bill - starting next week, all Medicare claims submitted by physicians will be reduced by 21 percent.

Probably only for a few days, though, because I anticipate that Congress will come back next week and find another route to stop the cut and hold physicians and patients "harmless" (that is, to restore payments for the period when the cut was in effect). CMS may also hold up on processing claims for a few days to give Congress time to act. Still, even if this all comes together, it looks like the result will be another 30 day extension of current rates, meaning that Congress will have to revisit the issue again and do something to stop the next scheduled cut. And at some point, Congress has to figure out what to do about the underlying problem: an unworkable formula (SGR) that triggers cuts in Medicare payments whenever spending on physician and related services grows faster than the overall economy.

It isn't just physicians who are being held hostage to the Senate's dysfunction; the bill also includes an extension of jobless benefits and COBRA coverage for people who otherwise will lose their coverage along with their jobs, and many other popular provisions set to expire at the end of the week. (The House of Representatives has done its part by passing legislation to provide a 30 day extension of the expiring programs. It also has passed legislation to permanently repeal the SGR and replace it with a new formula to provide more stable updates going forward.)

Let me say this as clearly as I can. The continued dysfunction in the Senate is unacceptable. Temporary patches to the SGR are unacceptable. ACP has made it absolutely clear that the only acceptable outcome is permanent repeal of the SGR.

But the current dysfunction in the Senate endangers much more than patients' access to Medicare. It has put health care reform on life support. It has created an unprecedented loss of public confidence in government's capacity to do the right thing. It has led to an increasing degree of anger among the electorate, as more and more of us feel like channeling Howard Beale's "I'm mad as hell, and I'm not going to take it any more ..." rant from 1976's "Network."

Meanwhile, President Obama's bipartisan summit may have produced the ironic result of getting Democrats behind a strategy of enacting the bill without GOP support by using the "majority rules" reconciliation process. Mike Allen blogs in Politico's Playbook that Bloomberg news' headline "Obama Bipartisan Health Summit Clears Path to Party-Line Vote" pretty much says it all. I'll have more to say about the summit next week, but I think one of the President's greatest challenges will be to get the public behind completing the bill on a party-line vote, when confidence in Congress, understandably, is at a historically low point.

Today's question: What do you think physicians and patients should tell their Senators about the SGR?

Tuesday, February 23, 2010

On blogging . . .

Last week, I was honored to learn that the ACP Advocate blog was selected by voters in a national competition as the Best Health Policy/Ethics blog of 2009. Yesterday, ACP issued a news release announcing the award, in which I am quoted as saying that the blog "seeks to inform and entertain readers and to elicit thoughtful commentary from across the political spectrum, not just from ACP members but from others with an interest in health policy."

Awards and recognition are nice, but what I enjoy most is making readers aware of interesting ideas, studies, and commentary that otherwise might not have come to your attention.

I don't try to be impartial, but I try to be fair. I strive to present a range of views, grounded in ACP policies but informed by my own experiences as someone who has been involved in health policy and advocacy for 31 years.

Blogging requires a thick skin. Many of you have told me when you disagree with me - often vehemently. That is okay - I have no interest in this blog being an echo chamber of whatever people think I want to hear. And your commentary gives me an opportunity to explain things better.

For instance, one of the frequent commentators on this blog is "Arvind." He also is one of my toughest critics. He posted this just the other day:

"I find that somehow you are speaking from both sides of your mouth. These two statements could not be any more illustrative - 'the cost of health care is rising faster than families, small businesses, and taxpayers can afford' and 'And because of continued cuts in payments that do not cover their costs, most physicians are not accepting new Medicare and Medicaid patients.' Can anybody explain how 'health care costs' can go out of control when Medicare pays so little that it does not even cover cost of providing care?"

The explanation is that health care costs are rising much faster than growth in the economy and family incomes, and Medicare expenditures also are increasing rapidly because of increases in the volume (numbers) and intensity (resources expended on each person) - even though Medicare payments for each service may not be keeping up with practice costs. Eligibility and enrollment expansions also will increase spending on programs like Medicare and Medicaid. Recessions tend to increase enrollment in and spending by government programs. Pandemics, like H1N1 pandemic, also increase demand for and spending on health care.

Specifically, Chris Fleming blogs in Health Affairs that "Medicare spending is expected to have reached $507.1 billion in 2009, an increase of 8.1 percent from 2008. . .Growth in spending on physician and clinical services is expected to have accelerated to 6.3 percent in 2009, up from 5.0 percent in 2008. Total expenditures are expected to have reached $527.6 billion in 2009. The expected increase is driven primarily by Medicaid spending in this category, which is projected to have grown 10.3 percent in 2009, compared to 8.9 percent in 2008. Projected private spending in this category also accelerated. . .due in part to care associated with the H1N1 virus.

"Total hospital spending is expected to have grown from 4.5 percent in 2008 to 5.9 percent in 2009, reaching $760.6 billion in 2009. This reflects a projected acceleration in hospital spending by public payers - up from 6.2 percent in 2008 to 8.0 percent in 2009 -due to increased enrollment. It also reflects growth in private hospital spending. .

"Prescription drug spending growth is expected to have grown 5.2 percent in 2009, reaching $246.3 billion. This 2.0 percentage point acceleration from 2008 is due to an increase in per person use of drugs, driven by the need for antiviral drugs to treat H1N1, and by higher price growth in brand-name drugs. By 2019, prescription spending is projected to reach $457.8 billion, with spending growth expected to accelerate over the projection period due primarily to increases in drug prices."

I can understand why a practicing physician like "Arvind" would take issue with the idea that health spending is going up when Medicare payments aren't keeping up with his costs. But the fact is that spending is going up because physicians (and hospitals) are treating more people and doing more for them, and more patients are getting ever more costly prescriptions. This is true, even though many doctors, especially primary care physicians, are underpaid for what you do.

Today's question: What does the growth in spending say to you?

Monday, February 22, 2010

"We can work it out"

"Life is very short, and there's no time
For fussing and fighting, my friend.
I have always thought that it's a crime,
So I will ask you once again.
Try to see it my way,
Only time will tell if I am right or I am wrong.
While you see it your way
There's a chance that we may fall apart before too long.
We can work it out,
We can work it out."

Lennon/McCartney, 1965

After a year of deferring to Congress, President Obama today released his own health care reform proposal (although it largely borrows from the bills already passed by the House and Senate).

The proposal is part of a coordinated effort by the White House to say to GOP opponents that "we can work it out" . . . but only if they are willing to see it his way. The White House's web site lists 14 Republican ideas that it says are included in the Obama proposal, in the president's budget, and/or in the bills passed by the House and Senate. It also says that "the president remains open to other policies as well. And the purpose of the Bipartisan Summit is to review all ideas and ensure that the best ideas are included in the plan."

The GOP isn't buying it.

Roll Call reports that the President's plan has ignited a partisan backlash. House minority Leader John Boehner (R-OH) and Senate minority leader Mitch McConnell (R-KY) each released statements to make it clear that they will not budge from opposition to Obama's plans. McConnell accuses the president of "completing ignoring what Americans across the country are saying."

Is McConnell right? The "By the Numbers" blog written by Washington Post pollsters suggests that Obama may have stitched together proposals that have "broad, but often malleable, public support." Large majorities, they report, support creation of a new health exchange to give people the same insurance choices that members of Congress have, ending discrimination against persons with pre-existing conditions, enacting reforms to reduce the deficit, closing the Medicare Part D doughnut hole, requiring large employers to provide coverage, financing the changes by raising taxes on higher income persons, and requiring plans to cover adult dependents to age 26 - all features of the President's proposal (and, for that matter, the bills that have already passed the House and Senate).

How does Obama's proposal differ from the bills that passed by the House and Senate? The Kaiser Health News "Blog Watch" has a good summary of the changes he proposes. The proposed changes include increasing the subsidies for people to buy coverage, providing more funding to states to expand Medicaid coverage (applied to all states - no special deals), increased penalties on employers who don't buy coverage, delaying and raising the ceiling for a tax on Cadillac plans, and getting more money out of Medicare Advantage plans. One of the biggest - and controversial - changes is a new proposal to create a new "Health Insurance Rate Authority" to "provide needed oversight at the Federal level [over health insurers' premium increases] and help States determine how rate review will be enforced and monitor insurance market behavior."

In the end, I don't think the changes proposed by President Obama will win over any GOP support. But by embracing changes that have broad "but malleable" support from the public, and daring Republicans to see it his way (or, presumably, get out of the way), he may have charted a way for the Democrats to finish the job, presumably using the "majority rules" reconciliation route.

Today's question: Do you agree with the changes proposed by President Obama? Do you think it will help get health care reform over the finish line?

Friday, February 19, 2010

What my morning commute says about the coming debt crisis

The last snowflake fell in Washington 10 days ago, but driving remains an unholy mess. During my morning commute today, gridlock occurred when a car heading in one direction came face to face with a mini-van headed in the other, on a street that was down to one lane. Neither could move forward or back up. (The whole problem could have been prevented if either vehicle had waited to enter the roadway until they were sure there was room to pass. But this is a town of stubborn and competitive people who think that backing down is the cardinal sin.) I sat there for about 15 minutes, and then found an exit strategy - pulling into a nearby parking lot that led to an alley that led to another way out.

The result was not just lost productivity for me and others caught in the gridlock. It also left me (and the other drivers, I expect) frustrated and angry.

This, I think, is an apt metaphor for the growing anger and frustration among voters at the political paralysis in Washington. The latest New York Times CBS poll finds that fewer than one out of ten Americans believe that their member of Congress deserves re-election. A Quinnipiac University poll finds that voters blame both parties equally for the gridlock, yet by "52 - 44 percent they want Congress and the President to keep trying on health care reform rather than giving up and moving on to other matters."

The voters want more bipartisanship, but that doesn't seem likely to happen. The New York Times reports today that despite the bipartisan health reform summit planned for February 25, the White House and Democrats are settling on a strategy of advancing health reform through a "majority rules" budget reconciliation bill that could be passed without GOP support.

Yet as difficult as it is to find a bipartisan way forward on health reform, the stakes for the country of continued gridlock may be even higher when it comes to the looming financial and budget crisis. The New York Times reports that "the unwillingness of the two parties to compromise to control a national debt that is rising to dangerous heights" is triggering fears that this could soon lead to an unprecedented global financial crisis. Yet rarely has the political system seemed more polarized and less able to solve big problems that involve trust, tough choices and little short-term gain NYTimes reporter Jackie Calmes writes.

In a follow up blog posted yesterday, Calmes comments on the President's decision to appoint a bipartisan panel to make recommendations to reduce the debt, "Mr. Obama set no conditions on the commission, including his campaign promise not to raise taxes on households making less than $250,000 a year. Economists across the political spectrum say the debt problem is so great that it demands both long-term revenue increases and reductions in the entitlement programs - Medicare, Medicaid and Social Security - whose escalating costs are the main drivers of long-range projections of unsustainable annual deficits." Yet GOP leaders insisted in response that the commission should focus only on cutting spending instead of raising taxes, and many Democrats are opposed to cuts in Medicare, Medicaid and Social Security.

Calmes writes that former Senator Alan Simpson (R-WY), who agreed to co-chair the panel, "signaled in his statement the real possibility that the commission would not succeed given the politically charged nature of the issue and the polarization in Washington. 'Whatever the results of our work,' he said, 'the American people are going to know about a lot more where we are headed with an honest appraisal of our situation and the courage to do something about it.'"

My morning commute left me irritable, but the partisan gridlock in Washington threatens to deny tens of millions of Americans access to affordable health insurance, and also, quite possibly, could undermine the long-term financial stability of the country.

Today's question: What do you think should be done about the partisan gridlock in Washington?

Its official: the ACP Advocate blog was selected by voters as the Best Health Policy and Ethics Blog of 2009. The announcement called the blog "one of the more influential professional association blogs out there". Thanks to all who support the blog, since any influence it has comes from you!

Wednesday, February 17, 2010

"An unconscionable abdication of responsibility by our elected leaders"

Today, I joined with ACP President Joe Stubbs at a press conference to release a major new ACP report that finds American health care is "facing an unprecedented challenge of affordability and sustainability." Dr. Stubbs observed that "by many measures, the State of America's health care is in decline" with "too many uninsured persons, too few primary care physicians, while the cost of health care is rising faster than families, small businesses, and taxpayers can afford." Yet a "highly-partisan and polarized debate over health care reform legislation regrettably has taken the country's 'eye off the ball' - from the urgency of implementing reforms to make health insurance coverage more affordable, available and secure; to ensure a sufficient supply of primary care physicians and other specialties facing shortages; and to reform payment and delivery systems to achieve better value."

In my remarks, I asked reporters to imagine what health care will look like if reform is not enacted.

"Fast-forward to 2018, a new President is in the White House and ...

"The number of people enrolled in Medicare has increase to almost 60 million, but the ratio of taxpayers paying into the program to support each beneficiary is at its lowest point. Medicare's hospital trust fund is out of money.

"Unrestrained Medicare and Medicaid spending has led to out-of-control deficits and an explosion of public debt, leaving little money for other national priorities.

"At the same time, rising premiums have put health care out of reach for many middle-class families. Small businesses are dropping coverage in droves. 60 million people have no health insurance coverage.

"Because of a shortage of tens of thousands internists and family physicians, it takes many weeks - even months - to get appointments. And because of continued cuts in payments that do not cover their costs, most physicians are not accepting new Medicare and Medicaid patients.

"What's the new President to do? The President might have no choice but to propose huge payroll tax increases, cuts in Medicare benefits and eligibility, and reduced payments to physicians and hospitals. Stringent controls over health care spending are needed, but anything that would make a big and immediate dent - like putting limits on services - would be fiercely resisted by patients and physicians alike."

All of the above is almost certain to happen, unless we change course now.

ACP offered five steps to make health care sustainable and affordable (1) build and improve on the bills. preserving key elements to provide coverage to most Americans, increase the numbers of primary care physicians, and pilot test reforms to improve health care delivery; (2) develop bipartisan proposals to reduce the costs associated with the medical liability tort system; (3) fund programs to expand coverage, train primary care physicians, and encourage testing and dissemination of models to improve health care delivery; (4) end the cycle of Medicare physician payment cuts caused by the Sustainable Growth Rate (SGR) formula; and (5) use the President's executive authority to require that federal agencies and contractors develop policies to increase the numbers of primary care physicians and reduce the time that clinicians and patients spend on health plan administration.

Dr. Stubbs concluded by saying, "The alternative to moving forward on comprehensive health reform is an unconscionable abdication of responsibility by our elected leaders to ensure that high quality health care remains available and affordable for American families today, tomorrow and for years to come."

Today's questions: Do you agree with Dr. Stubbs?

Monday, February 15, 2010

How would the GOP reform health care?

It looks as if President Obama's plans for a February 25 bipartisan summit on health care will move forward, even as Republican leaders continue to express reservations.

The kicker is that the President is asking the GOP to show how it would "put a stop to insurance company abuses, extend coverage to millions of Americans, get control of skyrocketing premiums and out-of-pocket costs, and reduce the deficit" (italics added by me). Many Republicans don't view expanding coverage as a principal goal of health care reform.

What kind of alternative might the GOP offer? Newt Gingrich and John Goodman offered "Ten GOP Ideas for Obama" in a February 10 Wall Street Journal op-ed:

They argue that the current tax system, which provides some employees with tax-free Cadillac plans while individuals and self-employed get no tax break, is unfair. Instead, they say that "a step in the right direction would be to give Americans the choice of a generous tax credit or the ability to deduct the value of their health insurance up to a certain amount." They would make health insurance "portable" so that it travels with an employee when they change jobs and also give people the option to buy insurance across state lines.

The Democrats' bills already include sliding scale tax credits for millions of people - those with incomes up to 400% of the Federal Poverty level who do not have access to employer-sponsored insurance - to buy insurance from a purchasing pool. The Gingrich/Goodman proposal is different in that it would give everyone the option of receiving a tax credit or tax deduction. But what they don't explain is how big the credit would need to be to make coverage affordable, or where would the money to pay for it come from? The average premium for a family of four in the large group market is almost $13,000 per year, so the tax credit would have to be pretty big to make coverage affordable for most Americans.

Gingrich and Goodman explain that their ultimate goal is to convert health care into a defined contribution program, just like traditional retirement plans have been replaced by 401-Ks: "Many health economists conclude that tax relief for health insurance should be a fixed-dollar amount, independent of the amount of insurance purchased."

I can see how this would help control health care costs, because individuals would have an incentive to be prudent purchasers (buying coverage that is no higher than the fixed dollar amount). But it could also lead to people buying inadequate coverage, shifting uncovered costs onto everyone else. And, if the fixed dollar amount ("voucher") didn’t keep up with rising premiums, the value of the contribution would erode over time. I could also see major problems of adverse selection if less well-off people found that they could only afford a less costly plan, while the well-off could supplement the voucher and buy more generous insurance out of their own pockets. Regional differences in the costs of buying coverage would also have to be addressed.

I can also see the appeal of allowing people to buy insurance across state lines. What they don't explain is how consumers would be protected from being sold a low quality health plan from another state that sets a very low bar for insurance regulation and consumer protections, since their own state insurance commissioner presumably not have the authority to intervene with an out-of-state plan. The Democrats' Senate bill allows insurance to be sold across state lines, but the states involved would have to enter into an agreement with each other on a regulatory structure.

Gingrich and Goodman have other interesting ideas: designing insurance benefits to improve care for the chronically ill, paying doctors a set amount that takes into account the "quality of care" being delivered but leave the pricing of individual service up to them, and providing more information to consumers. Some of these ideas are included, to one degree or another, in the Democrats' proposals.

And they propose elimination of junk lawsuits - Amen to that!

But they also express opposition to Medicare cuts, when the fact is that savings in the Democrats' bills will help extend the solvency of the Medicare trust fund and help pay for coverage for millions.

I think that the Gingrich and Goodman proposal has some interesting elements. The problem, though, is that they offer no way of paying for things like tax credits, they reject using Medicare savings, don't explain how many people who now don't have coverage would be able to buy it, and how adverse selection would be minimized. It is not clear, then, if their proposal would "put a stop to insurance company abuses, extend coverage to millions of Americans, get control of skyrocketing premiums and out-of-pocket costs, and reduce the deficit" as Obama insists that the GOP alternative should, or if they even agree that these should be the goals of health reform.

Today's question: What do you think of the Gingrich/Goodman alternative?

P.S. Thanks to all of you who voted for the ACP Advocate as the "Best Health Policy/Ethics" blog in the Epocrates 2009 Medical Blogs Award Program. The voting ended yesterday at midnight, and the ACP Advocate was the top vote winner, with 51% of the votes compared to 48% for the very worthy and thought-provoking "Covert Rationing" blog and 1% for the Pharma Marketing blog. I am humbled and honored by your support, but of course, a blog is only as good as those who take the time to read it and post your comments - even, or especially, when you disagree with me!

Friday, February 12, 2010

What happens if the states try to nullify an individual insurance mandate?

One issue that divides liberals and conservatives is their views on the respective roles of federal and state governments. Conservatives prefer that the states run things, liberals, the federal government. A growing number of conservatives, including columnist George Will argue that Obama's health care proposals - and in particular, a mandate that individuals buy coverage - would unconstitutionally usurp powers reserved to the states and the people by the constitution's 10th amendment.

The Commonwealth of Virginia, reports the New York Time's Katharine Seelye, is on the verge of enacting a law that would exempt state's residents from complying with an individual insurance mandate. She reports that almost two-thirds of the states have similar legislation in the works. Law professor Timothy Jost argues in the New England Journal of Medicine that such state laws are "constitutionally impossible" and that the "purpose of these laws ... is not legal but rather political" and are "part of a larger campaign to mischaracterize federal legislative efforts and stir up opposition to any federal health care reform."

It is beyond my expertise to predict how federal courts would rule on this issue. From a political standpoint, though, the individual mandate is one of the least popular features of health care reform, according to Kaiser Family Foundation's most recent tracking poll. Conservatives don't like it because they consider it a usurpation of constitutional liberties; and many liberals don't like it because it compels them to buy private health insurance, when they really would like Medicare-for-all.

The logic behind the individual mandate, though, is that if insurance companies are going to be required to accept all comers, without regard to pre-existing conditions, and would be limited in how much more they can charge them, then people need to be compelled to buy coverage when healthy. Otherwise, some would stay out of the insurance pool until they get sick - resulting in higher premiums for everyone else. This then could lead to an insurance pool "death spiral". Faced with higher premiums caused by those who didn't get coverage until they got ill, more insured people would drop coverage, since they too could just "go bare" until they get sick. Rates would go up for the remaining insured population, leading more of them to drop coverage. And so and so on until the entire system collapsed.

One way to get around this problem is to eliminate the insurance mandate altogether, and instead just enroll everyone in a government-run plan like Medicare. I doubt that this is what conservatives want, but it could end up being the simplest way of getting everyone covered, should the present approach of providing subsidies to buy coverage, combined with a ban on pre-existing condition exclusions and a requirement that individuals buy coverage, fail on either constitutional or political grounds.

Today's questions: What do you think about state laws designed to nullify a federal requirement that individuals buy coverage? And about the individual insurance mandate itself?

Tuesday, February 9, 2010

Washington, D.C. (noun): a place where nothing can move, advance or happen

Tom Toles' editorial cartoon in todays Washington Post says it all.

Washington has become a place where nothing can move, advance or happen. Having been paralyzed by a huge snowstorm over the weekend, the federal government has been closed since Monday, our roads are clogged with unplowed snow, our Metrorail system won't run above-ground trains, the schools are closed (until June, it seems)--and to top it off, another 10-20 inches of snowfall is expected in the next 24 hours. (Yes, our trains really don't run when we get more than a few inches of snow. You Chicagoans can stop laughing now.)

Of course, the snow and ice will eventually melt, and Washington will get back to normal. Not so the partisan gridlock that apparently will prevent anything from getting done even when the government reopens for business.

In an effort to break the health care reform stalemate, President Obama invited Republicans to participate in a televised, bipartisan summit, scheduled for February 25. But the House GOP leadership has threatened to boycott the event, writes the Washington Post's Chris Cillizza, unless Obama meets their many demands--including pulling the plug on the current bills and starting over. The Washington Post's Shalaigh Murphy reports that President Obama today told House GOP minority leader John Boehner (R-OH) today that that his core goals -- lowering health-care costs for businesses and individuals and expanding coverage to the uninsured -- remained non-negotiable. But Obama said he would consider GOP alternatives that accomplish the same results. He also said he would sign what he considered to be a "less-than-perfect bill."

Here's the rub. The White House and most Democrats believe a fundamental purpose of health reform must be to provide affordable coverage to all Americans--including the more than 30 million legal U.S. residents who have no health insurance. It is this core belief that caused the House and Senate to produce complex--and costly legislation--designed to ensure that 94-96% of all legal residents would have access to affordable health insurance. By contrast, Laura Meckler writes in the Wall Street Journal that House Republicans reject Obama's standard that the final bill must cover large numbers of uninsured people, quoting Rep. Dave Camp (R., Mich.) as saying: "We didn't portray our bill as being universal coverage . . . We never attempted to do that."

Instead, the House GOP alternative would lower premiums in the small and individual insurance market, with a negligible impact on reducing the numbers of uninsured Americans. According to the Congressional Budget Office, it would "reduce the number of nonelderly people without health insurance by about 3 million in 2019 and leaving about 52 million nonelderly residents uninsured. The share of legal nonelderly residents with insurance coverage in 2019--83 percent--would be roughly in line with the current share." The GOP alternative "would reduce average private health insurance premiums per enrollee in the United States, relative to what they would be under current law-by 7 percent to 10 percent in the small group market, by 5 percent to 8 percent for individually purchased insurance, and by zero to 3 percent in the large group market."

Meanwhile, most voters "want the two sides to keep working to pass comprehensive health-care reform" according to the Washington Post's latest poll. "Nearly two-thirds of Americans say they want Congress to keep working to pass comprehensive health-care reform. Democrats overwhelmingly support continued action on this front, as do 56 percent of independents and 42 percent of Republicans."

The voters may want both parties to work together, but that Democrats and Republicans can't even agree on the ground rules to meet to discuss if they can reach an agreement doesn't bode well for bipartisan progress. Digging Washington out of two blizzards may turn out to be a lot easier than advancing the political prospects for health reform.

Today's questions: Do you believe that covering the uninsured should, or should not, be a principal purpose of health reform? What issues, if any, do you think would be ripe for bipartisan support?

Thursday, February 4, 2010

We're #1! We're #1!

... in national health care expenditures, that is. This, of course, is nothing new: spending on health care in the U.S. has long out-paced any other industrialized country. What is noteworthy is "the largest one-year increase in [health care's] GDP share since the federal government began keeping track in 1960" blogs Chris Fleming, of Health Affairs. He writes that a new study shows that health care spending increased by an estimated 5.7 percent since 2008 despite a projected decline in the gross domestic product (GDP) in the same period.

The recession is having a big impact on respective roles of the public and private sectors. "Health spending by public payers is expected to have grown much faster in 2009 (8.7 percent growth, to $1.2 trillion) than that of private payers (3.0 percent growth, to $1.3 trillion)" Fleming writes, which is attributable to an increase in "projected growth in Medicaid enrollment (6.5 percent) and spending (9.9 percent) as a result of increasing unemployment related to the recession. Conversely, enrollment in private insurance is expected to have declined 1.2 percent in 2009, despite federal subsidies for Americans who have lost their jobs to extend their private insurance coverage via the Consolidated Omnibus Budget Reconciliation Act (COBRA) that increased participation in these plans."

"For the first time, government programs next year will account for more than half of all U.S. health-care spending, federal actuaries predict, as the weak economy sends more people into Medicaid and slows growth of private insurance", writes Peter Landers in the Wall Street Journal.

Free-market advocates would be loath to admit it, but in an employer-based private insurance system, when people lose their jobs, they also lose their coverage, unless the government steps in to provide it. If it wasn't for Medicaid and the government subsidies for COBRA coverage, far more Americans would have been without health insurance during this recession.

And for all of the anti-government sentiment among much of the electorate, I don't see people demanding that Congress repeal Medicaid or eliminate COBRA subsidies, or get rid of Medicare or the VA, for that matter. People dislike government, except when they need it.

What the health reform bills propose to do is replace the current patchwork system with an improved safety net - expanded Medicaid for the poor and near-poor, tax credit subsidies for people up to 400 percent of the federal poverty level, limits on pre-existing condition exclusions, and subsidies and purchasing pools to make coverage more available and affordable for small businesses. They would build upon what the government already does - provide people with affordable coverage when the private, employer-based system fails them - but in a more organized and coherent way.

Today's question: What is your reaction to the new estimates on government and private sectors spending on health care?

Tuesday, February 2, 2010

Health reform and the Obama budget

Does the President's new budget mean that the White House is shifting toward smaller-scale health reforms in lieu of comprehensive legislation?

Time magazine's Katie Pickert blogs that "the HHS budget doesn't do what massive health reform legislation was supposed to do." She notes that an AP reporter asked HHS Secretary Kathleen Sebelius "to clarify what was obvious already - that the 2011 HHS budget doesn't make any real headway toward solving the country's health care crisis." Sebelius responded that the "budget 'in no way replicates the efforts in the health reform legislation to reach out to the 30 some million Americans who have no health insurance at all and those who are woefully underinsured, … This budget - absent health reform - will still leave a major gap.'"

The National Journal writes that the budget "focuses more on the economy than on health reform." ABC's Jake Tapper explains that "the budget assumes $150 billion in deficit reduction from enactment of the health reform legislation," while the Wall Street Journal's Janet Adamy blogs that the budget offers a "back up" plan should the "embattled" health reform legislation fail. Jacob Goldstein reminds readers of the WSJ's health blog that "the big [cost] drivers are mandatory spending on Medicare and Medicaid - huge, rapidly growing costs that are outside the purview of Obama's (or any president's) annual recommendations for discretionary spending."

My take is that the President's budget doesn't itself signal a retreat health reform, but tries to have it both ways - pledging fealty to enactment of a comprehensive bill, while suggesting ways to advance smaller-scale reforms should the broader effort fail. Among the President's health funding priorities are:

-- Primary care training: $2.5 billion for community health centers, enough to fund current centers and create 25 new ones; $169 million to the National Health Service Corps, to train up to 400 more primary care physicians, nurse practitioners, and dentists to serve in underserved areas, bringing the total to 8,500 clinicians. $54 million for Title VII primary care training programs, the same as FY2010, but the current preference for family medicine programs (over internal medicine) would be eliminated.

-- Health information technology: $110 million for "continuing efforts to improve health IT policy, coordination and research activities."

-- Comparative effectiveness: $286 million for the Agency for Healthcare Research and Quality to study the effectiveness of different medical options.

-- Coverage: $25.5 billion to support State Medicaid programs by temporarily increasing Federal Medicaid funding for six months through June 2011.

-- Delivery system reforms: "new Medicare and Medicaid demonstration projects that evaluate reforms to provide higher quality care at lower costs, improve beneficiary education and understanding of benefits offered, and better align provider payments with costs and outcomes. Special emphasis will be placed on demonstrations that improve care coordination for beneficiaries with chronic conditions, that better integrate Medicare and Medicaid benefits, and that provide higher value for dollars spent."

-- Medicare physician payment: the budget includes an increase in Medicare baseline spending of more than $200 billion to accommodate enactment of legislation to end the annual cycle of SGR cuts. (Congress, though, appears to be leaning toward setting aside enough money to prevent cuts for the next five years but not enough to permanently repeal the SGR.)

For the past year, President Obama has pursued a "Big Bang" approach to health reform, centered on getting Congress to pass sweeping expansions of coverage coupled with other reforms to make insurance more affordable and available - yet the effort remains (hopelessly?) stalled in Congress. The new budget doesn't necessarily mean that he is walking away from big changes. But the budget does suggest to me a grudging awareness, if not acceptance, by the White House, that smaller, incremental steps could be all that he will get.

Today's question: What is your reaction to the President's budget?

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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