4 Potential Healthcare Roadblocks in the Senate
Published November 16, 2009 @ 06:00AM PT
What can we expect on the Senate healthcare reform front this week? Besides the usual political shenanigans, I mean, like John McCain telling a bunch of his constituents to tear up their AARP cards because AARP supports the House bill (so proud to live in Arizona.) Well, here is a hint. The Senate may win one of those ‘last runner to cross the finish line’ awards, after its members take many byzantine detours along the way. After seemingly falling into a black hole last week, the Senate’s drafting and debate over its combined healthcare bill won’t be making up any time. Insiders don’t expect a test vote before Thanksgiving, making a bill before Christmas a very faint possibility. So why is that?
There are 4 big issues Harry Reid needs to negotiate around:
Lies, Damned Lies
Published November 14, 2009 @ 11:00AM PT
Many of us acknowledge that the passage of HR 3962 last Saturday was not an altogether positive thing. The bill does provide consumer protections not currently available, and will expand coverage to many currently uninsured. But it also mandates a captive market for private insurers and provides an exceptionally weak public option that’s expected to cover 2% of the population and cost more than outrageously expensive private coverage. Worst of all, Stupak's last minute amendment strikes down women’s rights as a trade-off for universal healthcare coverage. It’s ugly. Not as ugly, however, as the Republican lies that tried to defeat it.
5 Healthcare Lessons in Possible Grocery Workers’ Strike
Published November 13, 2009 @ 06:00AM PT
Whether or not United Food and Commercial Local 99 workers will walk off the job at 6pm today due to contract disputes with Arizona Fry’s and Safeway grocery stores, there are healthcare lessons hidden in the saga. The union has had contract disagreements with management over many salary and benefit issues for a year now, but the main stumbling block is healthcare. More specifically, the disagreement is over “free” healthcare. Welcome to American healthcare drama, union-style.
Until now, the companies have paid all healthcare premiums for their workers. Now they are asking individual workers to pick up $5 per week in premiums, married workers to cover $10, and workers with family coverage to pitch in $15. That’s extremely small potatoes in the world of super-sized US healthcare costs. But for the hourly workers this union represents, including checkers, stockers, meat cutters, and produce workers, it’s not insignificant. For those like a friend of mine who has worked for Fry's for 20 years, is eligible for a pension next year, drives a Porsche convertible and plans to retire with a small beach-based business in the tropics, it actually is insignificant. Plus it doesn’t apply to him (see Lesson #3.)
How NOT to Measure Healthcare Quality
Published November 12, 2009 @ 06:00AM PT
Guess what? Only 1% of hospitals are below average! At least that’s how chairmen of non-profit hospital Boards of Directors see it. Apparently they live in Garrison Keillor’s Lake Wobegon, where all the children are above average. Patients, well, we live in real towns. If you ever wondered why hospitals were such dangerous places to be, we can now give you a big hint.
Of 722 hospital chairmen surveyed in a Harvard study, 99% thought their hospitals performed as well as average. The scariest finding is that fully 100% of hospital chairmen for hospitals that perform the worst think their hospitals perform at least as well as average or typical hospitals. Ironically, that means the 1% who thought they were below average actually underestimated their hospitals. But that still leaves an incredibly significant number of chairmen who seem to live in an alternate universe.
The Dirty Little Secret of Health Care Cost Control
Published November 11, 2009 @ 02:12PM PT
The trickiest knot in health care reform isn't immigration or abortion or even a public option. It's who's going to pay for it. We've talked a-plenty about new revenue, be it the House's surtax on millionaires or the Senate's high-cost health insurance tax. But we also need money derived from the savings that can be wrung out of our bloated $2.4 trillion a year health care system (a figure that dwarfs the measly $90 billion a year we'll spend fixing it.) Half of the costs for each of the health care bills -- and more than half of what the Obama Administration has proposed throughout the year -- are recouped by policies that "bend the curve" of our accelerating health care costs. Indeed, Republicans have made bemoaning the proposed $500 billion over 10 years of cost containment provisions in Medicare into high kabuki theater. Nonetheless, we're hearing a new "conventional wisdom" that the reform plans aren't good because they don't do enough to control costs -- and some who push this thread into hyperbole by claiming there's no cost control at all.
Here's the dirty little secret of cost control at this stage of the game: most of the politicians making the claim that the reform bills don't do enough to control costs wouldn't be caught dead voting for the ideas that really will control costs!
Don't believe me? Well, let's take Mark Warner or Susan Collins or one of the other senators now looking to poke holes in a reform plan while being secretive about what their own method for controlling costs will be. Which of the following ideas would these so-called "fiscal conservatives" actually vote for?
First, there are the elements that we know with certainty that the Congressional Budget Office would score as an aggressive way to control costs. We can start with ending the program for overpaying Medicare Advantage for-profit HMOs per customer compared to traditional Medicare -- a proposal in all the bills that the CBO guarantees will cut costs but which the insurance industry and most Republicans and moderate Democrats are fighting. Or there's the "Cadillac" tax in the Senate Finance bill, itself a somewhat lame iteration of removing the tax exemption on employer-provided insurance, a guaranteed source of revenue that also exerts downwards pressure on the cost of insurance. Or how about a public option that pays Medicare-based rates, a tool that the CBO has repeatedly scored as a cost-saver and a significantly higher cost-saver than one with negotiated rates (Warner only supports the latter, Collins supports neither of the above)?
Second, you know what else would substantially save money? Having the federal government negotiate and/or set the rates for health care services. That's how every single-payer system, from Europe to Asia to Oceana, achieves the bulk of dramatic savings. That's how hybrid public-private systems like Japan have achieved such efficiency that our per-person costs are three times as much as theirs (if we waved a single-payer magic wand tomorrow and removed the administrative costs of private insurance, we'd still have 2.5 times the costs of Japan). That's even how the conservative and wholly privatized model of Switzerland operates. And I would have a heart attack and die if I saw a single centrist Senator propose it.
Finally, there are the cost control measures that will likely save money but which the Congressional Budget Office will score as netting very little savings. These are likely the proposals a Collins or a Warner will champion. But because the CBO is doubtful that they would produce guaranteed savings, we could implement them all and still be open to the charge of "This bill doesn't do enough to control costs." For example, many -- including Bob Laszewski -- are hailing the idea of either a bipartisan Congressional commission or an independent MedPAC-like board to propose and implement cost-control tools for Medicare free from the politicking of Congress. It's a good idea, but one that the CBO is not likely to score well (interestingly, because they don't think it will generate more savings that what's already included in the bills -- natch.) Investments in prevention, primary care, coordinate care, the medical home, electronic health records -- all elements that we know save money in state Medicaid programs, closed systems like the VA, and state-of-the-art high-quality health systems like the Mayo Clinic, all likely to leave the CBO unimpressed. Reducing hospital readmissions, making adjustments for productivity changes at hospitals, and allowing trimming waste, fraud and abuse? Already in the bill, chief. Tort reform? Fuggedaboutit.
I would love it if the reform bills in Congress did even more to reform the way Medicare delivers its payment systems, blazing a path for private payers to follow. Real cost containment won't come from a single bill but from creating tools that allow us to adjust and bend the curve next year, and the year after that, and the year after that. It's not that the proposals on the table do nothing -- that I fear is about to become an often-repeated lie -- and it's not like we don't know what we can do to bend costs even further. But getting these options past the so-called fiscal conservatives who should be championing them? That's the true Gordian knot.
The dirtiest secret of all is that in health care, one man's waste is another man's profit margin... and still another's campaign contribution.
(Photo credit: http://www.flickr.com/photos/13061661@N08/ / CC BY-ND 2.0)
China's American-Style Healthcare Dilemma
Published November 11, 2009 @ 06:00AM PT
As we wait for the CBO to score the special interest-heavy Senate healthcare bill so the wheels of reform can begin to slowly grind again, it’s nice to know the country that owns the US now finds itself in a similar healthcare situation to ours. Largely because it followed our capitalistic, private-enterprise lead, China – which owns the largest share ($797 billion) of the US $3.4 trillion publicly-held debt – has a healthcare system in disarray. While some of the details are different, the themes are eerily familiar. No, we aren’t alone, but we might learn something from China’s dilemma.
China’s now diversified economy has left 300 million and counting of its 1.4 billion residents to rely on a porous government insurance program that only pays 60% of hospital bills. For medication and outpatient services, people have to fend for themselves. Although the government sets prices for all medical services and doctors’ salaries, when per capita income is about $5,000/yr it doesn’t leave people much to pay for healthcare. Take retired hydropower worker Shen Baohou, whose stent implants totaled $15,000.
Before 1980, when market reforms began, state-owned companies offered lifetime care to China’s residents. The benefit was one among many, including education grants and pensions. Chinese National Petroleum Corporation actually owned 50 hospitals to which it sent its 1.5 million workers. Then the workforce aged, retired, and required more expensive care. But younger workers went to work for private companies, leading to highly divergent risk pools. In 1981, 71% of Chinese had access to state health facilities; in 1993, only 21% did.
In 1994 China tried city insurance pools (200 million people are now enrolled) and separated hospitals from company ownership. It used a 6% employer tax and a 2% employee tax to pay for care. But medical inflation greatly outpaced wage and tax inflation. In 2005, people’s out-of-pocket expenses were 100 times what they were in 1980.
So in 2003, the government allotted more money for rural health cooperatives and gave farmers subsidies to buy insurance. Though the program covers 25-30% of hospital care and little outpatient care, 850 million people are enrolled. In 2007 China extended the program to urban workers; 120 million signed up. Some areas provide additional subsidies, and people can buy private insurance policies, if they can afford them. But their benefits are only good where they live – if they travel, they are officially “out of network.”
There is also a growing gap in quality of care. At Peking University People's Hospital there are electronic medical records, GE scanners, elite doctors and a fancy ward where the wealthy pay a princely sum for private suites. Community clinics, on the other hand, in both cities and rural areas, tend to be understaffed and poorly equipped. Worse, Beijing resident Helen Ye says people go to the clinics for colds, “but we don't trust the doctors because they are all being paid by the drug companies and so they over-prescribe. So most Chinese people, if they don't feel really sick, do home treatment and try to cure themselves."
China has an American problem that thankfully doesn’t involve as many profit-driven middlemen as ours. But it’s a lot bigger. What are they going to do about it? Frankly, Chinese leaders don’t know what to do. Some policy experts like economics professor Gordon G. Liu at Beijing University's Guanghua School of Management encourage letting the rich pay more for care, so doctors would work harder to get paid more. This theory relies on rhetoric that more doctors mean more care even for the poor, who can’t pay for it. Better yet, invite Kaiser Permanente to build hospitals in China, bringing in foreign investors. Other experts believe Liu’s theories would lead to doctors seeking out rich patients and ignoring the poor (do you think?)
So the State Council has set up pilot projects in multiple cities, and expects the experts to report back in three years. Some pilots will free up doctors to work at for-profit ventures, some will transfer them to community clinics without losing their government jobs, others will stick to the government-run model of fixed salaries but expanded care. The US could learn from this approach. Our leaders tend to sit on their hands, debating and spreading academic or just plain political rhetoric while some cities, states, and Medicare programs take the initiative. Instead, as a nation we could Get Off Our Buts, as the Roger and McWilliams book says. We just might come out ahead of China.
Photo http://lh4.ggpht.com/_jmb8njXy57I/STAk4D3rz9I/AAAAAAAABow/QxIHHHB-Fuw/s720/DSCF4668.JPG // CC BY 2.0
Is National Healthcare Reform Repeating Massachusetts' Mistakes?
Published November 10, 2009 @ 06:00AM PT
So where are we, as a nation, on health reform? You can compare the plans currently in play in an excellent summary here. But I can sum it up in two words: Massachusetts 2.0. Remember, MA was the first state to require all residents to have health insurance, with hardship exceptions. This was coupled with an employer mandate. It now has the highest percent insured population in the country, 97.4%. It is also drowning in healthcare costs, and looking for ways to cover them. The basis of its model: expand private insurance and use public insurance as a safety net. That has a familiar homey (or should I say House-y) ring to it, doesn’t it?
Given that Obama has studiously avoided talking about, much less praising, the MA effort, it’s ironic that Congressional efforts have mirrored this universal coverage pilot so closely. For instance, MA took the Congressional approach of tackling coverage first, and costs later. Nearly five years after its inception, MA universal healthcare is encountering steep resistance to proposed measures that would bend the cost curve, like Pay For Performance programs. As a result, insurance premiums continue to rise. They are expected to go up 10% for 2010. That’s not a good omen, as both chambers of Congress rely primarily on Medicare reimbursement cuts and pilot P4P programs to achieve cost savings.
More ominous yet, doctors in MA are cherry-picking patients based on their insurance plans. In MA as everywhere else, there is a shortage of primary care physicians. When demand is greater than supply, power shifts to those who provide the service. The complexity of the insurance behemoth wasn’t addressed during the MA overhaul, and it was in fact strengthened by a coverage mandate that did nothing to decrease insurance administrative bureaucracy. So doctors continue to pay for their correspondingly large administrative staff by preferentially seeing private plan patients. Some actually refuse to see poor patients on state-subsidized public plans.
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