Medicare and Medicaid
Getting Medicare and Health Reform Backwards
Published September 28, 2009 @ 08:03PM PT
I’ve noticed that many opposing health care reform -- many of them Republicans -- have started using “don’t let them cut any money from Medicare under any circumstances” as their favorite argument. But the “Bizarro world” quality of seeing the minority party so defensive over a program that they have long sought to prevent outright, cut or entirely replace or privatize doesn’t just stop with the applause line. A lot of the arguments they’re using have a similar “up is down” quality.
Take John Goodman’s blog today (the conservative economist, not the guy in The Big Lebowski) devotes a post to perverse incentives waiting for our medical system if reform passes. “At the risk of oversimplification,” he lays out a vision of perverse incentives for physicians if reform is passed. With government setting fee-for-service rates for all medical procedures, doctors have the incentive to do more services. But then if Medicare growth exceeds a certain limit, the federal government “will impose an across-the-board percentage reduction in all doctor fees.” The behavioral anarchy is shocking to Goodman. Each individual doctor has a miniscule ability to affect Medicare growth, and so will continue following his or her natural instinct to do more services -- even though in aggregate, that will cause the across-the-board cut to trigger. Paradoxically, this cruel blind injustice will just make it more likely that more doctors will do more services. More care means more wasteful care, and it perpetuates the situation it was designed to curtail.
Yes, that sounds massively inefficient.
However, Goodman has described a problem that exists now, not a projected future. The exact adjustment he describes was strongly advanced by the Gingrich Congress of the late 1990s -- called the Sustainable Growth Rate, it cuts doctors rates across-the-board by an arbitrary rate if aggregate Medicare growth crosses a certain threshold. It does, indeed, create that system where doctors are powerless to fix the situation but incentivized to perpetuate it. In fact, it creates a situation that is slightly worse -- the cut has never materialized. Every year, Congress passes a law at the last second to put a one-year postponement on the cut. So all the fear and perverse incentives to waste more Medicare dollars are there, but Medicare spending is never, ever reduced. Curiously, the legislators most inclined to believe Goodman’s economic theories are the ones who have consistently voted against delaying or removing the SGR cut -- including last year where a newly-diagnosed Ted Kennedy needed to walk onto the Senate floor to break a Republican filibuster that would have let the cut take place.
But here’s the kicker -- fixing the SGR is one of the main adjustments to Medicare in the House bill. Goodman’s projected inefficiency isn’t what happens when health reform passes -- it’s what health reform would prevent.
I suppose I shouldn’t be surprised that Goodman’s offered solution -- “Services provided over three visits, for example, might be provided with one visit plus a phone call or two, or one visit plus an e-mail exchange -- provided that the government pays more for the one visit” -- exactly describes the medical home model of care, a better, higher quality and more cost-effective model of delivering care which the proposals in Congress, in fact, double down on in terms of investments. After all, when it comes to arguments against health reform these days, up is down, and black is white.
(Photo credit: http://www.flickr.com/photos/sico_activa/ / CC BY 2.0)
"I Think Your Mom Probably Did": The Best of the Weekend
Published September 27, 2009 @ 10:46PM PT
Every weekend, I share my three favorite videos or stories that helped enhance my own understanding of the health care debate. In Washington, the focus is almost entirely on the machinations of the Senate Finance Committee, the House’s preparations for a full floor debate, and the looming question of what package can or will survive in the Senate. But with such a focus on the politics, there’s not quite enough on the policy. Luckily, the first two articles helped me fill in the gaps.
1.) Kaiser Health News, “Canadian Doctor: Dutch Health Care System Could Work In U.S.”
Dr. Robert Ouellet, until recently the president of the Canadian Medical Association, was also recently on a fact-finding mission to several European countries to assist the Canadian government in finding ways to improve their own universal health care system. This interview really has it all – musings on where the American health care system needs to go, comparisons to the Netherlands and several other countries, and myth-busting about the much-maligned Canadian system.
As mentioned before, those looking to blacken the name of Canadian medicine need to spend more time talking to Canadian doctors.
Q: In the United States, we’ve heard a lot of negative things said about the Canadian health care system. How do you respond?
A: First, people are not dying on the streets in Canada. I think there is a lot of exaggeration in what we have seen in the ads in the United States about the Canadian system. We have a problem of access and we want to fix that, that's for sure. We're not denying patients care because they don't have money. We have good quality. Many doctors, I am one of them, went to the United States for training. So it's not fair to say our system is so bad. That's not true.
Q: Would the United States be well-advised to adopt some of the Canadian ways of doing health care?
A: I think so. The most important thing for us is to keep our system universal. If it is one value that you want to import, that's fine. But it doesn't mean you need to import all [of our system] because it won't work in the States. And it's the same for us. You have good things in your system. But we don't want to have your system here in Canada. This is why we went to some European countries, to look at something different. And the first value we were looking for is universal access.
Read the whole interview at Kaiser Health News.
2.) The New York Times, “Medicare Scare-Mongering”
If we’re having a health care debate, then it must be time for someone somewhere to be darkly warning that Medicare is about to face massive debilitating cuts! If I was a senior citizen, I'd be ticked that my presumed gullibility had become such a political target. As this New York Times editorial illustrates, the reality is that a major goal of health care reform is to strengthen the Medicare program to increase its solvency and quality.
What the Republicans aren’t saying -- and what the Democrats clearly aren’t saying enough -- is that in important ways, coverage for a vast majority of Medicare recipients, those in traditional Medicare, should actually improve under health care reform.
The House legislation, the only bills in near-final form, would reduce and ultimately eliminate a gap -- the so-called doughnut hole -- in Medicare drug coverage that currently forces more than three million beneficiaries to pay for drugs entirely out of their own pockets once they hit specified spending levels. That would also benefit many other beneficiaries who pay high premiums for coverage in the gap that they never end up using.
The House bills would also waive deductibles and co-insurance for preventive care that can head off serious illness, expand eligibility for programs that assist low-income beneficiaries and provide incentives for doctors and hospitals to coordinate care, improve quality, and lower costs. All that should benefit many if not most Medicare beneficiaries. And delivery system reforms should benefit the private plans as well.
Read the full editorial at New York Times.com
3.) Stabenow Replies To Kyl: You Don't Need Maternity Benefits, 'But Your Mother Did'
My favorite video from the Senate Finance Committee mark-up (with a big h/t to Igor Volsky over at Think Progress). Once again, a conservative member of Congress is making the case that legislatures should not create minimum standards for coverage (a la, a mandate). I don’t buy that argument, but if you’re going to make it, I’d avoid citing a class of medical care that half of the population had an excellent chance of needing at some point in their lives.
Plus, it’s basically a video of a United States Senator making a “Your Mama” joke. What’s not to love?
The Senate Finance Mark-Up: Pharma 1, You 0
Published September 24, 2009 @ 09:56PM PT
As the Senate Finance Committee plunges ahead with the pageantry of its mark-up on a comprehensive health reform bill -- the last congressional committee to do so -- there’s a subplot to watch. Keep your eyes peeled for who benefits by the 564 proposed amendments: the various health care industries already making money off the system or the American people desperate for reform? Today was a textbook example of an amendment that directly pitted the interests of Big Pharma against you, the American taxpayer. In short, you didn’t do so well.
To give credit to the Baucus Bill, there is a provision wherein Medicare beneficiaries would get some relief from the “doughnut hole.” In Part D, beneficiaries’ prescription drugs are only covered for their first $2,700 per year. Once they reach that threshold, they have to pay for their drugs out of pocket until their total costs reach $6,154, at which point “catastrophic coverage” picks up for the remainder of their drugs. Being stuck in between those dollar figures is being stuck in the doughnut hole, and about 1/4 of the seniors on Medicare hit it each year. Making the elderly pay as much as $3,543 out of pocket on prescription drugs before their coverage kicks in again is obviously a huge problem. So Sen. Max Baucus negotiated a deal with the White House and with Big Pharma. The drug companies would kick in a rebate of up to $80 billion per year which would specifically be used for those stuck in the doughnut hole. Those in the hole would get drugs at half-price, which would be a huge relief for millions of seniors.
With that rebate came Big Pharma’s pledge to support reform, rather than fight it tooth and nail. They’ve been good on their word, running expensive but fairly milquetoast ads in support of a general notion of reform. But it came at a high cost -- an assurance that Pharma wouldn’t be asked to give up any more of their profits. The backroom deal was the exact opposite of what President Obama said would happen when he campaigned on health care, yet here we are.
Cut to today’s most notable moment in the mark-up: the amendment by Sen. Bill Nelson (of Florida, natch) which would have closed the doughnut hole entirely. Not only that, but the move would actually have saved more money than the current proposal. It also wouldn’t have been a radical move so much as re-establishing what had been the norm as recently as 6 years ago. It had broad Democratic support. And yet it failed to pass anyway.
Here’s the crux of Nelson’s amendment: about 8 million disabled Americans are simultaneously on Medicare and Medicaid, largely because of disability. They’re called “dual eligibles.” Overall, they tend to be low-income, unable to work because of their condition, and in the poorest level of health. They’re covered under Medicare, and use their eligibility for Medicaid to pay for their Medicare premiums for Part B. Now, before the Bush prescription drug bill in 2003, these folks’ prescription drugs were covered by Medicaid. Pharma got paid at Medicaid rates. As part of the Medicare Part D bill, however, Big Pharma got a raise – dual eligibles would be covered under Medicare. Pharma would get paid much higher rates and Uncle Sam would pick up the tab, minus a $1-$3 co-pay. How much higher were the rates? List price – or, if you prefer, “name your price.” Nelson’s amendment would simply return dual eligibles to being covered for prescription drugs under Medicaid, saving Uncle Sam a lot of money. How much? Enough to close the entire doughnut hole and still have $50 billion left over in savings.
Yeah, that’s your tax dollars we’re talking about.
You would expect the Republicans on the committee to vote against the amendment. After all, many of them had helped give Pharma that raise just a few years ago. But the amendment failed when three Democrats -- Tom Carper, Robert Menendez, and Max Baucus himself -- voted against it as well. All three of them cited the once top-secret deal as the reason for their vote.
“We don't represent their stockholders, we represent our stockholders, which are the taxpayers,” said Sen. Charles Schumer, who voted for the amendment. Apparently 10 Republicans and 3 Democrats weren’t so sure. And neither am I.
(Photo credit: http://www.flickr.com/photos/tomsaint/ / CC BY 2.0)
The Baucus Health Care Plan: Here Be Accounting Tricks
Published September 17, 2009 @ 05:10PM PT
The long-awaited and much-derided Sen. Max Baucus Chairman’s Mark intended to serve as the foundation for the Senate Finance Committee bill has, shall we say, a very limited audience. For once, I agree with Sen. Mitch McConnell when he writes, “The only thing bipartisan is the opposition.” But even if the proposal that took months to hammer out has zero Republican votes and progressive Democrats openly frustrated, there is one constituent who is quite impressed -- the Congressional Budget Office, which gave the Baucus bill inarguably the most impressive score of any health care proposal for cost reduction. But the reasons why Baucus’ plan appeals to the CBO are the very same reasons it is being vilified everywhere else... and why it's unlikely to become more popular the more people study it.
For starters, it’s not a surprise that the CBO looked upon the bill so favorably. After all, CBO Director Doug Elmendorf was photographed being in the room while “the gang of six” bipartisan negotiators were hammering out a deal. (In fact, there are more pictures of Elmendorf with the gang of six than there were pictures of gang of six participant Sen. Jeff Bingaman!) It’s also certainly the case that CBO’s rules for giving good scores on health care reform should be easy to predict by now. After all, HR 3200 yielded a very good score, as did the Wyden-Bennett plan. HR 3200, however, is also a textbook example on how to get, essentially, rogered by the CBO’s strict rules process. The House had fixed the Medicare Sustainable Growth Rate in its Paygo bill, netting a surplus of $265 billion. House leaders presumed that, since it was health care-related, that surplus should apply to HR 3200. The CBO did not agree, and when it proclaimed that HR 3200 would yield a $249 deficit, opponents of the bill had a new talking point –- even though the House health care reform effort creates a $16 billion surplus!
The point was clear to the gang of six: play by the CBO’s rules if you want your proposal to live. However, my Spidey-sense began to tingle yesterday when Sen. Kent Conrad requested CBO also score the Baucus bill in a 20 year-window. It’s an unusual move. But much like a lawyer only asks a question in front of a jury that s/he knows the answer to, Conrad knew what was coming. A $774 billion price tag over 10 years (even better than what Baucus himself reported), and a $49 billion surplus within the first 10 years. In short, the Baucus bill not only wouldn’t add to the deficit, it would reduce it. Extended out to a 20-year window, and the health bill would save hundreds of billions of dollars for the federal government.
Unfortunately, how it achieves those jaw-dropping savings is likely to be a ticking political time bomb.
9 New Surprises in President Obama's Speech
Published September 09, 2009 @ 11:09PM PT
A week ago, before tonight’s presidential address before Congress was even confirmed, I asked if President Obama had anything new to say about health care reform. I asked it even knowing that in many ways, it was the wrong question. The reality was he didn’t need to say anything new -- all it needed to be was new for most of the country. All he needed to do was say it better.
Not that the content of the speech being mostly rehash is at all a bad thing. If you read this blog regularly, or even every-so-often, you’re far more deeply enmeshed in the contours of this debate than, I believe, most Americans are. Although Obama’s town halls have been televised, although there was the press conference dedicated to health care, and the night of Q&A on ABC, although there have been op-eds, and blog posts, and Web casts and radio interviews a-plenty, most people just haven’t had the time to follow it. As a result, not everyone knows that the uninsured aren’t just sad unfortunate folks completely unconnected to us, but that our skin is in that game as well, with at least $1,000 hidden cost for uncompensated care for those of us with insurance.
People may know about pre-existing conditions, but they haven’t heard the story of Robin Beaton, the Texas nurse whose acne years prior was used an excuse to drop her health insurance precisely when she needed it the most to fight breast cancer. People know costs are going up but don’t realize, as the president said, “Our health care problem is our deficit problem -- nothing else even comes close.”
And they don’t hear nearly enough, nowhere nearly enough about the moral deficit of not fixing health care reform: “That is heart-breaking, it is wrong, and no one should be treated that way in the United States of America.”
Health care reform doesn’t exist in a vacuum. It’s not a good idea because it’s ideological or because the Obama plan is how anyone would build a system from scratch. It’s a good idea only to the extent that it solves an immediate problem. The structure of Obama’s speech was therefore elementary: you need to know the problem first, then you need to know how the solution relates to it, and then you need to be shown how all the stuff the media fixates on -- bipartisanship, “death panels,” illegal aliens, you name it -- how that doesn’t even relate to either the solution or the problem. Did Obama get a big enough audience or make a big enough impression to sway public opinion? Time will tell.
But since novelty is the spice of life, I have to share the nine things that I had legitimately not heard before, either from a policy or political perspective. Not all of them were positive, mind you, but I have to confess that the answer to the question of my earlier post -- does Obama have anything new to say about health care -- is yes.
Is Medicare Bankrupt?
Published September 08, 2009 @ 09:36PM PT
Well, if you know people on Medicare, the answer is obviously no. The government is still picking up the tab of at least a majority of their health care day in and day out. From what I hear from doctor friends, Medicare even pays more promptly than private insurance. Still, we’ve been hearing the “Medicare is bankrupt” canard on cable and reading it on protesting signs in town halls all summer. I’m not sure I understand the through-line of the argument, but my guess is that if Medicare is having financial difficulties, it proves we shouldn’t rely on government to solve our health care dilemma and should instead look to salvation from the free market. Except all available data suggests the single best thing we can do for Medicare is not to turn Medicare over to the free market. We tried that. It made things worse.
Call me old-fashioned, but I define bankruptcy as being insolvent -- your debts exceed your assets to such an extent that you can never pay them. That’s not the case this year for Medicare, nor the next, nor the next. Based on the actuarial projections of the Medicare Trust Fund, which is tasked with annually reporting to Congress on how the bottom line looks, the point where Medicare will pay out more than it takes in -- even by a penny -- won’t occur until somewhere between 2014 to 2028. But that presumes no changes in how Medicare income or spending. Either could be adjusted well before that point. Both have been adjusted at various times in the past well before the point of insolvency. Put another way, the Department of Defense budget is raised every year, usually in lieu of asking it to cut its budget substantially, but when’s the last time someone said the DOD was bankrupt?
But why is Medicare’s current financing structure insufficient in perpetuity? Kaiser Family Foundation has an excellent primer on this topic, based on the Medicare Trustee Report, the Congressional Budget Office, and the reports of the Medicare Payment Advisory Committee, going back for years. The reasons why are pretty obvious. None of them have to do with the bugbear of government incompetency.
The major reason is that health care costs have gone up for all payers, public and private, and dramatically so. Since 1970, health care costs have gone up for Medicare by 8.5% annually – but for private insurance, it’s 9.7%. Unlike private insurance, Medicare doesn’t have the option of pricing its product out of reach of new beneficiaries, dropping coverage on existing beneficiaries, or finding reasons not to accept new beneficiaries who look like they might have future health problems. Medicare has a lot of trouble controlling health care costs, and that’s largely driven by geographic variance in payments to doctors and physicians and the perverse incentives of fee-for-service payment, which incentivizes more care instead of better care. Guess what? Private insurance has the exact same problems. (Hey pot, it’s the kettle – you’re black!)
The Health Reform Journalism You've Been Waiting For
Published September 08, 2009 @ 04:53PM PT
One of the most common complaints from people trying as best they can to parse the different health care proposals is that there are too few articles that deliver the information in a straightforward, easy-to-read manner. You could always read the bills themselves, although, as Politico points out today, that experience may be more befuddling than enlightening for those not used to reading legal language. But the problem isn’t that these articles written to give a basic understanding of the proposals don’t exist. They just get lost in the flood of process stories, political horserace stories, and human interest stories than even Google can only help you so much.
That’s why it was my delight to find two truly excellent pieces of health reform analysis online today -- and why it’s my pleasure to recommend them to you.
Today’s Washington Post includes an article entitled “8 Questions on Health-Care Reform.” They are, in fact, the 8 most frequently asked “top level” questions. The language is very straightforward, and the whole article can be read in 10 minutes. It even has charts! Sample a snippet of the answer to Question 7, “What is likely to happen to my Medicare coverage under current proposals?”:
The vast majority of benefits provided by Medicare to 45 million senior citizens and people with disabilities would not be changed. Under the House bills, premiums for Medicare prescription drug coverage, known as Part D, would increase slightly. That increase would be offset by deep discounts on medications bought in the coverage gap known as the "doughnut hole."
Overall, the result would be lower out-of-pocket costs on prescription drugs for most seniors, according to the Congressional Budget Office.
Read the full article here… seriously, read it.
Towards the end of the spring, we saw a flurry of activity to actually create Republican “alternative” plans. They didn’t get much traction. Many of them were like Rep. Roy Blunt’s, which was barely four pages of bullet points in Microsoft Word that looked like it’d been written in about 25 minutes. A notable exception was the Patient’s Choice Act, which got some attention (and a rather lengthy analysis from me), but then disappeared from view. And by disappeared, I don’t just mean by the media -– Republicans largely stopped talking about them, too. In a post on The Health Care Blog, award-winning journalist Harris Meyer has a theory as to why:
Congressional Republicans have been blasting away all summer at the Democrats’ health reform legislation. But they might face heavy blowback if more Americans took a close look at two ambitious health reform bills sponsored by GOP lawmakers.
While the GOP plans include some worthy ideas, they have fatal policy flaws at their heart, largely related to insurance risk selection. Plus, they’re vulnerable to many of the same big-government political attacks leveled against the Democratic proposals. That may be the reason Republican lawmakers aren’t talking up their plans at the stormy health care town hall meetings they’re hosting across the country.
Read the rest of Meyer’s spot-on analysis here.
It really is our lucky day -- two great pieces of analysis that help shed some light not only on the proposals but on why someone might think they were a good or bad idea in the first place. They’re the pieces of health care journalism you’ve been waiting for.
(Photo credit: http://www.flickr.com/photos/shuttercat7/ / CC BY-ND 2.0)
