Signing up for Medicare

Good article on rules of when you can sign up for Medicare....and some of the issues you should consider when working past 65 and deciding about continuing employer based cover or Medicare.

Yale Book of Quotations top 10

quotes of the year is here. Their number 1 quote of the year, 2009:

"Keep your government hands off my Medicare."
unidentified speaker at health care reform town hall meeting in Simpsonville, S.C.,

I don't know whether to laugh or cry.

If you need something to worry about

check out this cool web site about risk of death from different causes. Not sure why they use 2002 data, because there are more recent data. They show deaths categorized by disease as well as by exposure. Nice visual representation of relative risk of dying from different causes. Hint: stop watching folks on TV talking about terrorism and go for a run.

More on geographic variation

from NY Times an essay on Richmond, VA and costs and outcomes there....and the fact that often the highest quality/best outcome areas are not the most expensive. Interesting article from most recent Archives of Internal Medicine on the risks of radiation from overuse of tests as an example of the cultural notion that more is always better is not likely the case in health care. Also, here is a link to the Dartmouth Health Atlas, the group that has popularized the study of small area analysis and geographic variation in health care. Here is a recent paper in the New England Journal of Medicine from some of the Dartmouth folks responding to criticisms about small area analysis and folks saying variations are driven by race on income only....they find these factors account for about 30% of the variation in expenditures across geography, with the remainder driven by system factors (how many docs, type of facilities, etc.). Here is a recent NY Times op-ed arguing that more doctors is not only not needed but would be bad for the system if teaching hospitals allowed to simply goose the existing system.

Quote of the year....for next 40 years

In Time's year end issue interview with Ben Bernanke, Chairman of the Federal Reserve Board, when asked if he was in favor of a law adding a value added tax responds thusly:

"....the one law I strongly advocate is the law of arithmetic. The law of arithmetic says that if you are a low-tax person, then you are responsible for finding ways of saving on expenditure so that you don't have enormous imbalances between revenues and spending. And by the same law of arithmetic, if you are somebody who believes that government spending is important, and you are for bigger programs, then it's incumbent upon you to figure out where the revenues are going to come from to meet that spending."

Excise Tax

Jon Gruber a few days ago on the tax on high cost insurance plans. Well written assessment....but I do wish we would cap the tax exclusion up front instead of doing in back door via this tax so that more focus could be put on role of the end user of care--you and me--on rising health care costs. But, this tax is the best aspect of the Senate bill to slow cost inflation.

Update: Today Bob Herbert in NY Times attacks the tax...he does understand it, just doesn't like i (meaning the real goal of the tax is to be avoided, with folks shifting down into lower cost insurance policies). I agree that it is not best referred to as a Cadillac tax....that is why I call it a high cost insurance tax. Again, I would rather limit and eventually end the tax exclusion altogether....and it doesn't bother me if you want lots of insurance, I just don't think all the premium should be tax preferenced if provided via an employer.

Column in N and O, Dec. 27

highlights the two trickiest issues for a conference bill....abortion and taxes (which ones). For taxes, the big issue is income tax increase (House bill) v. tax on high cost health insurance plans (Senate). Since I wrote this last Monday....the spotlight has shone brightly on special deals for states of holdout votes in the Senate....so that is likely to be important in negotiations with House. Also, I didn't list public option as a key sticking point because I think that is dead. The key for getting to a bill that gets 218 in the House is coming up with a face saving way for the House to basically assent to the Senate bill.

Odds and ends. Ezra Klein talking about the 24 Republicans who voted for the Part D plan with no spending offsets or tax increases and how they try and justify that with what they say now. The gem, a quote attributed to Orrin Hatch ....Hatch admitted that when Republicans controlled Congress, "it was standard practice not to pay for things." Here is the original AP story....part D plan added about half Trillion over first 10 years to deficit.

Klein also has a variety of interesting interviews about the filibuster in the Senate, how its use has changed and notions of reform.

Some Republican Attorney's General say they will sue over deals associated with Senate Dem holdouts. I don't watch so much TV, but this am was cruising the cable networks and saw a few of them talking...they mostly sounded like people who wanted to be governors or Senators instead of AGs, but I was impressed with their level of outrage for the Monday after Christmas...they were pretty jacked up.

But, I think they need to get straight what they are suing about. 10th Amendment challenge of the individual mandate? If yes, then Republicans need to stop calling it a tax increase, as the fed gov't clearly can do that. 14th Amendment equal protection challenge of Nebraska, etc. deal? Wouldn't Calif and NY be able to launch same over fact that the Medicaid formula differs by state per se, based on poverty levels? And isn't all this a bit tricky when the Repubs main rejoinder in the debate has been for fed gov't to pass law allowing insurance to be sold across state lines? This is fed govt telling states how/whether they can regulate insurance. They need a more coherent plan of attack....

Merry Christmas

Update, 7:15am, Christmas Eve: Senate has passed the bill 60-39. Had been rumors Feingold and Sanders would vote no on fill bill due to lack of public option (only simple majority needed for final passage). I think Hutchinson is the one who didn't vote. Update: It was actually Sen. Bunning of Kentucky who didn't vote.

The Senate is going to vote at 7am on Christmas Eve on the bill.

Dave Leonhardt on some cost saving notions and other issues for a conference. Latest from CBO on HI trust fund and overall deficit. Ezra Klein on the tax on high cost insurance.

I am taking a bit of break, so unless something notable takes place I won't be blogging for few days.

Peace.

A few steps closer

Senate voted 60-39 on two votes this morning, one approving the manager's amemdment, and the other a procedural vote necessary to break the filibuster. Sens. Reid and McConnell are said to be negotiating a timetable that will have the vote prior to the ~8pm Christmas Eve if Republicans continue to block.

Killin' Time

I once saw my granddaddy hit a pig between the eyes with the blunt end of an axe. Someone else then slit the pigs throat, and many others began to work on the carcas, all with knives. I was at a time honored Eastern North Carolina tradition of a 'hog killin' conducted during cold weather, when animals are rendered and processed into their various consumable forms--including sausage. The next morning, I had some of that sausage on a biscuit. I like sausage, but having that much inside information about your breakfast does make it taste a bit different.

So is the case with the health reform legislation.

While many are decrying a rush job, middle of the night secret votes and the like, the reality is that most people have paid far more attention to the health reform debate than they typically do to the Congressional process. In line at the Mall on Sunday, I overhead a conversation about cloture and whether the filibuster is in the Constitution or not (it is not; it is a Senate rule), and then discussing whether a conference bill can be filibustered in the Senate (it can) and whether it can be amended (it can't). Then they talked about why 3 committees in the House and 2 in the Senate had jurisdiction for health.

The health reform debate has, therefore, been a bit of a civics lesson. I would submit there has never been as much public discussion of the committee structure in Congress since I have been alive as there has been around health reform. So, the average person has learned much more about the process and the substance than is typical. That is partly because the issue being discussed is so important, partly because we have been talking about it for so long (the basic outline and approach of the bills are unchanged since Labor Day), and partly because there have been so many unreasonable things said in the debate that have obscured true choices--the salacious always gets more attention than nitty gritty policy. And much of what people have learned about the process, they don't like. And with good reason.

But, the unsavory factors about the process have always been around: the last holdout always gets the most; the system incentivizes brinksmanship; lobbyists having direct access while normal citizens are just one in 307 Million; the noisy getting the slots on Sunday talk shows while the quiet workers, work quietly; small states having disproportionate influence and so on. It is just that more people are looking at this process and bill than is typical.

That doesn't mean it produces the best policy. Far from it. In fact, if you weren't willing to just let me make all the decisions (what a missed opportunity!) I would take sight unseen the health policy program that President Obama's health policy team would negotiate with Mark McClellan, Gail Wilensky, and Bill Roper (all Republican directors of Medicare and Medicaid under Republican administrations). Because they all know health policy. The facts, and not just the slogans.

But, that is not what the Constitution says. It doesn't allow 6 or 7 experts to completely develop our nation's health policy. They can work together and submit reports and the like, but in the end, our elected representatives are the only ones that can make laws, or choose not to do so.

Analogies usually break down as some point. However, the one about not wanting to see laws or sausage being made is particularly apt. And very clear to me this cold morning, as I think of my granddaddy and making sausage.

60-40 and other stuff

Senate voted 60-40 in first procedural vote to stop debate....3 more votes required, 1 of which also requires 60 the other two simple majority (now there's an idea....).

Ezra Klein has interesting interview with Jon Kingsdale head of Mass connector about an individual mandate and how things have worked.

CBO revises estimate

of the degree of deficit reduction in the second decade (2020-29) of the Senate bill as amended by the manager's amendment. The say it will reduce deficit by between one quarter and one half a percent of GDP in the bills second decade; yesterday they estimated it would reduce estimate by one half percent of GDP. Revision due to fact that from 2020-29, Independent Payment Advisory Commission for Medicare would make recommendations only when Medicare growth rate was 1percentage point above overall inflation. Under revised estimate, CBO saying Medicare will grow by around 6 percent per year 2020-29. It has been growing by 8 percent or more the last few years.

The deficit impact of the first 10 years was unchanged. Typically CBO doesn't project out further than 10 years, but they have done so with health reform, in part because the Senate bill is much better than the House bill in terms of deficit in second 10 years. This is primarily due to the House using increased income tax rates to finance reform expansions, a very bad idea since health care costs are growing faster than wages.

Yes, No, Maybe So

So say Krugman, Brooks and Munger in today's News and Observer (Krugman and Brooks are reprinted from NY Times) with regard to the Senate bill (Munger is really saying no as well).

My friend (and former professor!) Mike Munger uses the classic Libertarian analogy of car insurance not paying for oil changes to make the case for not subsidizing insurance and having folks face more of the true costs of their care. I agree with him in many ways. That is why I favor severely limiting if not abolishing the tax exclusion of employer paid insurance.

However, the analogy breaks down in an important way. When your car gets near the end of its life, you stop investing more to keep the old bag running. You just get another car. When we get old and sick, we spend more and more with less and less benefit. The structure of insurance is not the only difference between your car and your life.

Good discussion of cancer testing

risks and benefits. A bit more reasonable than most of the recent discussion of this topic.

BCBS NC says premiums to rise faster in NC

I meant to write a few thoughts about Blue Cross/Blue Shield of NC reporting that they believe premium costs will increase more for their customers in NC than what the CBO projects for the nation as a whole yesterday, but didn't get to it.

First, the big picture. There are 160 Million Americans with insurance they get from an employer. There are 14 Million who purchase their own insurance. CBO says that premium costs for those getting coverage from employers will increase by 0-3% if the Senate bill becomes law. Not much change. However, CBO says that individually purchased policies will increase by 10-13%, but that the amount of coverage will also be much better, with better defined as covering more due to benefit package standards in the Senate reform legislation (essentially making individual coverage policies on par with what people getting insurance from a job now get).

BCBS NC says that they think premiums in NC for individual purchase customers will increase by 53%--quite a difference. They also note larger premium increases in the small business market than what CBO finds (32%).

A few thoughts on this.
(1) Right off, let me say I totally agree with one thing that BCBS notes. Total premiums and the amount that an individual has to pay for their health insurance are not the same thing. They are both important, but not the same thing. From the standpoint of the nation as a whole, we should be worried about increases in premiums, regardless of who pays the premiums (you, employer, subsidy via reform) because if we spend a dollar on health care, we can't spend it on something else. All else equal, we would like to spend less. If you can't afford insurance now but will be able to later that is good for you and the country (if you think expanding coverage is important); that is one of the main points of all this. I say this because CBO finds (and I wrote about in the News and Observer) that about 6 in 10 persons newly insured via the exchanges under reform will qualify for premium support based on their income, making it cheaper for them (but not reducing the total cost of the premium). But, the full premium is still being paid, just partly or in some cases mostly, by the federal subsidies.

(2) CBO has an unassilable reputation. So, BCBS NC is not going to get much traction in saying a private consulting firm hired by them or an insurance association plus their claims works shows something different. Meaning, most people aren't going to believe them unless they already want to believe their message because it fits into them being opposed to reform. Could CBO be wrong and Oliver Wyman correct? Of course, but there will be very few who would believe that CBO is just wrong and they are just correct (esp by this much).

Update: in fairness, the BCBS NC report is not saying CBO is wrong--they are arguing NC will be different. But, several folks wrote me immediately when BCBS NC published last week saying see, CBO is wrong. My point is that only people who want to reach that conclusion (CBO cooking the books) will conclude that based on the BCBS NC claim that premiums will rise faster in NC than national average .

(3) It is important to keep in mind that CBO has done a national average projection, and of course there would be variation state to state. An average is produced by examples above and below the average. So, even if CBO were correct, you would still expect to find that some states had higher premiums than average per CBO and others lower. Setting aside the fact that the difference is quite large, there inevitably will be differences across states relative to a national average. The next step would be to ask why might the NC experience be different?

(4) As I think about why might the NC experience be different from a national average, I would look at these possibilites:

a. Demographics in NC v. other states. This would be things like obesity and smoking. I doubt that these sorts of differences would produce this sort of difference. I wouldn't think that NC would be that much different from a national average, though I do believe we are above average in terms of obesity.

b. Intensity of how diseases are treated. Practice patterns is a phrase that describes how medicine is practiced in a given area. It points out the well shown fact that the same condition is not treated the same way in different parts of the nation. Atul Gawande popularized this notion in this New Yorker article in June, 2009 when he showed that two towns in Texas with very similar populations had huge differences in per capita Medicare expenditures ($7,500 for one, $15,000 for the other). The point is that if BCBS NC is purchasing care on behalf of patients that is somehow more intensive than in other states (more tests, labs, etc.) that would be shown via higher premiums. Higher health care costs, leads to higher premiums.

c. Prices. This is how much BCBS NC is actually paying for service X. For example, if BCBS NC paid more for an endoscopy (just an example) than another insurer in another state, this could help explain a difference if this occurred systematically. BCBS NC negotiates prices with providers: doctors, hospitals, health systems. So, if they were paying higher prices than average, their negotiating practices could explain a difference. But, given they have a strong market share in NC, you wouldn't epect them to be worse than average at negotiating prices.

d. How big a change new insurance regulations represent for North Carolina. CBO notes that one reason premiums will rise in the individual market after reform is that the insurance has been expanded....more things covered and less out of pocket cost given you get sick...for a higher premium. BCBS NC notes differential current regulation--and therefore differential changes from status quo to Senate bill--explains most of the difference.

I am not really sure how NC current insurance regulations stack up with other states, but if the Senate mandates for minimum benefit packages and the like are relatively larger changes in North Carolina than in others states, that could explain a difference. BCBS NC report says that our premiums are relatively low now because of lower regulation, which means that people in NC buying individual purchase policies will get a bigger expansion of benefits than in other states, for a bigger price if that were true. Further, they are essentially saying that because the consumer regulations in NC are relatively lax, this has been a bad state to be sick in, making you more likley to be uninsurable given any premium that might be quoted for individual policies. They are saying that this could lead to sicker pool of folks ready to uptake insurance while healthy folks don't do to weak individual mandate. The basic story is plausible, it is just not clear to me that our regulations are so much further behind a national average. I'd need to know more about comparative state regs at this time to really be able to say.

(e) Last possibility is that BCBS NC has higher costs of doing business than other insurers. This doesn't seem likely to me. The other possibility is that they could take in more in premiums but pay out less in terms of claims than a national average, but that also seems unlikely now, and won't be possible under the Senate bill since it sets the proportion of premiums that must be paid out in care (85% for group; 80% for individual).

If there were a difference in premiums between national avg and what is expected in NC (and I haven't seen a CBO state by state analysis, nor do I have any inside info on Oliver Wyman analysis but have read what BCBS NC put out) my guess is that a difference would not be primarily due to : (a) demographics. It is hard for me to believe that a difference that large is due to differences in current regs (d) but I may be wrong. But, I am curious if anyone has a sense of how much difference the individual market insurance regs are as compared to the Senate bill across states? I haven't seen anyone do that in a way that is easy to understand.

Other reasons you could expect any state's premiums to be above a national average would be (b) intensity or (c) prices, or more likely a mixture of the two. Now I suspect many reading this discussion are thinking, well since BCBS NC has a large market share (about 7 in 10 group policies in NC, just about all individual policies) that what is most needed is more insurers to enter via the exchanges and competiation bid down the prices. More insurance companies could potentially exert competition and force BCBS NC to learn to run their business more cheaply or lose customers because their premiums would be higher. The exchanges will have a chance to bring that about.

However, there is another type of competition that enters this picture, and it is competition (or lack of it) between providers. If there is a reason that providers in NC (docs, hospitals, health systems) are less likely to be competing, and more likely in economic terms to be colluding, then that could make both intensity and certainly prices be higher. And by colluding, I don't mean executives meeting in clandestine locations to fix prices. I mean simply that it is obvious to the providers that it is not in their best self interest to start up a price war. I really don't know if there are reasons to think that NC might be different from other states in terms of providers not competing. But, my hunch is that there aren't many states with two world class teaching universities right on top of one another (I work at one and have three degress from the other), which are in the center of the sate and so can plausibly be part of an insurance provider network in any part of the state.

I figure that BCBS NC (and every other insurer) has to have one or the other in every network/contract they write in NC, and everyone knows it. So, there is no incentive for UNC and Duke to compete on price. Could that produce this level of premium difference? It doesn't seem likely to me, but if I were trying to diagnose why premiums in NC were higher than a national average, I would start by looking closely at intensity and prices. Finally, the BCBS NC analysis notes that most of the increased premiums in NC will result from the weakness of the indivdiual mandate (meaning penalties much weaker in Senate bill than in House) which they are saying will lead to worse adverse selection in NC than the nation as a whole. The managers amendment, introduced this morning, strengthens the indivdiual mandate by increasing penalties. I am not sure what effect the strengthening of the mandate would have on their projected premiums, but it is stronger than it was when the analysis was done.

A final note in defense of an individual mandate. Every country in the world that has universal coverage either has an individual mandate or a system in which people are automatically enrolled. So, if the goal is universal coverage some day, the degree of individual mandate will have to increase or an auto enroll program of some sort will have to come about if everyone is to be covered. The populist surge against an individual mandate is not actually about the mandate as much as I think it is about the price of insurance (which of course is driven up primarily by the cost of health care). People wouldn't sweat a mandate as much if it didn't cost so much. Once you have everyone in the system, the cost of insurance can stabilize and drop as you get rid of cost shifting due to being uninsured. Getting from here to there won't be simple as long as you use private insurance as the expansion strategy. Hopefully adverse selection won't be as bad as BCBS NC says it will be. They are making this case asking for a stronger mandate. That may be warranted, but may not be politically possible to get a mandate as strong as what they would want. There will be constant tweaks in a reformed system addressing all sorts of issues, including the possibility of adverse selection being much worse in some states than others.

A Good Step

The bill is the best that can be gotten now. It uses a mixture of Medicaid expansions and setting up a private insurance market to expand coverage; 31 Million people will be insured in 10 years who otherwise would not have been. And there are significant insurance reforms which will protect consumers. I think the insurance market structures are sound and if the exchanges work well, it is easy to imagine them being opened up. We have a chance to actually set up a market for insurance, with consumers shopping for their own insurance. That is shockingly rare in such a consumerist society.

The biggest disappointment with the bill is what it doesn't do to control costs. The tax on high cost insurance is a historic de facto limiting of the tax exclusion of employer paid insurance premiums. But, we need to do much more. There is not the political will to limit the tax exclusion further at this time, but that must come down the road. And doing so will help focus the cost control effort on the end users of care--you and me. That is a huge missing piece in our culture. Everyone says that want to slow the rate of cost growth....up until it means spending less. As a society we have to grow up and face this. This is a first step, certainly not a last one.

And this has been done in a manner that CBO says does not add to the deficit, and actually reduces it a bit. If you think back to mid June when the initial CBO score came back with HR3200 increasing the deficit by quite a bit and not getting near universal coverage, you have to give credit to the Dems. They redoubled their efforts and took very seriously the need to create a bill that didn't add to the deficit.

I am glad that CLASS has survived. It is inherently uncertain trying to project disability rates into the future, but it is certain that long term care is a tremendous risk that most don't prepare well for. CLASS has the chance to stimulate the discussion and thinking about long term care before it is too late--making it a normal part of being a young adult. As someone who is 42 and will be around and in the age of needing care myself when we will know for sure whether it worked or not in stimulating better planning by helping to start the conversation, I say it is a good move.

It would be an easy call for me to vote for this. That is in large part because of what a disaster is represented by the status quo, both in terms of the human toll of being uninsured, and the inevitble effect on deficits of doing nothing. There will be unintended consquences, but also opportunities to tweak this as we move ahead over the next years and decades.

The claim that this is a rush is laughable. The basic outline of the bill has been the same since summer. Deadlines typically are arbitrary, but work also tends to expand to fill the time alloted it. Barring something unforeseen, the Senate has moved the ball down the field. Good job.

CBO Score

of managers amendment is here. CBO says reduces deficit by $132 Billion over first 10 years, with about 31 Million insured in 2019 who would otherwise be uninsured.

Deal

struck to get Nelson and Manager's Amendment is being introduced.
Republicans objected to waiving reading of amendment as predicted and they are reading it now...estimate is 8-10 hours. They must finish by 11:59 tonight to have cloture vote to break filibuster at scheduled 1am vote on Monday (apparently one entire calendar day must pass).

Text of managers amendment is here. Going into work to print and read....more later.

Some Big Changes I see from managers amendment:

*CLASS stays in.

*Larger High Income Payroll tax increase. Original Senate bill had 0.5 % increase of Medicare payroll tax for persons making over $250,000 per year now 0.9% increase.

Current law 1.45%>>>>2.35% for $250,001st dollar on up proposed, to take effect Jan 1, 2013.

*High cost insurance tax. Longshore workers classified as high risk, which exempts their benefits from the tax. Also exempts flexible spending account amounts from contributing to the total value of making a 'plan' meet the high cost tax level if the employer limits indivdiual contributins to flexible spending accounts to $2,500. So, if an employer doesn't limit to $2,500, the amount in a flex spending account would count toward the total [along with employer share of major med, employee share]. p. 362-364.

*Abortion: language tightening and walling off federal money from paying for abortion. Also a state level clause that would let states ban all private insurance policies from covering abortion sold in exchanges. [Currently, there are 6 states that ban abortion covered by private insurance outright.] Here is what I wrote about Stupak. pp. 38-54. Lots of detailed language about what is not meant by abortion lingo, notably not altering EMTALA, Civil rights Act(s), etc.+

*Tax on medical device makers. Delayed by one year, now start 2011. But fee rises from $2 Billion put on industry in pro-rated manner to $3 Billion after 2017.

*Tax on insurance providers. I think I have this straight, but would like to see what others say here. The amount of the industry wide annual tax before was $6.7 Billion. Now it will be 2011 $2Billion; 2012 $4 Billion; 2013 $7 billion; 2014-16 $9 Billion; 2017 and later $10 Billion.

Other change is that revenue generated by third party administration fees are exempted from determining the share of the tax that a given company would owe (now only premiums received as a measure of their business). And the schedule for how premium totals are exposed to this tax for a given company is the same. If $25Million or less total net premiums in a year, then 0 tax; if $25M to $50M then 50% are exposed to determine the amount of tax owed. If above $50 Million, then total premiums used. All of this is for determining how this 'industry tax' is apportioned among said industry. pp. 365-370.

Insurance doesn't include LTC insurance, Medicare supplement,

*Tanning bed tax! Cosmetic surgery tax gone, but 10% tax on tanning beds effective July 2, 2010. [Hint: just go outside and you can avoid this one] p.373

Other Changes, More or less straight through the document.
*Nebraska: Full funding of Nebraska Medicaid expansions in bill, up to 133% of poverty (other states get 94% I believe)....cost of $45 Million over 10. Landrieu got $300 Million. No word on federal building namings or bridges....

*Insurance regulations (I think I have this straight, would like to see what others think): No lifetime limits on dollar value of benefits after exchanges up and going (Jan. 1, 2014). Before then, annual limits are allowed if they are judged to be reasonable by Sec of HHS. The above applies to "essential benefits" under the Patient Protection and Affordable Care Act.

short version seems to be no annual limits on essential services per the existing law after exchanges up and going in 2014. pp.2-3

*Guns: None of the Act provisions, including the wellness and prevention provisions of original bill that included data collection efforts of risk factors for death, etc. cannot ask about guns or ammunition. And the amendment forbids use of gun ownership to risk rate premiums...Nelson is a big hunter and this stuff is right at the top. pp. 5-7, new section called Protection of Second Amendment Gun Rights.

*Insurance regs, II: starting in 2011, group insurance must spend 85% [or higher if state regulates differently] of premiums on health care, and issue pro rata rebate to consumers if they do not do so (meaning, bring in more premiums than needed to achieve this); 80% [or higher if state regulates] for individual policies. pp. 8-10

*No public option, but national NP plan. Insurers can create multi-state plans (sell across state lines) with states agreeing and Office of Personnel Management overseeing (who runs federal employees health plan). Plans must meet benefit reqiruements of the Act and have the benefit levels available (bronze, silver, gold, platinum) and then the plans can be sold in multiple state exchanges if state agree. States can also require extra benefits to allow multi-state plans to be sold (p.59). But, multi stating and/or states requiring extra benefits can't increase cost to federal govt [eg can't make subsidy rise]. States that have premium rating requirements of less than the Acts 3:1 can continue to impose them....I am pretty sure this is a big change from before (p.60). Phase in of what proportion of states a multi-state plan must be made available in for OPM to certify it as a national plan (60% of states in year 1 up to 100% in year 4). pp. 54-62.

*Individual mandate strengthened/penalties increased. The penalties for not purchasing coverage are higher. For example, initial said starting penalty was $350 in 2015 and now $495. In later years as penalites rise, there is now an income based penalty, more similar to House bill....I think. I will need to circle back here as it is complicated text in original and more complicated text in managers amendement. pp. 67-73

*Wyden's Amendment notion is contained in Sec. 10108 (p. 80) which is essentially a demonstration allowing employers to offer employees a voucher if they don't want the employer provided insurance that they (employee) can go into the exchange and purchase cover with. It opens this up to employees who premium contribution range between 8% and 9.8% of gross income. If more than that, they can get premium support subsidy through initial bill given income applicaibility. But, this lets a larger group of employees go and shop in exchange if employer willing. Interestingly, if the free choice voucher ($ to be spent on insurance) is greater than cost of plan, employee gets difference in income. So, could have employees wanting catastrophic only but at company with very expansive benefits picking this and employers being ok with it as 'free choice voucher' amount set at less than they pay now. A good dissertation topic for someone down the road, looking at the behavior here. pp. 80-89.

*Sec 10202. Incentive Program to get states to reconfigure Medicaid dollars toward community based services to keep folks out of nursing homes. Lots of detailed info here. Targeted at states where less than 50% of LTC is for non -institutional care. pp. 111-120.
Also extension of CHIP funding through 2015 and other CHIP stuff pp.121-132. STuff on pregnancy and prevention and then Indian Health Service funding up through pp. 146.

*Medicare innovation center and payment bundling demonstration. both important to actually move away from fee for service and old means of payments. pp. 153-161.

*Independent Medicare Advisory Board, Sec. 10320. Some additions, including in years when a recommendation is not reuired to be submitted to congress a plan for changes to Medicare, the board can still send an advisory recommendation. But, in most years, Medicare has slower rate of growth than full health system. I had hoped for a stronger change here. House bill doesn't have such a Board, so just keeping it in is good. This will need to be expanded and given more power down the road to improve ability to address cost inflation. Also, the Board now submits to the Congress and the President. Some other lingo here that I don't totally get...will circle back. pp. 180-190.

*Delay prospective payment update of SNF...RUG IV. Can't implement prior to October 1, 2011. I think it was to get into effect Oct. 1, 2010. This may be one of things Nelson was talking about when he said worries about payment changes for long term care provoiders. p. 212

*Pay for performance demos....more stuff to help move away from straight fee for service for Medicare doc payment. Can't increase total pay in an area. p. 213-215

*Amendments to Title IV p. 250-301 relate to research funding, NIH, and getting rid of co-pays for preventive services like mammography.

*Tort Reform. Extra demonstrations for states to address medical malpractice/tort. The requirements are that state must have demos that focus on alternative dispute resolution but which also address/focus on reducing medical errors. Also directs MedPac to do study on alternatives to current tort system. pp. 344-359.

Still stuck on 59

so says Ezra Klein. Politico describes similar and Nelson says coming our of Senator Reid's office, "As I've said there is always a lot of room which you have to have between the bid and the ask, and we're seeing if we can close the gap."

UPDATE: NY Times says white house vetting Nelson's wish list. Abortion restrictions and opposition to CLASS are among them. Here is what I think of CLASS.

Column in today's News and Observer

revisits some questions I posed in October about how things will play out. NY Times writes about the race for a 60th vote by Christmas and the pitfalls of same. The part of this article that makes me giggle is Ben Nelson (the last holdout) saying the President made a strong case to him for a yes vote, but 'that it remains to be seen if he was compelling.' Well, he is uniquely qualified to decide if he was compelled or not....I feel bridges coming on in Nebraska. The Christmas deadline is arbitrary of course, but I think it rolls by then or it is done.....maybe final vote not before Christmas, but if they go away without a cloture vote I think it is dead....with 41 beating 59....just another day at the office.

Other stuff
*BCBS NC CEO Bob Greczyn says that premiums for indivdiual policies in NC will increase by more than the 10-13% national average that the CBO says if Senate bill becomes law. BCBS NC is largest private insurer by far in NC. I will write a bit more about this later today.

*Larry Kissell makes it into the WaPost in a way he probably doesn't like.

*The Dean of the health policy guys, Henry Aaron writes in the WaPost that the bill isn't perfect, but is important and better than the status quo. Predictably, he notes he really wishes we would cap the tax exclusion of employer paid insurance premiums....if you are worried about cost inflation in health care. Sigh.

*More on CLASS and what $75/day could mean.

* NPR fact checking the claim that 'all the taxes start now with all benefits later'.

*Important report on deficits....bipartisan group....many might say given this we can't afford the health bill. It is the opposite. Burn the picture above into your brain if you worry about deficits, it is the percent of GDP spent on Medicare and Medicaid with respect to the rest of the federal budget. It is inevitable if we do nothing....the Senate bill is not the last step to addressing it responsibly, but it is a first step, and much better than doing nothing.

The Plan

MSNBC has outline of a vote schedule....but there are lots of ifs.

Clearly made case for cut the deal, move ahead

from Paul Starr. I have said it before, but everyone should read his 1982 book The Social Transformation of American Medicine, 1982, BasicBooks.

Senator Coburn

has an op-ed in the Wall Street Journal decrying rationing in the Senate bill. Most interestingly, he decries an Independent Medicare Advisory Commission and the use of Comparative Effectiveness Research. You might be interested in how his own bill--The Patients' Choice Act--deals with some of these same issues.

Here is a column I wrote about the Patients' Choice Act (which is co-sponsored by Senator Richard Burr, R-NC, my senior Senator). Better yet, read the Patients' Choice Act for yourself. Past posts have discussed this, particularly the creation of a Health Services Commission in the Patients' Choice Act, pages 206-15 of Sen. Coburn's bill. Here is another post focused on his discussion of the Independent Medcare Advisory Commission and my noting that he seems to forget some of what was in his own bill when he criticizes others.

In short, the Patients' Choice Act develops a commission with more teeth than what is included in the Senate bill....and which allows for the imposition of civil penalties on doctors not following the guidelines of the Commissions set up in the Patients' Choice Act, including banning banning doctors not following the guidelines from billing federal insurance programs such as Medicare. Don't take my word for it, read for yourself.

Below are selected parts of Title VIII of the Patients' Choice Act (that Sen. Coburn sponsored) with the language below creating a Health Services Commission (pages 206 and running to page 215). Page numbers are noted, and of course you can read the full bill above.

*Purpose, sec. 801 (b), p. 207
(b) PURPOSE.—The purpose of the Commission is to
11 enhance the quality, appropriateness, and effectiveness of
12 health care services, and access to such services, through
13 the establishment of a broad base of scientific research
14 and through the promotion of improvements in clinical
15 practice and in the organization, financing, and delivery
16 of health care services.

*Duties, sec. 802 (a), p. 207-08
(a) IN GENERAL.—In carrying out section 801(b),
23 the Commissioners shall conduct and support research,
24 demonstration projects, evaluations, training, guideline de
25 velopment, and the dissemination of information, on
1 health care services and on systems for the delivery of
2 such services, including activities with respect to—
3 (1) the effectiveness, efficiency, and quality of
4 health care services;
5 (2) the outcomes of health care services and
6 procedures;
7 (3) clinical practice, including primary care and
8 practice-oriented research;
9 (4) health care technologies, facilities, and
10 equipment;
11 (5) health care costs, productivity, and market
12 forces;
13 (6) health promotion and disease prevention;
14 (7) health statistics and epidemiology; and
15 (8) medical liability.

*The Act also creates, under subtitle B, a sub-unit of the Health Services Commission, a 15 member Forum for Quality and Effectiveness in Health Care.

*Membership, sec. 812, p. 210-11
(a) IN GENERAL.—The Office of the Forum for Qual23
ity and Effectiveness in Health Care shall be composed
24 of 15 individuals nominated by private sector health care

p.211
1 organizations and appointed by the Commission and shall
2 include representation from at least the following:
3 (1) Health insurance industry.
4 (2) Health care provider groups.
5 (3) Non-profit organizations.
6 (4) Rural health organizations.

*Duties of the Forum, sec. 813, p. 211-12
(a) ESTABLISHMENT OF FORUM PROGRAM.—The
24 Commissioners, acting through the Director, shall estab
25lish a program to be known as the Forum for Quality and

p. 212
Effectiveness in Health Care. For the purpose of pro
2moting transparency in price, quality, appropriateness,
3 and effectiveness of health care, the Director, using the
4 process set forth in section 814, shall arrange for the de
5velopment and periodic review and updating of standards
6 of quality, performance measures, and medical review cri
7teria through which health care providers and other appro
8priate entities may assess or review the provision of health
9 care and assure the quality of such care.

*How will guidelines and standards be developed, p. 212
(b) CERTAIN REQUIREMENTS.—Guidelines, stand
11ards, performance measures, and review criteria under
12 subsection (a) shall—
13 (1) be based on the best available research and
14 professional judgment regarding the effectiveness
15 and appropriateness of health care services and pro
16cedures; and
17 (2) be presented in formats appropriate for use
18 by physicians, health care practitioners, providers,
19 medical educators, and medical review organizations
20 and in formats appropriate for use by consumers of
21 health care.

*When they will bring about guidelines, p. 213
(e) DATE CERTAIN FOR INITIAL GUIDELINES AND
15 STANDARDS.—The Commissioners, by not later than Jan
16uary 1, 2012, shall assure the development of an initial
17 set of guidelines, standards, performance measures, and
18 review criteria under subsection (a).

*Enforcement Standards, sec. 814, p. 213-214
SEC. 814. ADOPTION AND ENFORCEMENT OF GUIDELINES
20 AND STANDARDS.
21 (a) ADOPTION OF RECOMMENDATIONS OF FORUM
22 FOR QUALITY AND EFFECTIVENESS IN HEALTH CARE.—
23 For each fiscal year, the Commissioners shall adopt the
24 recommendations made for such year in the final report
25 under subsection (d)(2) of section 813 for guidelines,

1 standards, performance measures, and review criteria de
2scribed in subsection (a) of such section.
3 (b) ENFORCEMENT AUTHORITY.—The Commis
4sioners, in consultation with the Secretary of Health and
5 Human Services, have the authority to make recommenda
6tions to the Secretary to enforce compliance of health care
7 providers with the guidelines, standards, performance
8 measures, and review criteria adopted under subsection
9 (a). Such recommendations may include the following,
10 with respect to a health care provider who is not in compli
11ance with such guidelines, standards, measures, and cri
12 teria:
13 (1) Exclusion from participation in Federal
14 health care programs (as defined in section
15 1128B(f) of the Social Security Act (42 U.S.C.
16 1320a–7b(f))).
17 (2) Imposition of a civil money penalty on such
18 provider.

Delays

Bernie Sanders introduces an amendment for Medicare for everyone, Coburn objects to the typical consent to not read the entire bill and the greatest deliberative body in the world spends an afternoon reading part of something that one Senator would vote for [well, maybe three or four--only 56 votes short!]. Dems apparently still waiting for CBO score. I have a hunch that Republicans stalling like this actually increases the resolve of the Dems and makes the waiverers more likely to vote yes.
Update: more from NY Times.

Howard Dean

has gone insane. Just saw him on TV saying now that since there is no public option or Medicare buy-in the bill should be opposed, because this bill uses private insurance to expand coverage. The public option that has been discussed is very weak. The Medicare buy-in is a better policy, but that as the way to get Senate Dems worried about gov't to come on board never made political sense.

Governor (and Doctor) Dean is welcome to be opposed to a plan that uses private insurance as a major way of expanding coverage. But that has been the outline of the bill for 4 or 5 months. The essence of the bill hasn't changed that much. It is time for the grownups to kick the ball down the field and get what can be got.

My thoughts on doing nothing.

More on CLASS

I wrote about the CLASS Act provisions last week in the News and Observer. Here is a NY Times story about CLASS. Sometimes I wonder if certain groups just think they should oppose certain things, without actually thinking much about it. Long Term Care Insurance companies have been opposed to CLASS....here is a Genworth action alert asking agents to contact Congress, etc.

The problem is that private insurance has not been able to sell a great deal of long term care insurance....less than 10 percent of persons age 55 and over. I have a paper on long term care insurance and the use of genetic markers as a potential risk adjustment/underwriting variable that is coming out in the January 2010 issue of Health Affairs, but I can't link it yet. My point here is not about genetic markers and long term care insurance, but the fact that there are all sorts of reasons that people don't buy long term care insurance that are good reasons. Put another way, the same industry that has managed to sell lots of life insurance can't sell lots of long term care insurance. I think something like CLASS could actually help boost coverage rates of private LTC insurance because (1) it helps people think about this happily avoided topic at younger ages; and (2) could let private insurance focuses on the truly big ticket costs of a nursing home with CLASS defraying earlier/lower costs that are typically community based.

In particular, the main argument against CLASS by private insurers seems to be that CLASS will give false security to people. But, now most people haven't got any insurance cover and/or lots actually think that Medicare covers a great deal of LTC.

Here are some of the main reasons that people don't buy long term care insurance.
1. premiums are low at young ages, but people don't think about LTC at young ages.
2. when premiums are low, the expected point of potential use of LTC is a long ways away. You can get a low premium at age 40, but your likely time of use of LTC insurance is 3 or 4 decades away.
3. The inflation risk of benefits to be used far down the road are extreme...and the paradox of the lower the premium at younger ages, the more extreme the time horizon problem.

*Points 1-3 are really problems with the the insurance product being sold....in short, they aren't passing the market test in large numbers.

4. Many don't have enough income to afford premiums, or enough wealth to protect to make purchas of such insurance make sense.
5. Medicaid, which serves as a de facto NH insurance insurer, with the deductible essentially being youn non housing wealth, likely crowds out private insurance.

If private insurers were selling lots of private LTC insurance, I would get their opposition to CLASS. But, given that they haven't figured out how to develop a product that lots of people want to buy, I don't see how something like CLASS wouldn't help them.

Senate Dems to White House Tomorrow

Sounds like Reid et al. will drop Medicare buy in and get what they can get....and they are all going to the White House tomorrow. I think they must have manager amendment and cloture vote by sometime Friday to pass it by Christmas.

Dropping the weak public option is not that big a loss. Medicare buy in is a better health policy, but it was always an odd thing for people saying they were worried about government intervention in the health system to be for as a compromise. Lieberman has totally flipped around on this, but the thing to do is move ahead. Politically, this actually gives cover down the road to the Dems....anything goes wrong, blame it on lack of a public option, and it takes away the Republicans blaming anything bad on the presence of public option. Health insurance companies get more customers they now can't sign up, but they will also be on the spot.

If an individual mandate with expanded private insurance markets passes without a public insurance option, in many ways the pressure may be wratcheted up on private insurance. This will be an experiment in whether people can actually be good consumers of health insurance and see whether that can do anything to cost inflation. The insurance companies will say the penalty for individual mandate is too low and they will be worried about adverse selection. The liberals will be angry that essentially the Dems are passing what passed for a moderate Republican alternative 15 years later. I actually think there is going to be more pressure on private insurance companies than many think. If this doesn't work out so well (of course there will be bumps and tweaks down the road), then we will return in 10-15 years, and it probably won't be to try and work it out in a different manner via private health insurance.

Check out Joe

Supporting a Medicare buy-in for those 50-64....not during the 2000 Presidential campaign, but less than three months ago!

I would like to be a fly on the wall

at the 5:30pm Dem Senate caucus meeting this afternoon.....and the White House is confirming they want a deal cut with Sen. Lieberman.

And Peter Orszag lets his hair down....The system is frayed!

If there were one Republican that would jump, they could get whatever they wanted on med malpractice reform, probably a court house named after them, and all sorts of various projects built in their state.

A few things

Interesting chart in NY Times on life between the ages of 57 and 85.

Ezra Klein has good post on Massachusetts and level of cover via this exchange approach....96% with the number of folks getting penalized for not signing up dropping year 1 to year 2.

And Joe Lieberman has apparently said he will filibuster any bill with Medicare buy in included. Sen. Lieberman was invited to be among the 'gang of 10' negotiating, but never showed up for meetings and was replaced by Sen. Pryor....so now I think it really looks like he: (1) really loves being on television and the center of attention; (2) maybe doesn't actually want a deal, but won't negotiate in good faith up front; (3) and has been really inconsistent in alot of his policy arguments on why he is for/against certain things. Anyone remember one of the key parts of the Gore/Lieberman 2000 health policy campaign? Yep, he was for a Medicare buy in for those 55-64 before he was against it.

OPM public option

Jacob Hacker 'godfather' of the public option idea lays out why he thinks the Office of Personnel Management running a national plan a la fed employees health plan is a bad idea.

Ping pong

straightforward write up of how to get to a final bill without a conference committee....but things are stickier in the Senate than they appeared mid week last week.

Quick thoughts on actuary report

That came out yesterday, full report here linked via TNR blog. Here is NY Times. More detailed comments later, but biggest picture:

*If we do nothing, from 2010-19 we will spend 35 Trillion, 260 Billion on health care and there will be about 56 Million uninsured in 2019.

*If Senate bill becomes law, we will spent 35 Trillion, 500 Billion on health care, and there will be around 23 Million uninsured in 2019.

So, health spending goes up by $260 Billion over 10 years, and 33 more people have health insurance, on a default base of over $35 Trillion (the T is correct) under do nothing.

Other notes are that Medicare solvency is extended by 7 years and trend lines within the report suggest a new system with better hopes of slowing inflation in the next decade (2020-29). Also, actuary notes that often Medicare cuts don't materialize...which means one congress can't bind another. For a bit of historical comparision, Balanced Budget act of '97 cut Medicare spending by 12%, and about 7-8% of it stuck...meaning carried through on. The Senate bill proposes Medicare cuts of 5% of total over 10, much smaller and a good chuck is overpayment to Risk Plans and reductions in DSH payments which should drop as uninsured drop.

I wish we would do more to control costs. Here are some thoughts I have had on that in the past.

Broder on Frosh Dems and Cost Inflation

David Broder writes about the bundle of amendements that 11 frosh Dem Senators have assembled that focusing on slowing cost inflation.

Today's N &O Column--CLASS

Today's column focuses on the Community Living Assistance Services and Support (CLASS) provisions in the reform legislation. More later today once done with grading finals and doing final grades....

Here is recent CBO report comparing CLASS provision as passed in House (allows non working spouses to sign up) and the Senate (only workers can sign up).

Here is a new study on informal caregiving (when families care for loved ones without pay) and here is exec summary. Study done by National Alliance for Caregiving and AARP and funded by MetLife foundation. CLASS would provide some extra resources that families could use flexibly to address caregiving needs of loved ones.

Conference on the quick

Speaker Pelosi saying full deal by Christmas is possible...but wants a conference....but any conference over a weekend is one whereby they are taking the Senate bill mostly as is.

Public Option as a symbol

Politico has a report on the death of a liberal dream in public option going out. The public option as it was included in both the House and Senate bills was no liberal dream, and was very weak, and would likely have been inconsequential. The point of public option as a cost saving tool would be to impose Medicare payment rates on a larger slice of the nation. This would have slowed cost inflation as CBO and others said. However, the public option provisions had a new entity being created by HHS, which would then have to set up networks andn negotiate rates. This wouldn't have likely worked very well, and CBO said it basically wouldn't do much one way or another. In the end, the phrase public option became something that Democrats/progressives were for, and that Republicans/conservatives/mod-conservatives were against.

The real questions are: (1) is the system as is sustainable? (2) we willing to undertake a major change to cover more [notion of everyone has been given up]? (3) Can we do this in a way that slows cost inflation? (4) If the answer to (3) is yes [and it is], are we willing to make the hard choices to do this? [answer is mostly no, but some steps in Senate bill, maybe getting better not worse at the end] . Ezra Klein has report of Collins and Wyden teaming up in a good sign...not so much the amendments per se, but if Collins and Snowe are on board then Nelson is superflous and that is good for good policy.

Public Option gave Democrats and Republicans something to fight noisily about while not talking more clearly about these bigger questions. And Republicans just blocking has harmed their interests if they can't actually kill the bill altogether....here is one Republican lamenting.

As I wrote about a few weeks ago, public option 'light' as I called it was much ado about nothing in actual health policy terms. It is interesting to see Senators who have been professing worry about 'govt involvement in health care' and using that to be against 'public option' now embracing a Medicare expansion. On health policy grounds, I think the Medicare expansion makes more sense, and I think the bill has probably gotten a little better, and especially with the frosh Dem Senators talking about adding in some more cost saving provisions I might get quite a bit better right at the end--I am surprised by that, but glad for it. I guess you can say that alot of time has been wasted haggling over public option, but the thought of missed Christmas vacations may have been the only thing that would finally get the Senate rolling.

Most intersting to see is whether the President really backs whatever Senate may pass and asks the House to take it up as is.

Good questions

Buried in grading finals....good questions here that need to be answered once the dust settles and the details of the compromise come out.

Update

Updating the Update (11:30am): sounds as thought the fed employee based public plan offered in exchanges will be triggered, with trigger based on how many private plans are in exchanges. So, main point is a more national choice of plans....again, along lines of fed employees health plan. Also, hospitals are going off about Medicare buy in....they would rather have newly insured have private insurance which would pay higher rates. More here including notion that compromise has new insurance regulation requiring 90% (up from 85%) of revenue must be spent on care...sort of less competition for more regulation notion. This is along the Swiss/Netherlands approach of using private insurance for universal coverage with stringent regulation, notably about how much they have to spend for care (and conversely, how much they can make). Assume this applies to policies sold in exchanges only....but not sure.

NY Times has a bit more on the deal, here is WSJ:
*Medicare buy in for those 55-64; unclear how broad this will be opened up
*Plan to be offered similar to fed employees health plan, instead of public option govt run plan....fed employees plan is essentially the blueprint for exchanges and brings together variety of private insurance options for fed employees to pick from. One upside in negotiations was to use existing office of personnel mgmt infrastructure and not needing for HHS to set up new infrastructure.
*No Medicaid expansion.

Provisions off to CBO for scoring.

Reid's statement here.

Also, good overview of the public's 'we want to save costs but not actually reduce any spending' and the converse of providers 'wanting to save money but not have our incomes cut' perspective on health care costs.

Finally, momentum may be developing for the Senate bill, assuming it is passed, being fully backed by the President, and asking the House to vote on it up or down, bypassing a conference bill. The House can bring a bill to the floor with a rule that says up or down, no amendents...the notion is that it is hard enough to get it through the Senate once, much less twice. Dems in House will be furious, but this is also the quickest way to dispatch with this and move to other things....and the bill and issues dividing the Dems are not like fine wines (the aint getting better with age!).

Deal reached

Apparently a deal has been reached by the 10 Dems who have been negotiating....sounds like a Medicaid expansion from 133% to 150% is off the table. The Public Option as it has been discussed is gone, and in its place is apparently some sort of Medicare buy in for persons age 55-64. What is not clear is how many persons in this age group (55-64) could buy into Medicare. It seems as though the Medicare buy in would eventually be a part of the exchanges beginning in 2014. The details have been sent to CBO and we may not know all detail until they do score.

So, more details needed to be able to say much more. But, if only long term uninsured are eligible this will mostly just be pushing sicker near elderly folks into Medicare.....private insurers might be helped by that. If it is broader, they will likely see it as a threat.....need more details.

Also, Nelson's Stupak-like language was tabled 54-45 which means it is dead in the Senate. Still searching for an abortion compromise in the Senate.

Latest

Abortion amendment may be voted on today....and frosh Dem Senators are said to be trying to put more cost cutting provisions in the bill, especially related to Independent Medicare Commission. Supposedly deal on public option from the 10 Dems who a negotiating may come by tonight.

Premiums down, wages up (and vice versa)

Nice op-ed by Ezra Klein in today's Wash Post. The tax exclusion of employer paid insurance premiums is perhaps the least understood aspect of the health care system....I have been shocked by how many of my friends and colleagues didn't realize that the got tax free income if they have job-based health insurance....and that at $250 Billion cost to the US Treasury each year, that is the third largest health program, after Medicare and Medicaid. Sigh.

The consumer in health care (you and me) is actually a big source of our inability to slow health care cost inflation....we say we want to do it, but not if it means spending less!

Abortion and Public Option

Lots of action today, but not much posting....I am at an End of Life conference in Orlando.....briefly...

Sen. Nelson introduced admendment along lines of House Stupak amendment on abortion, and there is a negotiating group of 10 Senate Democrats working on a compromise around the public option. Here are outlines of what is under consideration from Ezra Klein and he says Medicare buy in seems to be gathering steam.

More on meeting

Politico reporting public option deal close that would have a national plan run by office of personnel management (which runs federal employees health plan) that would included non profit insurance providers....all other options so far are to be set up through Health and Human Services. A couple of sunday morning shows had Dems saying abortion language just about there and Durbin said only thing between managers amendment end game was abortion and public option.

Amendment updates

Sens. Reid and McConnell have agreed that all votes will require 60 to pass...in one sense making all votes have to overcome a filibuster, but in another sense speeding things up. Notable amendments have been the failure to remove the CLASS Act provisions (a long term care provision) and a failure to stop home health cuts. In the case of the CLASS Act, 11 Dems voted to remove (incl. Baucus and Conrad)....but it takes 60 to put anything in, and 60 to take anything out.

Here is CBO report on CLASS Act from last week. It is in Title VIII of the overall Senate bill....see Table 4, next to last page of this for its budgetary effect in first 10 years by year. Short version is a self funded long term care insurance program that wouldn't cover nursing home care, but is essentially age-in-place insurance....benefits of $75ish per day indexed that is someone to assist in home. Notion is totally self funded plan into which you have to pay premiums for 5 years (3 of which you must be working) before you can claim benefits...so wouldn't help those now disabled. But, it could make a big change to future LTC landscape. CLASS Act comes from Senate HELP committee and was a pet project of Senator Kennedy. CLASS Act reduces deficit in first 10 by around $73 Billion so is over half the $130 Billion over first 10 in the bill....big disagreements about what it does 30 years out.

My biggest question about CLASS--would it spur innovation in private LTC insurance that would increase rates....by letting private companies skip the part of the cover with most moral hazard and focus on nursing home cover only? In one sense this points out trouble for CLASS Act, there will likely be lots of moral hazard for home care, especially that has flexibility in how to purchase benefits as CLASS does. But, if it limits NH admission it will decrease Medicaid costs on the margin....but these benefits may be mostly felt at state ...and the Congress looks at federal budget (of course Fed govt finances Medicaid as well, but seems to focus more on Medicare since states really control Medicaid). In NC NH only policies are banned by state regs....but CLASS would change the landscape. Less than 10% of those 55+ have private long term care insurance. Families now provide most care via informal care.

Howard Gleckman knows as much aobut long term care as anyone and here are his thoughts. The main difference is that CLASS is an attempt to be self funded insurance but using default in/opt out financing via payroll taxes.

End game drawing near

The President is going to Capitol Hill tomorrow afternoon to meet with the Senate Dems. A week from now it is likely that things will be stalling or that the outlines of the deal will emerge. Apparently the Dems in the Senate realized that the more liberal ones and the more conservative ones will actually have to work out a deal, to well....work out a deal. Nothing like working on the weekend to concentrate the mind!

Important interview on Medicare cuts

Ezra Klein talks with Jim Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities.

Friday News and Observer Column

looks at what happens to private insurance premiums if the Senate bill becomes law. Total premiums for employer based coverage (160 Million people today) will be slightly less (0-3%). The share a worker pays is determined by the benefits offered by their employer, today and under the Senate bill.

Total premiums for individual based policies (14 Million people so covered today) will go up, by 10-13%. The increase is mainly due to mandate benefits that will make individual purchase cover similar to employer based. In terms of changes in insurance, it goes like this:

In 2016
Ind. cover bought in exchange 23 Million
Medicaid expansion 14 Million
Employer based -5 Million
Nongroup/other -4 Million (incl. some Medicare ESRD/perm disabled, but mostly shift from indivdiual purchase outside exchange to purchase in exchange).

Net increase in insured 28 Million
Still uninsured 23 Million (includes illegal immigrants)

If you want more details, see CBO report of Nov. 18, 2009, in particular Table 3 which shows flows across coverage categories from 2010 to 2019.

The CBO report of Nov. 30, 2009 on premiums is quite complex, detailed and well done. The full report is here. Of particular importance is table 1, which details not only total effect on premiums but how different aspects affect premiums (for example, mandating benefit package increases premiums for individual purchase, but indivdiual mandate that brings in younger, healthier people has a decreasing effect; the net in the individual purchase market is up by 10-13%). There are detailed assessments of how the subsidies work in this report that cannot be covered in a 700 word newspaper column.

The key for me is that the TOTAL PREMIUM for individual purchase is up. The INDIVIDUAL SHARE of this depends on your income (Table 2 has the details). About 6 in 10 of the 32 Million purchasing indivdiual policies (18 of the 23 Million buying in exchanges) will get a subsidy that averages two-thirds of total cost. The 9 Million still purchasing individual coverage outside of exchange will not get subsidy. Around $350 Billion of the $850 Billion in outlays of the Senate bill are for premium subsidy and setting up exchanges. Around $375 Billion of the outlays are for Medicaid expansions. Around $120 Billion is for reinsurance and risk adjustment. These expenditures are offset by Medicare cuts and higher taxes...CBO says net effect is reducing deficit by $130 Billion over 2010-2019.

The primary reason that premiums are down slightly for 160 Million people now covered in employer based is due to competition spurred by exchanges. CBO's analysis did not include the effect of small business tax credits on people covered by small employers....that would further reduce premiums share for the approx. 1 in 10 persons with employer cover in businesses with less than 50 persons.

They actually voted!

and passed amendment on mammography 61-39....snowe, collins and vitter from (LA) voted yes and Feingold and Ben Nelson voted no.

Stem Cell Lines

NIH announcing that 13 new NIH funded stem cell lines will become available for research, the result of the Obama Administration's change of the Bush Admin stem cell policy.

Optimism rising for a bill

per Washington Post. And Peter Orszag noting that it will take years to decades to get to a system that rewards quality over quantity. That is one reason why it is so important to act and kick the ball down the field....you will never be done tinkering with the system....but we know that status quo is a disaster.

More on CBO premium report

The report on the effect of the Senate bill on private insurance premiums released by CBO on Nov. 30 is a comprehensive report with lots of information. It seems as though its major findings are allaying some fears of the moderates like Landrieu and Lieberman. The basics of what CBO found are, that as of 2016 as compared to no reform:

*160 people with employer based insurance today would have slightly lower premiums in 2016 (from negligible to 3% reduction). To be sure this is better than premiums going up 3% over the status quo....but it is important to remember that the status quo (no reform) is essentially a doubling of premiums over the next decade. Much more needs to be done on the cost control front.
*14 Million in indivdiual purchase market today, premiums for individual market policy in 2016 would be 10-13% higher....but that the policy coverage that would be obtained would be more generous. Meaning covering more things, and having a higher actuarial value....the percent of costs that insurance pays v. out of pocket payments for a representative group of patients.

In 2016, there will be 32 Million in the individual purchase market. 23 Million of these will be in the exchanges, and 18 Million of this 23 Million will get a subsidy to purchase insurance (5 Million will get no subsidy, and 9 Million purchasing individual cover outside of exchanges will also not get subsidy). So, the 10-13% higher premium is the true cost of the insurance. Around 6 in 10 of persons in indivdiual market will get subsidy so THEIR COST will be a lot less than it would be without reform, and the subsidies defray the cost of cover. The subsidies are expensive and that is the major outlay of the bill....and that is what the increased taxes and cuts to Medicare offset. In 2016 with no refrom we will have 52 Million uninsured; if Senate bill becomes law we will have 23 Million.

There is some sorting amongst types of insurance as follows by 2016 (non elderly).
Exchanges +23 Million
Medicaid +14 Million
Employer -4 Million
Other -5 Million (mostly perm disabled, ESRD covered by Medicare; Update: actually this is mostly non group people who CBO is saying would have had priv non group policy with no bill who now will buy via exchange.)

The subsidies go something like this:
below 133% poverty, cover via Medicaid
150-200 poverty, [$20,600 individual, $42,000, midpoint of income range] the max you can spend on premium is 4.7% to 6.5%, and the share of premium paid by the subsidy is 77% for individual, 83% for family.

350-400% poverty [$44,200 individual, $90,100, midpoint of income range] max you can spend on premium is 10.2%, with share of premium paid by subsidy being 13% for individual, 35% family.

Like with all means tested programs, there is quite a perverse incentive right at the point when subsidy goes away....for family cover income of $102,100+ in 2016 gets 0 premium support, whereas $90,100 gets 35% of premium paid. You can raise the trigger point, but you just raise the point of the perverse incentive.

Given that you have concluded that doing something to address the uninsured rate is important, and then concluded that you were going to stick with an employer based system and try and put together insurance markets for individuals to purchase coverage, this is pretty good.

Politically, the most importatn thing that the CBO report says is that the 160 Million people with employer provided insurance will see small decreases (wrongly wrote increases here yesterday) in premiums, not large increases that many have been saying. The wavering moderates in the Senate will have to decide how bad they think the status quo really is.

Public Option Key?

Paul Starr says no, but accelerating the start up time of the benefits of reform is key in the NY Times.....also published today in the News and Observer. Speaking of Starr, he wrote the best history of American Medicine, winner of the Pullitzer Prize for General Non Fiction in 1982... The Social Transformation of American Medicine (Basic Books, 1982). The first sentence of the book is brilliant, "The dream of reason did not take power into account."

So true.

Speaking of (un)reason(able)....Howard Dean saying the bill without a public option is not worth it and should be defeated. This is completely ridiculous, in part because the version of public option that is in the Senate bill (and House) is watered down and not likely to be conssequential one way or another.

And in the race for the most unreasonable thing said on the floor in the Senate reform debate, Sen. Coburn takes the early lead with a 'die sooner' redux.

CBO report on effect on premiums

Is just out today and this will be important. Quick read is that the 160 Million in large group and small group market today will see very small decreases in premiums (1.5% and 0.5%) in 2016. For individual purchase market, the short version is that two things will happen: (1) premiums will be higher for (2) substantially better insurance....with better defined by covering more services and having higher actuarial value....which means amount of costs that insured pay out of pocket. Roughly, 10% higher premiums for better coverage (need to get straight how much better). Then people will get income based subsidy (around 6 in 10 folks buying in this market will get some subsidy).

So, CBO says premiums down (a little( for the 160 Million with employer based cover today. For the uninsured, their ranks will be reduced, and the total premium paid will be higher than that paid by the 14 Million now covered in the individual market....but the insurance will be more expansive. And many will get premium support.

This will be spun every which a way.....I also need to read it more carefully and will later comment more.

Update: NY Times early take. Ezra Klein weighs in.

You say you are for reform but wanna cut costs?

There are quite a few Senators who have been saying things like I am for reform, but the current Senate bill doesn't do enough to slow costs. I agree. Here is a good overview of some practical ways to improve the bill. The Senate is going to start talking about this tomorrow....so, the Senators like Snowe, Lincoln, Carper, Lieberman, Landrieu, Hagan, Corker, Bennett, Collins, Nelson (of Nebraska) need to step up and say how they would improve it since they all say they want reform it is just that the current bill doesn't do enough to control costs. They aren't helpless.

And the more liberal Senators who say the full scale public option would slow the rate of growth are correct.....but its not going to happen. Folks like Durbin, Schumer, Feingold, Burris, Sanders, Dodd, Harkin, Wyden need to step up to what is doable.

Left/progressives meet the centrists. It is time to get 'er done....or put another way, to put up or shut up.

What Next?

Unless there are really big developments (which is doubtful) on the reform front, I am going to take a bit of a breath over the next few days and won't be blogging and won't be writing in the News and Observer this Friday. Here are a few thoughts on what I think are the likely direction of things in the Senate with the bill.

1. Public Option will come out. And the weak public option is not worth having in the first place, I don't think. A strong triggered public option would like be more effective at 'holding insurance companies honest' than the one now written.

2. I think med malpractice comes in. For a certain segment of the population who want reform and who want to see the President succeed and who think the Republicans are just blocking for political gain....they still have uncertainties and things don't pass the BS test for them. Reflexively, they think med mal reform is important and bringing it in will appeal to them, the doctors of the nation, the moderates in the Senate and the Blue Dogs in the House. And the CBO says that a list of changes will reduce deficit by $54 Billion over 10 years....with ~$40 Billion of this being for declines in defensive medicine. And this will be important for any future cost control efforts because without med mal/tort reform, the docs will always say 'what about malpractice?' to any changes. I wrote about it last summer.

3. I assume some abortion compromise will be worked out. Those on both sides are very noisy.

4. An Independent Medicare commission is likely to stay in but be focused on payment reforms (shift from fee for service in Medicare toward other approaches). The questions related to things like changing eligibility age will be excluded from such a commission but will be wrapped up in some sort of Deficit reduction commission that is likely to come about next year....not as part of health reform but more generally next year as Dems seek to move ahead with a Deficit commission to prep for 2010 elections (and it is needed).

5. There will be attempts via health reform debate to cancel the remaining $200 billion in stimulus money and/or support of moderates will get hooked in with that issue.

6. Not sure what will happen on financing. I wonder if the addition of the payroll tax to Senate was result of a 'pre conference conference' with the House.....as Senate seems no way on income tax hike, while House was no way on insurance tax. Payroll tax plus pared back insurance tax the compromise? This is also where the med mal may be the only way to bring along some of the moderates.

Also, if something passes the Senate, perhaps the President will say 'this is my bill' and ask the House to treat it essentially as a conference bill, bring it to the floor with a rule that doesn't allow amendments? It is hard enough to get something through Senate once....how about twice?

In the end, I think the key is what the members of Congress and their consitutuents understand the status quo of doing nothing to represent. How bad do they understand the status quo to be? I think pretty bad. As worry about deficits rise, there seems to be some who think we can't afford to do this now. In reality, it is the opposite. Because of what Medicare and Medicaid will do to the deficit inevitably with no change over the next 30 years, we cannot afford not to move ahead with something different. Advocates will have to be better at making this case for reform if it is to pass. The best visual for this reality is the graph that loads with this page.

As the headline of CBOs health care page says, "The federal budget is on an unsustainable path, primarily because of the rising cost of health care and the aging of the U.S. population." This refers to what happends if we do nothing. If we take a step now, we have a reasonable chance of improving this outcome.

Interesting interview with Humana CEO

from the WSJ. Best line of the interview "The recession hasn't touched health care the way it has other parts of the economy--which is also part of the debate, that fact that it is so big and keeps getting bigger. It's almost unstoppable even in a recession."

Most interesting insight is that he says they knew the payment increases in MedicareAdvantage in 2005 were unsustainable and so he is saying they knew as they got into that business, they also knew they would be getting out. Essentially this was the Bush administration widly over-paying private insurance companies for Medicare Advantage because they preferred 'private' to 'govt' even if they had to overpay to get there. Here is what I wrote recently about Medicare Advantage.

Motion to proceed passes

60-39.....not sure who didn't vote. Debate will begin on Nov. 30. The over/under for passage or final death in Senate is 11:10pm Dec. 23.

Deficits

Interesting article from the Economist on options to reduce the deficit. Hint: cutting food stamps won't get it done.

Lincoln says yes

Blanche Lincoln (D-AR) just gave her speech on Senate floor announcing she will vote for cloture on the motion to proceed tonight. That is 60. Vote is tonight ~8pm.

Smart Overview of cost slowing aspects of senate bill

is written by Ron Brownstein in The Atlantic's Politics blog edited by Marc Ambinder.

health insurance tax raises wages

Ezra Klein links to and discusses latest from Jon Gruber describing how the Senate tax on health insurance increases wages. The point of the tax on health insurance is for people to avoid it by choosing lower levels of health insurance. They have incentive to do this because no longer are all premiums paid by employers tax free income...and if the marginal amounts of premiums (above $23k for familes, 8.5k for individuals) are taxable there will be incentive to have less insurance and more wages. This reduces the amount of insurance, lowering health care costs while increasing taxable wages. Gruber estimates net wages rise by $234 Billion from 2013-2019, or about $700 per year per worker.

Senator Burr

Senator Richard Burr (R-NC), my senior senator put out the following statement yesterday about the Senate bill. Pretty standard Republican stuff this year, government takeover, saying the bill will explode the deficit when in fact the non-partisan CBO has said it will reduce the deficit by $130 Billion over 2010-19, and by $650 Billion from 2020-2029. As I say, this has been typical of Republicans this year--block and oppose anything--which is of course their right. But, it is very disappointing coming from Senator Burr, given that he has provided a bill of his own to the debate, The Patients' Choice Act (he is a co-sponsor of the bill).

I thought it would be worthwhile to review the Patients' Choice Act in the context of what is in the current legislation and Senator Burr's statements. I wrote about the Patients' Choice Act in the News and Observer on July 24, 2009. Here are other blog posts about the Act. Several big picture points.

*The Patients' Choice Act calls for repealing the tax exclusion of employer paid health insurance. The excise tax on high cost health insurance plans that is a part of the Senate finance bill is a de facto limiting of this tax exclusion. As Senator Burr and others (rightly) argue, ending the tax exclusion would help slow health care cost inflation. The tax on high cost health insurance plans is after the same idea. The tax proposed in the Reid bill is a much smaller tax increase than the repeal of the tax exclusion proposed by the Patients' Choice Act.

*The Patients' Choice Act had autoenroll procedures whereby person's would be automatically signed up for the lowest cost insurance plan available in an exchange, or health insurance market to be set up at the state level. This is an example of a 'implicit individual mandate' but the Act knew that if you are going to make risk pools work, you have to get people into them.

*Whatever else the Reid bill is, it is certainly not a government takeover of health care. It mostly leaves the system as is for the 160 Million people with employer based insurance, and the 105 Million people with Medicare and Medicaid [expands Medicaid]. It then creates insurance markets to try and cover others. The tag line 'government takeover' is ridiculous and not based in fact.

*All of the bills being discussed this year (including the Patients' Choice Act) have had as a central feature the setting up of insurance markets that were designed to help consumers be better shoppers of health care. The Patients' Choice Act (PCA) was much, much weaker on insurance market reforms than the Senate bill, and concerns over affordability which are raised over the Senate bill, would have been acute with the PCA because the subsidy provided was far, far below the cost of current policies.

*Probably the worst aspect of the Patients' Choice Act was its de facto block granting of the Medicaid program, which would have been a huge shift of costs to the states.

*The Patients' Choice Act was the first bill this year to have a fairly strong independent group to apply cost effectiveness research to coverage decisions. It is now being called an Independent Medicare Advisory Commission. Here is a detailed blog post about this from this past summer. So, I certainly don't expect to hear Senator Burr riffing on these ideas in the Senate bill since they were in his bill first. Title VIII of the Patients' Choice Act (pages 206-215) have some very detailed language about commissions to set standards, apply cost-effectiveness research, and even to penalize physicians who don't follow guidelines.

*Fiscal responsibility. It is hard to know how responsible the Patients' Choice Act would have been because it has never been scored by the CBO so far as I know. I wrote in July that it should be scored soon....but it never was, again, so far as I know. Is this because the CBO was too busy and couldn't do it? I am not sure. It is an advantage to be able to say you have a bill but not have it scored.

Like I have said in the past, I give Senator Burr credit for introducing a plausible bill. Not my preferred approach, but he made a reasonable attempt. As a citizen of North Carolina, I would certainly prefer him to seek to improve the bill instead of simply oppose. If he thinks the status quo is better than the Senate bill, he should vote against it and make the case to the people of North Carolina that he was standing up for us. I certainly don't agree. However, I am willing to listen. I would like to hear him make the case without resorting to the rhetoric contained in his statement of yesterday.