Saturday, July 18, 2009

Where we stand

Just to recap an eventful week, President Obama doubled down on health reform as an issue, and has put his credibility on the line insisting that a meaningful reform will be passed. Bills in both Houses of Congress moved forward, and the outlines of the big choice regarding how to offset the costs of any bill got clearer: the House version raises income taxes of high incomes and a payroll tax on employers not providing coverage v. a cap of the current tax subsidy provided to employer provided insurance which had fallen out of favor with key Senate Democrats. The House proposal may make them fall back in favor, if not love. Everyone includes Medicare payment cuts.

The most important thing that happened was the Director of the Congressional Budget Office (CBO) said that none of the plans had mechanisms that would reduce cost increases. In short, he was saying all the bills are focused on expanding insurance rates, but not addressing cost inflation in the system. Peter Orszag, the President's Budget Director (and former Director of CBO) signalled that Congress had to put in place mechanisms to control costs, and not simply expand coverage. I think it seems as though the President's Budget Director is more of his go-to in all this than is his Secretary of HHS (Gov. Sebelius). This likely wouldn't have been the case had Tom Daschle been HHS Secretary, but he is not. I think when (and if) it gets to a conference bill and the President really weighs in, the budget types in the administration will be front and center.

Things that might make the CBO look more favorably would include a cap on the employer provided insurance tax subsidy, which in the end would result in non-elderly folks having less insurance, likely reducing use. Or implementing a board such as the base closing commission to apply cost effectiveness research to the Medicare program and begin to identify care that is not done that either had no benefits, or for which the costs are too high to justify the benefits (no way Congress per se can/will/should be involved in those decisions). Or a huge change in payment approach (away from fee for service for docs) and toward something based at least in part on capitation (which shifts some of the risk of high use away from Medicare and to the providers; in return, the do better if patients and healthier and/or use less care). The middle idea noted above (broad use of CEA) I think should be done; the last one would likely reduce costs and likely improve quality of care, but to say there would be lots of details is the understatment of the year. More likely to start with demonstrations.

Interestingly, the American Medical Associaton (AMA) came out in support of the House bill with some qualifiers. Now, the AMA is famous for being opposed to everything, and then being for commissions to save what they were just opposed to and was going to destroy medicine and the American way of life just a few years earlier (see Medicare) maybe they are just holding their fire until they have to be opposed. But, maybe not.

I have a hunch. The President is going to surprise people and when all hope seems lost for reform, he will propose a substantial malpractice reform. And the AMAs qualified support may mean they know/suspect this as well. I suspect that (malpractice reform) is ultimately what it will take for their support, and that is probably the only hope of any Republican eventually voting for a final conference bill. And I can't think of single large reform in any nation that has not had the doctors at least neutral if not in favor. Time will tell.....just one person's thoughts.

NY Times story. CBO analysis of House bill. CBO testimony on long term future of federal budget.

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