Sunday, January 31, 2010

Diabetes Care Group, Jackson, Mississippi

This past week as I was lamenting that our political system does not seem to be able to work to address the serious problems facing our health system, I got a breath of fresh air: a look at something that was working.

Diabetes Care Group is a start up company that specializes in the management of diabetes, and is located in Jackson, Mississippi.** This group has a proven clinical model and a team that has shown remarkable control of patient Hemoglobin A1c levels, in addition to reducing cholesterol and controlling high blood pressure that are so commonly comorbid with obesity forming the bland sounding but deadly 'metabolic syndrome' that is exploding in our nation.

The statistics on type II diabetes (which typically onsets due to obesity and inactivity) in our nation are grim. A recent paper in Health Affairs shows that the costs of diabetes to US society were $153 Billion in medical costs and $65 Billion in reduced productivity in 2007. There are 16.5 Million persons with a diagnosis of type II diabetes, 1 Million with type 1 (which is hereditary and typically onsets in adolescence). Another 6.3 Million Americans have undiagnosed type II diabetes and are at extreme risk of suffering the complications of the disease (heart disease, stroke, retinopathy, renal failure, amputations of lower body extremities). And 57 Million Americans are said to have pre-diabetes--elevated glucose that will likely develop into type II diabetes if not mitigated.

The good news is that there are ways to manage pre-diabetes and diabetes. In addition to insulin and other pharmaceuticals, exercise, weight loss and a balanced diet can manage diabetes, sometimes without pharmaceutical intervention in the case of type II diabetes.

The Southern United States is the heart of the diabetes epidemic, so Jackson, Mississippi is a great place for Diabetes Care Group to be working. This is a start up with a head start in the form of a dedicated group of health care providers who have a proven track record of managing diabetes successfully. In fact, Dr. Marshall Bouldin has been involved along with his colleagues in a variety of diabetes control settings both in Jackson, but also in the Delta region of Mississippi, one of the poorest parts of the United States. They have shown the ability to reduce and maintain A1c levels and control the related risk factors among largely minority, low income and heavily uninsured (groups at higher risk) patient populations around Mississippi. In short, they have shown an ability to get results in places and among patients that would be expected to be harder than average to successfully treat. In fact, part of their success stems from learning to treat diabetes in resource challenged community environments, which forced them to figure out what works best to enlist patients' to become the key to managing their own disease.

Regardless of what does or doesn't happen with health reform, addressing type II diabetes is a tremendous challenge for the health of our nation. Diabetes Care Group is busy doing it.

**For full disclosure purposes, I was there at the Board meeting and open house of this organization because I am doing some consulting with them in the form of statistical/economic modeling of the treatment of diabetes.

Saturday, January 30, 2010

More on there is no simple bill

Economix blog has nice post on why the notion that Pres Obama should have just sought a bill banning pre-existing conditions and nothing else won't work. The pre-existing condition ban and insurance regulations come along with the individual mandate. One won't work without the other....and this shows a big problem with 'doing what the people want' because the insurance regulations are very popular in polls, while the individual mandate is not. The econmix blog also notes some of the similarities of the structure of health exchanges between the Dem bills and the Patients' Choice Act....but that is old fare if you have been reading this blog.

Here is a related post about community rating (not setting premiums based on risk, but standardizing them across a risk pool) and what would happen to members of Congress if they didn't benefit from community rating. Employer based coverage is community rated (in Duke's plan, same premium regardless of age or illness, thereby healthy folks subsidizing sick) but in the individual purchase market, there is aggressive underwriting because there are not large pools across which to spread risk. This is why the individual purchase market is so small (only 14 Million Americans shop for and purchase their own private insurance, out of 307 Million people).

More on Obama and House Republicans

The NY Times prescription blog has a 'fact check' of sorts focusing on their health reform interaction. In the first post they note that the assertion from Rep. Tom Price of Georgia that 'our plan' would cover everyone without raising taxes, etc. is not true. And the President was very effective at making clear the notion that Dr. Price asserted you can cover many more folks and no one has to pay (Dem Senate bill cuts future Medicare and raises taxes to pay for the bill) anything is ridiculous.

The second portion of their fact check notes that President Obama did promise health negotiaions on C-Span and that hadn't happened. The President responded the committee hearings were all televised, but there were many private negotiations, last Spring with insurers, pharma, etc., and in the winter the melding of the final bills....obviously, some private meetings are are impossible to get rid of, but the President did promise that in the campaign. And watching yesterday, public meetings with President Obama representing his positions himself might have been alot more effective than Congress being so front and center (remembering the proviso that a President dropping all the details on Congress and saying pass it a la the Clinton plan didn't work). Using a football analogy since the Super Bowl closes in, if Obama were a running back, he only carried about 12 times a game, and his team and the country would be helped if he did so twice as much.

Taking a step back, I thought the most important and effective thing the President did was to confront the House Republicans with the message that the words and tone they use matter. This is certainly the case for him and the Democrats as well. However, the strident, ideological terms of the debate especially around health care used in opposition to the Democratic reform plans have not matched the reality of the plans. We talked about fictitious death panels for 6 weeks last summer.

Whether you like the Senate bill or not, it is essentially what passed for a moderate Republican plan in 1994. And the biggest change it would have brought about was a more than doubling of the number of Americans who shopped for, and bought their own private health insurance plan. From my perspective as someone who thinks about health policy all the time, and not just when it is politically important, the 'socialist, anti-American' over the top rhetoric from Republicans during the health reform discussions make it hard for me to take them seriously when they say 'give our plans a chance.' It makes them seem to be unserious.

Friday, January 29, 2010


WSJ with interesting story from Massachusetts showing that prices that hospitals charge insurers often vary by a twofold factor for reasons that are not based on what most would probably assume. The report found that price differences were NOT based on (1) quality; (2) patient mix (how sick patients were) (3) payer mix or (4) costs of delivering care.

Reputation and location very important. I specualated back in December that while most folks worried about insurers not competing when one has large market share as Blue Cross Blue Shield NC does, that hospitals not competing I suspect might be much more important in keeping costs (amount paid by insurance for care) high in some markets.

If you think market forces are important for health care, it is not so good that quality and costs of delivering care are not closely linked to how much hospitals charge.

Health Reform in China

I missed this from last week's WSJ on health reform actually passing--China. The plan is substantially increase health spending by around $120 Billion over the next two years. Key goals are to expand insurance coverage and especially reduce the access differential in the rural areas. More from another WSJ article. I taught a class at Peking University last summer on comparative health systems and the students were all abuzz about US health care reform. Maybe I should have been taking notes....

Interesting video

of the Pres addressing and then having questions and give and take with the House Republican caucus today in Baltimore. It is about 90 minutes long, with plenty on health care but other stuff as well. Here is a copy of the GOP better solutions health care document that Minority Leader Boehner gave to President Obama.

Thursday, January 28, 2010

A few quick links

The State of the Union obviously didn't have a clear message of 'pass the Senate bill.' For health reform, the most telling was what he didn't say.

Here is NY Times coverage of speech and WSJ.

There are all sorts of paths to a reform bills being painted, but it is just hard for me to believe there is a realistic way other than the House passing the Senate bill and then the Senate making changes via reconciliation in the Senate. The longer it goes with no clear way forward and moves back burner....i just don't see how it comes back front burner.

A few links. Speaker Pelosi saying two track reform, easy stuff now and more comprehensive later. Discussion of moderate Dems worried that reconciliation will end any hope of bipartisanship in Senate for rest of session....freedom is just another word for nothing left to lose and all that. Word of House sending Senate $300 Billion in changes to be done via reconciliation, which makes it sound more likely that reform not going to move but House setting up opportunity to blame the Senate. We would have done it if....etc. More Senate blaming House, House blaming Senate.

Most likely outcome by far is no bill I think. I hope I am wrong.

Wednesday, January 27, 2010

Pelosi claims she has votes

to pass the Senate bill if the Senate will pass revisions via budget reconciliation. Most revisions being discussed are Medicaid deals (Nebraska, Louisiana) and delay in high cost insurance tax applying to Labor Union insurance policies.

The Pres didn't say clearly 'pass the Senate bill' during the State of the Union. I am travelling and will have limited blogging access for a few days.

Pass the Senate Bill

Here is my argument in today's Raleigh, (NC) News and Observer. I have also signed a letter calling for this, which also shows that I support the Senate using reconciliation to clean up the Medicaid deals that are in the Senate bill.

Tuesday, January 26, 2010

CBO report on budget outlook

CBO released a report on the budget outlook for the next 10 years. It is basically discussion of the deficit/debt today and the next 10 years. You think you know how to balance the budget? They have an interesting tool that lets you run a limited number of simulations. But, there is a nasty trick. None of the options include anything related to Medicare, Medicaid or Social Security. This is very effective at providing a sense of reality.

For example, if the 2001 and 2003 tax cuts are allowed to expire and marginal income tax rates return (increase) to what they were last time we had a balanced budget AND we freeze total discretionary spending at 2010 levels (incl. defense), then the deficit settles down at about $450 Billion per year from 2013 to 2020.

The last two sentences of their abstract are as follows:

"Beyond the 10-year projection period, growth of spending for Medicare, Medicaid, and Social Security will speed up from its already rapid rate. To keep federal deficits and debt from reaching levels that would substantially harm the economy, lawmakers would have to significantly increase revenues, decrease projected spending, or enact some combination of the two."

It is going to take a pretty good poke on Medicare in particular, but also Medicaid to ever achieve fiscal sanity. Social Security is actually alot simpler since it is tagged to inflation, whereby health care is rising much faster than overall inflation. I believe we have to do this within the context of overall health reform because I don't think you can ever get a handle of health care inflation without covering most everyone, at least in a catastrophic manner. Medicare both contributes to and partakes of health care inflation rising much faster than overall inflation because the same provider system serves Medicare, private, Medicaid and is also expected to treat uninsured persons.

Note that all the times we have had a balanced budget since World War II that revenues were about 20% of GDP. They were 15% last year due to recession, but 17-18% during from 2001 on.

I have heard a few politicians pledging not to 'cut a dime from Medicare, ever and to cut taxes.' It looks like from the simulation tool that if you just extend the 2001 and 2003 tax cuts it adds about $7 Trillion cumulatively to the deficit over the next 10 years alone. In 2015, the deficit with these tax cuts extended would be around $800 Billion rising to $1.1 Trillion in 2019 with the slope headed up.

Next time you hear a politician say their plan is to 'never cut Medicare and to decrease taxes' you should simply laugh. And then cry.

A poignant end of life story

that I pass along. To my students in PPS 178, how does this story influence your views on the health system? Are there changes to this story you desire for your family? Are there any policy changes you desire for Medicare?

Monday, January 25, 2010

More detailed poll stuff

from Nate Silver at Most interesting one that jumped out at me is only 61% of respondents to Kaiser poll saying that the Dem bills banned pre-existing conditions....guaranteed issue. Of course, that is one of the main points. But, that policy comes with an individual mandate. You can't separate them.

In other polls, there are large majorities saying way forward is to pass only bans on pre-existing and do nothing else. This is about the only thing I can think of that would be worse than doing nothing as it would blow up the individual purchase insurance market.

Lots of things jump to mind here. Bad job of communcating, bad process that drew everyone's attention. A roomful of Dems that agree on 95% of stuff will spend all day talking about the 5%. And that in the end, health policy via the latest poll is not likely to produce good policy.

Which way is the wind blowin?

Not clear, but every day in which it is not clear what the plan is regarding health reform is that much closer to no bill at all. Ezra Klein writing about reconciliation to clean up the deals (Nebraska, Louisiana, delay in tax on high cost insurance for Labor) with House passing the the Senate bill. This is process wise doable, but not clear about the political will.

NY Times Prescriptions blog with several pieces. One on the differences in states and how that affects their view of reform (rate of uninsured from ~5% in Mass, to 1 in 4 in Texas). Another on a group that was created in 1950s to deliver care in remote parts of the world that now spends 60% of its money providing care in the US.

An interesting political strategy memo about health reform and past attempts, and I think his point 1 about the reality of the problems of the system is spot on.

Politico has one Dem rep saying we can't run having passed nothing and need to step up, with another saying we need to scale back.

Finally, a Dem congresswoman from New Hampshire saying that the female members would have done a bipartisan deal last Fall if they could have just sent all the men home. And Debbie Wasserman Schulz talking up a pared down bill in this clip. I suspect my mother would agree.

State of the Union may be the last hurrah: will the Pres say the House SHOULD pass the Senate bill? Or will he declare that dead and chart a course for a pared back bill?

Passing the Senate bill is the by far the best policy option. And politically, I think it greatly increases the chances that the Dems keep the House. Put another way, if they run having passed nothing, they are likely toast. If nothing passes and it is another generation before we are back to will not be good.

Sunday, January 24, 2010

Radiation Errors, Malpractice and how do you decide

The New York Times has an article recounting two tragic cases of extreme radiation errors in Cancer treatment. Their column is the first in a series on the increasing use of radiation in medical treatments.

One thing really jumped out at me from the story that is not about the very personalized stories of tragedy and error they recount: since 1980, the amount of radiation the typical patient receives has jumped 7 fold. The first question in my mind is what are the benefits of this, and what are the costs? I don't know the answer.

There are a lot of ways to view this story. As tragedy, which of course it is. As an example of mistakes/errors in the medical system. As an attempt to sensationalize tragedy/errors, when most people don't suffer same. As an example that when you are sick and scared, that the medical personnel treating you are not superhuman, but just human, which is good and bad. As calling out for more systematic data to help answer the questions about whether the costs outweigh the benefits. As evidence that computers/technology has upsides and downsides.

Regarding the medical error/malpractice angle, no matter whatever you think is messed up about the system, it is likely worse than you think. It is probably also messed in a manner that is opposite of whatever perspective is what you mostly worry about. Meaning, around 40% of malpractice cases filed are not due to negligence according to the best research....but the same research shows that less than 5% of the cases of true negligence result in a lawsuit. I wrote about this back in the summer in the News and Observer. Here is the blog post on the day of that column with multiple data sources about malpractice research and medical errors.

Most profoundly, I realize that if I or a family member will someday have to make decisions about treatments, I want better data [probabilistically speaking, causes of death are: heart disease about 42%; cancer 25%; stroke 18%]. I want to know whether the benefits outweigh the costs, realizing that the final calculus is likely to differ across patients. We have to come up with a system that demands the questions be asked; allows for the assemblage of the best data; communicates this in an understandable manner to patients; and then allows individual variation to figure out final decisions.

At present, we as a society seem to go vaguely insane at the first point--even asking the question, do the benefits outweigh the costs? We need to grow up.

Friday, January 22, 2010

Smoking cessation and cool Duke students

New meta-analysis paper in the BMJ quantifies statistically significant life extensions even for those who are diagnosed with early stage lung cancer. I did a paper with colleagues from Duke and American Cancer society that showed life extensions by age of quitting. We found that if you stopped smoking by age 35, that your life expectancy did not differ significantly from a never smoker. We found that even someone stopping at age 65--who likely had half a century of life time smoking had significant life extensions if they quit prior to getting ill. In communicating the results we often use the stylized fact that you get life expectancy gains IF you quit prior to getting sick.

The new study shows that is not correct, and that for certain lung cancers you still get life expectancy gains from cessation, even after the onset of disease.

Turns out one of my former students Damjan Denoble, who lived and worked in China for several years, remembers what I said about smoking (this can be good and bad when they remember!). This post of his I link to is about US health reform, and it is a bit of circular reference, but the blog is a very good one if you are interested in China, in particular. They were one of the first to say China was cooking the books on H1N1 transmission last is a classic post of discussions of US and Chinese culture filtered through the lens of....everything.

Some poll results

Ezra Klein discusses Kaiser's poll in aftermath of Mass special election, broken down by Brown voters, Coakley voters and non voters. Here is a detailed breakdown of the poll results.

Here is Kaiser's national January tracking poll, 42% for 41% against, 16% unsure. Among Dems, 64% favor; Repubs 76% opposed; independents, 41% favor/43% oppose. The more details they hear of the bills the more supportive they get. Thing people like the most are insurance market reforms; like the least, individual mandate. That is classic....because they go together. You can't do away with pre-existing conditions if you don't pull most everyone in.

Interesting argument to move ahead

William Galston arguing the Dems have to move ahead with the Senate bill. Interesting comparison of President Bush's decision to surge in Iraq after the polls showed the public no longer supported the war, but he moved ahead because he thought it was the correct thing to do. The President has got to say clearly to the Dems in House to pass Senate bill if that is what he thinks is best....even if going against the polls. And then be prepared to suffer the some point you've got to not only figure out what you are for, but what you are willing to lose over, if it comes to that.

On the merits, the Senate bill is a good step ahead, and the best move for the good of the country is for the House to pass it.

Setting Premiums

I missed this when it came out (on New Years Day) but was looking for a way to set up a discussion of health reform possibilities for my class next week, and this is an effective and simple example that will help anyone figure out how they think health insurance premiums should be set. Students in my PPS 178 class (comparative health systems) I want you to do this before class on Tuesday: (1) decide what you think is the way premiums should be set in this example. (2) Then, read through the many thoughtful comments to the post.

My first column in the Raleigh, (NC) News and Observer (last June!) touches on this general issue.

Thursday, January 21, 2010

Pelosi says votes not there

to pass Senate bill as is. Not sure about the odds, but the most likely thing is no bill now. Maybe there is a compromise bill that is not successfully filibustered....the Pres will have to make the case at the State of the Union if there is any hope of moving forward.

McClellan in WSJ

writes about Dem bills in WSJ. What he says about making faster track from demo project to actual policy makes sense to increase savings, with savings defined as spending less than what we would do without a change....but a demo project that leads to spending less than otherwise would have been will then be decried as rationing.

We have to decide among the following per Medicare:
(1) raise the Medicare payroll tax, becuase it is not high enough to finance the baby boomers with limited/no changes in how Medicare works;
(2) Have tremendous cuts in some other part of federal spending....and most of it will have to come from either Social Security, Medicaid or Military, as that is where the big spending is (in addition to Medicare).
(3) Try and slow the rate of spending growth somehow. The most likely way to do this are to change payment incentives in the program, and also begin to systematically ask do the benefits of what we do outweigh the costs? If no, then we should stop. Then we have to say, are there some things we do that produce such a small marginal benefit that it is not 'worth it'. All of this is inherently a value judgement, and it is hard. We will mess up trying. Eventually you will get to changes that are in danger of hurting people. There are certainly changes that won't. It won't be simple to figure out. If you don't want to try, see options 1 and 2, or 4 below.
(4) Continue to run a budget deficit that will continue even as economy rebounds. I think this is a terrible idea and it will eventually do really bad things to the economy....not clear exactly what it will do or when, but it won't be good.

Also, he notes that tax on high cost plans not perfect, but is a start. It seems to me that there is increasing agreement that the unlimited tax exclusion on employer paid health insurance needs to go. That is good. It would be preferable to deal directly with the exclusion as opposed to a tax on high cost insurance, to help focus attention on patient choices, decisions as McClellan notes.

An idea from a conservative

Megan Mcardle with a fairly simple plan for guaranteed catastrophic cover in place of Dem bill she doesn't like. It is not the same as this idea I have suggested, but they are cousins. Main point of both: federally guaranteed catastrophic cover (she via tax code, me via Medicare), private insurance underneath, with folks purchasing extra cover if they wish with after tax dollars.

And another, from a very famous one that is also a cousin. However, this one seems a bit more complicated and would require new agency.

Wednesday, January 20, 2010

Placing Dem Bills in historical context

D. Leonhardt with a succinct placement of the Dem bills in historical context. He says the bills are 'politically partisan, and substantively bipartisan' especially as compared to past proposals.


The worst aspect of the health reform debate has been the culture war spilling into health policy angle. You can't just be opposed to a policy, you have to be opposed to the socialist, statist fiat, etc. Andrew Sullivan is lamenting this as well. The 16 years of Presidents Clinton and Bush II were the coming of age of the baby boomers as the leaders of the nation (they were born within 6 weeks of one another in 1946). The main thing the boomers are in the process of leaving left us with is this sort of culture war meets health/public policy way of governing and legislating.

The main thing that caught my eye about Sullivan's post was the quote from a reader. This is the type of thing I increasingly hear from my Duke students.....they are far more practical than their parents, which is a good thing. May the 'culture war as tool of public policy and if the other side doesn't agree just scream' way of doing politics go away....I think the kids of the boomers will lead the way.

Here is the quote:

"My teabagger parents are gloating today about the Brown victory. To them, this whole politics game is like football: they simply cheer for the red team to beat the blue team. Period. They don’t know or care how Brown or any of their other preferred candidates are going to solve the real crises my generation will face.

And for all their slogans and smugness and phony outrage, the teabaggers are on the wrong side of the future in every way I can imagine: Entitlements will have to be cut. The eligibility age for Medicare and Social Security will be raised, benefits will be means-tested, and Medicare will eventually be rationed. Everyone in my generation knows this. We accept it. But we want those programs to stick around in at least a minimal, bare-bones form. The teabaggers just mindlessly shout “Don’t cut my Medicare!” But they don’t mind bankrupting it for my generation.

Taxes will be raised. This is a fact. But teabaggers keep demanding tax cuts, insisting that cuts increase revenues, a claim that can’t even be called discredited because it was never credible in the first place. Policy-smart conservatives know it’s hooey, but teabaggers love it because it’s a convenient, feel-good talking point, truth be damned.

The rest of our lives will be filled with economic stagnation and profound personal insecurity.

The health care system as we know it will fall apart, spiraling costs will destroy growth, and the government will be forced to take an ever-bigger role in health care, sooner or later. What it means to be middle-class will be drastically different in fifty years, maybe even twenty. The disruptions of globalization will require government to alleviate the economic risk on individuals through programs like expanded unemployment benefits, targeted job training (and re-training), and education reforms. Teabaggers’ answer? Scream “Socialism!” and argue for ending all regulations and social welfare programs.

The theme of the future will be the need to accomplish more with fewer government resources. This will require a generation of leaders committed to the old-fashioned conservative notion of good government. For teabaggers, though, it’s an article of faith that there is no such thing as good government, so they don’t care what kind of hacks they put in office.

American empire will have to be rolled back. We can’t afford it. The defense budget must be cut. But teabaggers just want more and more war, imperial occupations that never end, in every corner of the globe. You have to wonder if war simply makes them feel good. Climate change and peak oil are facts. They will alter our lives in ways that seem like science fiction to us now. But teabaggers grasp at any flimsy excuse they can find not to face these facts, from “Al Gore is a hypocrite!” to “Drill, baby, drill!” to “The emails prove it’s all a hoax!”

The ridiculous, exhausting culture war has to end. My generation is sick of re-fighting Vietnam and Selma and Stonewall. We don’t want to be defined by whether we eat arugula or wear Carhartt. But the teabaggers need the culture war to continue forever because it ratifies their prejudices. It justifies their hate. It prevents the change they fear."


I hear this sort of thing from undergrads at Duke all the time....though I would add the exhaustion of the kids with their baby boomer parents is not only with the 'teabaggers' but angry liberals as well. Please guys: take that stuff with you.....

Jury Duty

I have jury duty on line ability. Managed to stay away from sharp objects and ledges over night....

The unsustainability of our health system hasn't changed but the politics sure have. By unsustainable, I don't mean that it sucks. I don't mean that I wish we could copy another nations system. I do mean that we cannot maintain fiscal sanity over the long term with no change in our health system. By fiscal sanity, I mean the ins (taxes) have to match the outs (what gov't spends). We have no hope of fiscal sanity without health reform. The Peterson-Pew Commission (Center right) and the Center for budget and policy priorities (Center left) recent reports are just about the same report. Deficit reduction long term = health care reform. You cannot have one without the other.

I think the country would be better off if the House passed the Senate bill. Not because it would guarantee fiscal sanity. Indeed, if it were the only thing done, it would not. However, if it were passed, it would be a start to a path that got us there, and its passage would ensure that we would have to tinker and address the system for the next 5 Congresses. Sort of like hand cuffing everyone to everyone else and jumping off the cliff. But, they are not going to do that.

I heard some folks on TV saying things like 'pass the popular parts' like banning pre-existing conditions and nothing else and claim victory. That won't work as a health unsustainable as the current system is, you could make it worse. Something like this (ban pre-existing but allow underwriting which means astronomical premiums, or ban both without a mandate) would likley just devolve an already small and fragile nongroup purchase market into death spiral. The cannablized parts don't make so much sense in a vacuum.

So, the Dems either need to cowboy-up and pass the Senate bill or step back and work a plausible, relatively comprehensive plan. You could just give up, but while it is possible the Dems could lose the House anyway, I think it is probable if they fail to address health care at all.

If you are going to step back, it is not to the start, there have been lots of talks. If doing this, start with malpractice reform. It will not save that much money ($54 Billion over 10 per CBO) but hey, it will save some. And, most people want that. This is a case where doing what most people want will likely help some, and at least won't do anything really bad.

And for the Republican politicians with plans that would repeal the tax exclusion for employer paid insurance (Bennett of Utah, Burr, Coburn, Corker, McCain) in the Senate, please talk your plan up. There is plenty to criticize in them (Bennett's is actually with Wyden which is why he is being primaryed in Utah), but you have it right that the tax exclusion remaining unlimited hinders our ability at slowing health care inflation. The President has obviously been convinced that the tax exclusion is a long run cost problem as he managed to keep the high cost tax in the negotiations of last week. You can choose to focus on the deal Labor got, but I was surprised the tax stayed in. Tangling with labor like that would be like if a Republican said 'well, maybe abortion is not that bad' in terms of taking on a key political base.

If the Republicans jumped in, they could help move this along and perhaps move it away from a tax that is a de facto capping of the exclusion, and maybe we could have an actual capping of the exclusion that would help focus on the role of the individual in rising health care costs. Maybe their plans are all defensive, just to say, yeah we have a plan. However, even this morning I saw some of them saying we need to address the health system problems. You could choose to wait until after the election, thinking you will have much more power. If you started now, it might actual improve the chances that turned out to be the case.

And go from there. Back to jury duty.

Tuesday, January 19, 2010

Brown wins

Senate seat from Massachusetts. The early chatter suggests the House passing Senate bill as is not likely to happen. The other more exotic options are even less likely. The new math until 2010 election in Senate is 41>57 + 2.

For me, this still holds.

Get your chinstraps on tight

if this is true. I am skeptical the Dems are unified enough to do this.

Ezra Klein making the case to move ahead. In the end, I think it really depends on what the Dems in House, in particular, think about the status quo of no bill, combined with the probability of (a) coming back to health care and (b) what the bill would look like if Congress did later (whether later this year, next congress, etc). Which do they think is better for the country? For me it is easy call of move ahead. But, they have to decide.

From straight politics perspective, I think it goes like this. If you are a vulnerable Dem and you voted yea in Nov. 7 you are already going to face ads of 'liberal/socialist/wanted to kill your grandmother' etc. You are better off answering with a bill that covers 31 million people, banned pre-existing conditions, closed doughnut hole, and is a step toward slowing rate of cost inflation, etc. than answering with nothing. The ads will be the same regardless.

If vulnerable and voted no in the House, you probably like the bill now better than the one that passed the House and you voted against. But, you can still run and say I voted against. It comes down here to do you think the bill is better than status quo or not? I do. But I don't have to run for re-election as a professor at Duke;* they have to decide. And they are going to get adds of you supported Nancy Pelosi and her 'liberal/socialist/wanted to kill your grandmother' etc. bill.

Then there is abortion. I have no idea how this cuts with the above groups. I think it is an invented controversy, mostly because of the tax exclusion of employer paid insurance. That has clearly been subsidizng abortion since 1976 using the logic used by the Stupak amendment, but alas, discussion of abortion and logic do not often seem to intersect. I think this has always been a mixture of people wanting to 'poison pill' the bill and others simply latching their most important issue onto something they thought would pass.

So, bad political climate for Dems. In the end, they have to decide whether the bill is an important step ahead or not.

*Actually I am being reviewed for tenure by Duke this year, so sort of am running for re-election, but that is a different story.

Monday, January 18, 2010

Perspective on bill

Nice post by Ezra Klein putting reform bill into perspective of the entire health system.

What will happen in Mass and then to reform?

Update 9:30pm: now says Brown 3:1 favorite, meaning 74% chance of winning. I think he correctly picked every senate race in 2008.

Short answers are I don't know and I don't know. Here is detailed analysis from you are interested in polling generally, statistics and how polling is done you will find his post interesting. If not, then you won't and he says it is a toss-up, but also paints the most convincing case for either side using the polls, so you can make yourself happy with what he writes whether you are a lefty or a tea-bager.

What about reform? If Brown wins, there are plenty of ways to pass a bill, even the bill that is now being negotiated. The biggest barrier to this is that the Democrats are not so unified. It is really a question of what a Brown loss will do to vulnerable Dems, especially in the House. Will this scare them into not wanting to vote for the bill, or any bill? I got a newsflash for any of them thinking this way: 10% unemployment and people even wondering who will win Senate race in Mass means that they are vulnerable and a lot of them are going to lose, no matter what.

If you look at the Nov. vote in the House, the most liberal and the most conservative Dems voted no. So, the negotiations are titrated toward just enough to pass the bill. No public option loses some on the left, while inclusion of public option can't pass the Senate. Some of the conservative Dems certainly like the bill now being discussed better than the one that passed the House. But, they are mostly in swing districts and they are the ones who are most likely to lose, because the only way you get a large majority is winning marginal seats. So, Mcintyre, Kissel and Shuler in NC (Dems voting no in Nov House bill) have a good chance of losing, regardless of the health bill. Anthony Weiner from Brooklyn and who is for Medicare for all is not going to lose.

In the end, they should do what they think is best and correct. Hopefully, there would be issues at least someone would be willing to lose over?

The worst thing about passing nothing is how terrible the status quo is for this nation. In 1999, employee share of premiums were around 10% of wages, and last year they were almost 20%, and the number of uninsured in accelerating. The fiscal insolvency of Medicare due to the baby boomers, which we have known about since the 1970s-80s, is upon us. We actually have to do something.

And it is hard to see how we as a country muster the will to focus back on this again. No bill means two straight Democratic Presidents crushed in first part of their presidency attempting to address health reform comprehensively. Republicans are good and unified on defense, but the campaign slogans (market solutions, sell across state lines, etc.) are just that and I just don't think its in their DNA to take this on. The one time they have driven for something large (Medicare Part D) they committed one of the most fiscally irresponsible bills Congress has ever enacted. Not much of a track record.

I think the bill being outlined is easily better than the status quo. And one of the best aspects of it actually passing would be that it would ensure that each Congress for the next 5 would be back to tweak, adjust, and refine. It would take 293 House votes and 67 Senate votes to override a veto, so all the Republicans can run on repeal if it passes, but if something does pass it is not likely to be repealed. Whether a bill passes or not, if the Republicans are going to gain back lots of seats, I hope some of them are actually thinking of policies that have a chance of making things better. The country needs for them to develop an offense.

Sunday, January 17, 2010

Constitutional discussion

News and Observer has two interesting op-eds this morning (reprinted from WaPo and NY Times). Thomas Geohegan arguing that the practice of the filibuster is unconstitutional primarily because it deprives the office of the Vice President of one of its only two constitutionally defined roles: breaking an equally deadlocked Senate. And George Will arguing that a debt/deficit focused entitlement commission being discussed would be unconstitutional because it would deprive the Congress of its constitutional duty to set spending levels.

I am not sure if the filibuster is unconstitutional, but it has rendered the Senate dysfunctional. The answer there is some change in the filibuster rule set to take place at some future point (say, in 4 years the filibuster break becomes 55 votes, in 8 we have straight majority rules [stick with me, I know that is shocking]. Then they can set a policy that makes more sense without knowing who will be in minority or majority.

On Will's argument, he says this is a 'lets hold hands and jump off the cliff together' approach to dealing with long term solvency. As a metaphor, I think that is about the only way of coming up with a broad based agreement (in a broad cultural sense) of how to set up a plan where the ins match the outs over a long term, and the cumulative debt is stabilized at a sustainable level. Will mostly is opposed I think because he suspects they(a commission) will raise taxes in addition to reduce benefits (those are actually the only two choices other than insolvency, long term). He is right, they will have to rise if we will achieve fiscal sanity and benefits will have to be cut.

In the 4 years since the 1950s that we have had a balanced budget, revenues were between 20 and 20.5% of GDP. They were just over 15% this past year, a terrible recession....but something like 17-18% for most of the past decade.

If you look at the Petersen-Pew Commission on Budget Reform, which is Center-Right, and the Center for Budget and Policy Priorities similar Commission (which is Center-Left) they are shockingly similar in two ways. First, deficit/debt reform is health care reform as Medicare and Medicaid are the primary drivers of the deficit problem the next 50 years. And second, there will have to be a broadly agreed to mix or benefit cuts and tax increases to deal responsibly.

Back to the filibuster argument in the Senate, the current state of dysfunction in that body does not give one much optimism for them rationally dealing with the deficit/debt issue since addressing it will be focused on a 'hold hands jump off the cliff together' setting up Congress voting up or down seems to only way to have a chance at sanity.

Friday, January 15, 2010

Getting what you ask for

is sometimes bad. The Economist on what happens if an individual mandate were unconstitutional and how that would be bad for conservatives.....I wrote about this last week. It seems perfectly obvious to me that the fastest route to a single payer would be to either do nothing now and/or have an individual mandate ruled unconstitutional. As the baby boomers age and the workers paying the payroll taxes to finance it don't have insurance in larger and larger numbers, something will give.

Like I have written, I think a Medicare for all for catastrophic cover would be the best way to go, but it just seems politically impossible....unless we did nothing this year and the system really breaks down. I'd rather not find out what comes after a total melt down....

Thursday, January 14, 2010

Excise Tax Remains Fairly Strong

Update Friday, 1/15: My column in the News and Observer is back today, discussing the 'ping pong' conference approach....the discussion below gives my latest thoughts about the tax on high cost health insurance. The column was done Wednesday night.

Ezra Klein has the most detailed discussion I have seen on the deal between Labor, the White House, the Senate and the House, and seems confirmed by the NY Times.

First, let me say I am pleasantly surprised by the deal that seems to have been made on this tax; it is much better than what I thought would take place. At one point it seemed as if it would go away, and it is clearly only the pushing of President Obama that allowed it to remain. And he was going up against among the most loyal Democratic voter groups in organized labor, and bucking the House of Representatives that was/is mad that the Senate bill has been the starting point since mid-Autumn on the final bill.

While I would prefer a straight cap of the tax exclusion of employer paid insurance premiums because it would focus more on the individual's role in health care use, I have been a strong supporter of the excise tax on high cost insurance plans. That is because it is a de facto capping of the tax exclusion. There is a certain amount of 'hold your nose' over the demogoguery necessary to sell this tax--on the insurance companies, when of course it will be passed on--but it is the best that can be gotten at this time, and it has the best hope of beginning to slow cost inflation of almost anything in the bill. Of course the tax will be passed on, incentivizing employees to have less generous plans if they must pay taxes on the marginal premiums. That is the point. It is a tax that is designed to be avoided by people seeking lower premiums.

I suspect many will say the President and Democratic party caved to the Labor Unions, but in fact, the tax remains similar to before (and again, better than what I thought would happen). I thought the unions would get much more. Here are the outlines:

*Tax of 40% on value above $24,000 families (was $23k) and $8,900 individuals (was $8.5k). Dental and vision linked premiums are now excluded from the determination of the value to determine whether a plan would be taxed.

*Key is that the tax inducing amount will be indexed to Consumer Price Index (general inflation) + 1% point, just as before. This means the taxable rate will grow much slower than health care has over time, meaning that unless cost inflation in the system slows alot, more and more policies will be subject to the tax, bringing about downward pressures on health costs and people shift into less costly plans. There had been word that this indexing rate would be changed greatly, rendering the tax not effective. That hasn't happened and that is good news if you are worried about cost inflation in health care.

*Union plans are exempt from the tax until 2018, ostensibly so that Unions that have explicitly bargained for richer benefits because of the favorable tax treatment can renegotiate. Folks will howl about this, and I get that. But, if there is a wave of renegotiation, that should result in downshifting of insurance premiums which is the point of the tax in the first place. In fact the President of AFL/CIO is quoted as saying the goal is that no union member will pay the tax. That is only possible if they have less generous insurance benefits, which is the goal of the tax in the first place. I would suspect it would be hard to score this per CBO--meaning how to score planned lessening of insurance plans in favor of higher wages-- so I suspect the CBO will credit no downshifting/savings in order to be conservative, but there is a reasonable chance this will work better than projected (with better defined as less generous premiums), reducing the deficit by more than scored.

*According to what written by Klein and in a few other places, the health insurance exchanges will be opened up by 2017. Under earlier versions, it wasn't until 2019 or later and then in some versions only with state discretion that employers could go into the exchanges (marketplaces for insurance to be set up) or employees who had employer-based health insurance. This twist of 'if you like your benefits you can keep them' has always been, 'and by the way, you don't have any choice' because those with employer based cover couldn't purchase plans in the exchanges.

The Wyden amendment that was defeated in the Senate finance committee would have opened up the exchanges to anyone who wanted to shop in them, and the Senate bill passed includes a scaled down version of this. It seems as if the exchanges are going to be opened up, and earlier, perhaps to everyone, or in one place I read, only to collectively bargained plans, which would not be as good. This is good if you conceive of the uninsured problem (as this bill does) as one of market failure and you are trying to set up a market that will bring about choice and competition for consumers. Keep in mind only 14 Million out of 307 Million Americans buy their own health insurance; that number will already by over doubled if this becomes law, but this may mean many more people will be able to leave one size fits all employer plans and seek a better deal in the market place.

The insurance industry has generally been opposed to opening up the exchanges, presumably because it would allow folks to shift out of employer based plans and into privately bought ones. Perhaps the thinking is that healthier, younger folks will be those most likely to leave for the exchange, harming the employer based risk pool? Or it could be the other way, sicker older people in smallish employer based pools may want more comprehensive cover than what is offered by their plan? I am not sure on this, and I am not sure if they (insurance) will fire away at this compromise, but I suspect it is too late to do so with effect.

*It seems as though they believe these changes will cost about $60 Billion in scored savings per CBO, so they will have to make that up....and there have been words of expanding the Medicare payroll tax to dividends and investment income. That is not as good a financing source as it won't slow cost inflation. However, on the whole, the developments of today are good for keeping some plausible baby steps on cost control in the bill.

A sane discussion of debt

from the Center for Budget and Policy Priorities. The short term expanded debt was and probably is needed to keep us from having the second depression/actually have a recovery. But, the long term deficit (how much more we are spending and most importantly, are scheduled to spend as compared to revenues) on a routine basis over the next couple of decades under current policy is disastrous.

If you are worried about the long term deficit/debt of the US you are worried about health care as Medicare and Medicaid inflation are the primary long term drivers of it.

There are three main reasons that Medicare, especially drives the deficit problem:
(1) The baby boomers had fewer children than their parents. There were 4 workers per Medicare beneficiary in 2000; there will be 2.4/beneficiary in 2030.
(2) Everyone dies and most people are sick before doing so. And 83% of all deaths in the U.S. occur among Medicare beneficiaries. Whomever insurers older persons will face this issue.
(3) Cost inflation in health care is so much higher than general inflation, and wages.

#3 is the only thing that can be addressed. The other two are inevitable. No ideology or interpretation whatsoever involved, just math.

This will be hard. They note that if the 2001 and 2003 tax cuts are allowed to expire, that will close 2/5ths of what is needed for a sustainable budget. That is alot, but that means 3/5ths still must be found, either from reducing the outs (what gov't pays out) or increasing the ins (what gov't takes in). To do this will require changes in Medicare, Medicaid and Social Security (or some combination).

The health reform bill is a step towards us having a chance to do this reasonably. I wish the reform bill would do more on cost control. I wish we would cap the tax exclusion at the national mean....I hope the excise tax survies in some form, as it will signal at least a de facto capping of the tax exclusion. And I hope we end up with a real Medicare advisory Commission that will begin to systematically look at what, when, how and how much Medicare pays for care. We will never have a chance to get a handle on cost inflation so long as there are so many uninsured persons who still get some care, this moves us toward a much smaller group of persons who are uninsured. And the passage of a bill this year will make tweakings inevitable, perhaps there will even emerge ways to address cost inflation that politicians of all ilks can support, if we can take this first step.

State v. Federal insurance regulation

NY Times on House v. Senate regulations of health insurance. Senate bill allows states more discretion and House bill establishes federal regulations. I think the article slightly overstates the differences between the two approaches, but there are differences. Interestingly, Karen Ignani of Assoc. of Health Plans (insurance lobby) states she views that 50 states each doing their own thing is not a good approach. Federal rules with state implementation always seemed most likely outcome to me, but folks in this article are saying some states will purposefully circumvent the rules.

This paper in New England Journal of Medicine by Timothy Jost sketches the argument.

Package to CBO next week?

Update: word of deal on excise tax, but no details and still denials. WSJ says dental and vision dropped from inclusion in determining the trigger amount for high cost insurance tax, but all details not clear.

Seems as though goal is to have reform package to CBO next week....main stick is the tax on high cost insurance. And the House is likely to get their version of exchange and perhaps more premium support. That seems the compromise. Abortion talk has been quiet.


Lots of discussion that the majority of the public is opposed to the health care reform bills that have passed and are likely to result from the merger of the House and Senate bill. CBS News poll from this week that shows it is not monolithic opposition, and indeed, there are more persons that don't think the bills go far enough than think they go too far.

They polled three areas, asking about reform bills.

Covering Americans: go too far 32%; Not far enough 35%; About right 22%
Controlling costs: go too far 24%; not far enough 39%; about right 21%
Regulating health insurance: go too far 27%; not far enough 43%; about right 18%.

Politically, it can be bad to be caught in 'no mans lands' right in the middle with folks on all sides upset. However, for folks who wish reform had gone further, say Medicare for everyone, consider the facts. The Democratic party won the most convincing presidential election since Reagan. Had a 60 vote Senate (sort of, 58 + 2) for the first time since the 1970s and have a huge margin in the House. There are about 40-45 members of the House who are publicly for Medicare for everyone. That is about 170 votes short, in the more liberal House of Congress!

In the end, most of those folks will be supportive if a bill passes, and they should also know that something this big and complex addressing something this big and complex will be tweaked and improved. In fact, once it passes, perhaps the Republicans will be more like to become involved in ways that will be beneficial.

Wednesday, January 13, 2010

8 hours of meetings

at the White House today....Reid, Pelosi and the Pres say they are getting close...more meetings at the White House tomorrow.

Nitty Gritty

Article in NY Times on details of reform steps needed and hindrance of Obama Administration not having new chief of Medicare and Medicaid (formally called Centers for Medicare and Medicaid), or CMS. Reality is that any reform effort that tacks on bits and pieces to an existing system will have many, many practical issues and problems to work through.

Health bill negotiations

per politico....

OBAMA, DEM LEADERS MEET TODAY – President Obama, Speaker Pelosi and Senate Majority Leader Reid will meet at 9:30 a.m. in the Oval Office to talk reform. And at 10 a.m., they will move to the Cabinet Room where they will be joined by Democratic Reps. Steny Hoyer, James Clyburn, Henry Waxman, Charles Rangel and George Miller and Democratic Sens. Dick Durbin, Chris Dodd, Max Baucus and Tom Harkin, reports POLITICO’s Carol Lee. Final list of attendees....meeting still underway at 1:20pm per Politico.

More from NY Times saying President insisted on excise tax to Labor leaders but Pelosi still opposed.

Word of deal to exempt collectively bargained benefit plans for excise tax...which will probably have to be met with a change to exempt non union plans....likely leading to an income test of when tax applies. This this then creates a need for more financing to keep bill deficit neutral...I guess the Medicare payroll tax applied to dividends and investment income.

End of life talks

Important article in NY Times describing a paper in Cancer, addressing the issue of doctor/patient communication around doctors level with patients, when in the disease course, and to what effect? What determines when and if they have 'the talk'? Lost in all the hysteria of death panels that didn't exist this past year are the real issues surrounding how Americans approach the end of life. This relates not only to issues of cost, but also patient preferences, autonomy, family dynamics, and what it means to maintain a sense of hope while a person faces a terminal illness.

Some of my past work with colleagues from Duke has shown that hospice saves Medicare money. And most people use hospice for a relatively short period of time before death, meaning that many users (7 in 10 in the study above) would have saved Medicare more money had they used it longer. And, most work on length of hospice use suggests that you cannot receive the full benefits in terms of palliation from relatively short lengths of use. So, hospice would appear to be one of the few areas in which increasing something both saves money AND improves benefit. Typically, we are left with an intervention that costs a great deal and produces some benefit and deciding whether it is 'worth it'.

But, there are problems with the hospice benefit as conceived in Medicare. Notably, one must unelect 'curative' care to receive hospice. I put 'curative' in quotations because as I heard Joanne Lynn, a hospice expert say several times 'if we could cure it we would.' But, the initial hospice statute from 1982 uses the phrase curative....they mean 'all the expensive stuff.' This may delay selection of hospice by patients who may be interested in aspects of this approach, but not soley. Other issues include the effect of having a caregiver to allow one to practically utilize the benefit (most hospice care paid for by Medicare is delivered in patient homes). And my colleagues from Harvard Haiden Huskamp and David Stevenson and others are writing about altering the hospice benefit for patients of nursing homes (essentially bundling hospice to the nursing home and making them the purchaser of hospice services).

The Medicare hospice benefit is a key place for end of life policy making, in part because it provides a classic example of Medicare as an insurance innovator which is counter-intuitive to many [and 83% of those who die each year are Medicare beneficiaries]. Medicare has been the source of most large insurance payment innovations in the U.S. in the last 30 years (prospective payment, DRGs, RBRVS). Here is another column I wrote that discusses Medicare and end of life spending.

I recently received a grant from the Agency for Healthcare Research and Quality (AHRQ) along with my colleague from Duke's Cancer Care Research Program Amy Abernethy and Marion Danis from the Department of Biotethics at NIH to study patient and family caregiver preferences when a patient is facing a Cancer diagnosis with an expected survival of 6 months or less. We will be adapting Marion's Choosing Health Plans All Together (CHAT) tool to this patient population. Ultimately, learning more about patient preferences could be used to guide policy in how we treat and finance end of life. We are especially interested in potentially altering the Medicare hospice benefit to allow for the receipt of palliative care earlier in the disease to elect hospice under Medicare you must unelect 'curative' care.

As an aside, when I was an undergrad at UNC, I saw Marion give a talk where she discussed futile care....meaning care that was judged to be providing no benefit (and maybe causing harm) and was very expensive and that we needed to address that issue. For this 20 year old, this notion was a stunning revelation...isn't more always better.....and I remember thinking 'what is that crazy woman talking about?' Later I got to know her and she encouraged me and helped me see this as an important issue. And now we get to do a project profs out there be nice to the undergrads....maybe they will be your colleague on a project some day.

And again on excise tax

From the New Republic....if you are just checking out the financing aspects of reform, a pretty good overview....if you have been paying attention for awhile you are probably thinking....can't you guys just vote?


Tuesday, January 12, 2010

More on Mass

and the special Senate election to fill Sen. Kennedy's seat permanently. Scott Brown, the Republican, is running saying he will go to Washington and block the bill. Of course, when he was a State Senator, he voted for the Mass plan--you guessed it, the bills that have passed both Houses of Congress are based largely onthe Mass plan. And of course there is a third party candidate with the last name of Kennedy (no relation).

Tax talk

Amidst more push back on excise tax on high cost insurance (seems the trigger level may rise, and/or be based on actuarial value instead of premiums and/or be adjusted for age) WSJ describes proposal to apply Medicare payroll tax to investment income. Now it applies to wages only. On first blush, this is just a middle ground between House income tax hike and Senate tax on insurance which is not surprising. More broad based than income tax hike in House. So, not as bad as income tax hike, not as good as capping tax exclusion in de facto manner via health insurance tax. More on this later.

Update: nice summary of big picture re taxes. No easy choices left.

Sunday, January 10, 2010

Massachusetts miracle/disaster

Depending on your perspective. 3 polls out this weekend show very different pictures: 2 says Coaxley (Dem) up 9, the other say Brown (Repub) up 1. Brown has been saying send me to stop the health bill, etc. 2 others noted in this link above with one saying Coaxley up 12 and the other Brown up 1.

The poll showing Brown up is PPP, from Chapel Hill, who usually polls for Dems, but this appears to be a general interest poll. Rasmussen who is often accused of being in the tank for the Republicans is one that says the Dems up 9%. Guess they will just have to have the election.

Krugman on excise tax

Paul Krugman clearly summarizes his thoughts on the excise tax. I have written alot about it and been in favor and still am and think he makes the key points regarding why I am in favor. One further thing that I wish is that we would more clearly just limit the tax exclusion (whether there was an allowance for age, for example) because this would help to focus a cultural discussion of health care costs on the end user of care: you and me. The tax has largely been sold politically as a tax on the bad insurance companies....which will be passed fact, it has to be passed on or it won't work as desired, which is to make people pay more attention to how much insurance they have. Sometimes you have to hold your nose (on the demagoguery related to tax the insurance companies, not the person) because it is at least a de facto capping of the tax exclusion and far preferable to an income tax increase for these reasons.

Here are columns I have written that highlight the excise tax: July 10, Oct 23, Aug 21.

Sorry is the hardest word

Interesting story of the increasing use of the word 'sorry' when there is a medical or other error in health care/health care industry. A link to the so-called 'sorry coalition' that pushes openness, disclosure and sorry as a way to deal with medical errors. Here is what Univ. of Michigan's approach to malpractice/errors. And what I wrote about malpractice and reform in August, 2009.

Saturday, January 9, 2010

Actuary Report, Round II

The Actuary of CMS (Medicare and Medicaid) has released a revised report on the expected impact of the Senate bill should it become law. Similar to the last one, projecting an increase of $222 Billion in total health spending over the period 2010-19 (they estimated ~+$240 Billion in early December, but I can't lay my hands on the original report this second). It is important to keep in mind that the default spending over this period if reform is defeated will be $35 Trillion, $260 Billion.

Let me say that again: if we do nothing, the actuary says total health spending from 2010-19 will be $35 Trillion, 260 Billion.

The actuary is saying if the Senate bill became law, spending over the same time period will be $35 Trillion, 482 Billion, and 36 Million people will be insured in 2019 who will be uninsured if the bill doesn't become law.

The report notes that there are some aspects of the bill that will have the effect of slowing the rate of spending growth: the Independent Medicare Advisory Commission; the tax on high cost insurance policies; and very small reductions from increased use of comparative effectiveness research. There are other policy aspects that many think will slow growth in the first decade that are credited with no savings here, just as with CBO. They both take fairly conservative perspectives, which is fair enough. But, these changes are more than offset in the first 10 years by newly insured folks and folks with better insurance.

If the Senate bill became law and that was it, it won't be much of a cost slowing victory. The provisions of the Senate bill are a first step that give us a chance to begin addressing cost inflation in a meaningful manner over the long term (next 30-40 years). One of the side benefits and realities of passing reform is that the health system will be in play. I would expect every Congress for the next 5 to pass tweaks or changes (or who knows, maybe the Republicans will take both Houses in 2010 and repeal it all, and then what?) and that is needed and necessary because this is an imperfect bill. But, it is far preferable to the status quo. That is in the easy call category for me.

The most interesting difference between the actuary and the CBO is that the CBO says 31 Million people will be covered in 2019 who will otherwise be uninsured. The Actuary report puts this number at 36 Million , which is quite a big difference. They seem to be showing more uptake of private coverage which is essentially saying they expect the individual mandate to be more effective than CBO does.

Also, note that the Actuary is focused on spending and not revenue/deficits. CBOs bottm line focus is the effect of proposed legislation on the deficit, while the Actuary is focused on total spending.

As I said in this column, you can address coverage without cost, but you can't hope to fundamentally address cost so long as you have systematic uninsurance with people still receiving care. The Senate bill has more on cost control than say, the Massachusetts plan had (which was pretty much straight coverage expansion) but it is not enough. Our nation will have to pay ruthless attention to cost inflation for the rest of my life if we are to achieve fiscal sanity. The Senate bill is a step in this direction. A first one, not the last one (by a long shot).

Friday, January 8, 2010

Premium/wage tradeoff

Austin Frakt has a nice post with links to peer review studies supporting the notion that rising health insurance premiums lead to lower wages, and that conversely, slowing premium growth will increase wages. This is a major policy argument for the tax on high cost insurance. I am (still) convinced by this. Perhaps in the short run, savings from lower premiums won't be passed on in wages, but in longer run they should be.

Cranking up

Health reform talk cranking up in earnest.....politico's live pulse with a variety of things happening. Most notable I think is that the President will appear at the House policy conference next week, where he will have to make the case for the tax on high cost health insurance over the income tax increase favored in the House.

The income tax increase is such a bad idea for several reasons. First, it has no hope of slowing cost inflation. Second, it adds a new source of revenue to a system whose biggest problem is unsustainability (the excise tax if nothing else, moves money already in the health sector; I think it will do more in terms of slowing cost inflation). Third, wages are rising much slower than health care costs and income tax is such a large source of financing in House bill that it won't be able to keep pace. That is why House bill much worse on deficit per CBO in years 11-30 than Senate bill. Fourth, we eventually need an income tax increase just to have any hope of dealing sanely with the deficit....can't blow that on health reform.

Thursday, January 7, 2010

Arguments against excise tax

WashPost has an article today covering arguments against the tax on high cost insurance policies....but I am not convinced. Keep in mind the main point of the tax is to be avoided and not paid as people seek less costly plans. I think the tax on high cost plans is one of the most likely cost control aspects of the Senate bill and seems likely to make it into the final one.

Drug reimportation and terrorism

Drug reimportation from other nations would probably lower costs for some folks, but it is no panacea. An op-ed in the Wall Street Journal begins says it is much worse and begins...

"As a threat to our nation's security, allowing imported drugs into our pharmacies ranks just below terrorism."

He means this to be very scary. I hate to bring up data produced by the writer of the Op-EDs own organization (American Council on Science and Health), but if the threat of reimportation is below terrorism, then it is quite small. His organization says terrorism is less likely to kill you than failure to use carbon monoxide detectors! In fairness, the op-ed is not about terrorism, but also in fairness to everyone else, why hitch a potentially reasonable argument to the current hysteria?

I hate to pile on, but his organization's website says this:

"With this website, ACSH wishes to give readers a more accurate perspective on the real, documented risks to life in twenty-first century America.

The popular media presents many small or unsubstantiated exposures as real, life-threatening risks; consumers may justifiably become concerned and alter lifestyles for little or no good reason."

Here Here....

Detailed ping pong

write up of how ping pong works.

Abortion brinksmanship

NY Times story about Congressman Stupak (D-MI) and his insistence that his language on abortion be included or that he and other Democrats in House will bolt the final bill. The calculus in the House is complicated, but goes something like this.

220 (Number of votes for the House bill, Nov. 7, 2009)
MINUS liberals who bolt due to no public option and/or other issues such as excise tax
PLUS Blue Dogs who like the Senate bill better than the House one
UKNOWN abortion. I suspect this makes the liberals less likely bolt.
UNKNOWN Rep. Cao, the lone Republican who voted for the House bill


Wednesday, January 6, 2010

No conference, outline of bills

Earlier this week it became clear that there will not be a traditional conference, largely because the creation of a conference committee can be filibustered in the Senate. I have heard a few folks say this is unprecedented to 'ping pong' bills back and forth between House and Senate to bypass conference committees....not so. Here is a post describing year end ping ponging in Dec. 2007....just an example.

Here is a side-by-side comparison of the bills that passed the House and Senate.

Today there was a meeting at the White House between Speaker Pelosi and the Chairs of the relevant House Committees. This says the President stated he wants a tax on high cost health insurance plans, but that the Speaker is not sold.

Here is what I wrote about the upcoming conference...which will now be an informal conference about 10 days ago. Key issues in addition to the excise tax and abortion that I wrote about between House and Senate will be national insurance exchange or state level exchanges, whether to include House employer mandate, how stringent the individual mandate will be, whether to include an Independent Medicare Advisory Committee.

Recession and health spending growth

The new issue of the journal health affairs has a paper documenting national spending on health care in 2008; the headline is that health spending grew slower in 2008 than it has in many years, due to the recession. They note the health care spending grew by 4.4% in 2008, to $2.3 Trillion ($7,681/capita). In spite of the slowing of the growth rate, the percentage of the GDP spent on health rose from 15.9% to 16.2% because health care still grew faster than other parts of the economy.

General inflation during 2008 was only 0.1% according to the Bureau of Labor Statistics, although 2008 saw an anomaly in which two methods of calculating inflation that are typically similar were very dissimilar during 2008 (other method would say 3.8%).

There are several interesting parts of this paper in addition to the overall finding/report. First, they have historical data showing that recessions have typically slowed the rate of health care inflation (Jan-July '80 recession, the double dip July '81-Nov. '82, July '90-March '93; March 01-Nov.'01 and this recession Dec. 07-? [Exhibit 3 in the paper]. Second, exhibit 3 also shows the price (amount paid for things) versus non-price drivers of health care inflation (population factors, intensity of treatment, etc.). Prices have consistently risen faster than non-price factors the past 30 years in health care, and that was true in 2008. Finally, federal spending rose faster than in the past due to more people being eligible for Medicaid due to the recession, the fact that the American Recovery and Reinvestment Act increased federal share of Medicaid, and there was an acceleration of costs in Medicare Advantage due to the MMA 2005 funding changes to the program (essentially, purposefully over-paying them to encourage people into private plans).

In total, the federal government accounted for 35% of total national health spending in 2008, up from 34% the year before. When coupled with state Medicaid spending, government pays for about 1 out of every 2 health care dollars today.

Monday, January 4, 2010

Constitutionality of mandate part 3

Today's WSJ has an op-ed by Orrin Hatch (R-UT) and two others arguing that the individual mandate in unconstitutional. Lets assume they are correct (which I don't think they are) and you can't mandate the purchase of individual insurance. Then what?

There are three things you can do in response to the uninsured problem.

(1) Nothing. Either because you don't think it is a problem or you are worried you will mess things up worse by addressing it.

(2) Cover folks with government insurance. The current bill expands Medicaid substantially. There are of course many liberals who want to cover everyone with Medicare.

(3) Expand private insurance coverage. Obviously the bill does this as well as expanding Medicaid by imposing an individual mandate and also substantially changes insurance by forbidding the use of pre-existing conditions, ending recission, etc. In one sense, this bill would make private insurance a bit like a utility...still private, but even more heavily regulated. There are nations that do health insurance this way more or less (Switzerland and Netherlands).

Changing insurance rules by ending or limiting the ability of private insurance to underwrite won't work without an individual mandate. If there is another way to force risk pooling I am open to it, but can't imagine it. An employer mandate won't work completely, because one of the instabilities of our current system is the breakdown of the link between employment and insurance and the inevitable fact that with an employer based system if you lose your job you also lose your health insurance. If anything, we need to move away from the job/insurance link.

Insurance market regulations that the public seems to like without an individual mandate will just end up with individual market death spiral. Even the main Republican alternative plan, the Patients' Choice Act has a soft individual mandate of sorts (auto enroll, letting people opt out). It won't work as well, but they obviously know it is a problem and want a way to have a mandate without using that word. In short, you have to get all folks in, or get very close or using private insurance won't work so well.

Sen. Hatch and others better be careful about what they ask for, because if they get what they say they want then they are going to render option (3) above less likely to work. I don't think there are so many that favor option (1), but if that is the argument they want to make then go for it. There is only one option left after that. As I wrote in my column on October 16, 2009,

...."the current direction of the debate is best understood as one last chance to see whether private health insurance can work for the good of the nation in covering all Americans and in a manner that is financially sustainable."

There are only so many things you can do if your goal is to expand insurance coverage toward universal levels using private insurance as the main non-elderly coverage vehicle and it is hard to see how you do this without an individual mandate or other form of forced risk pooling. None of the pat panacea replies about across state lines, deregulating, malpractice lowering costs changes this basic fact.

Sunday, January 3, 2010

Two Questions

I am refining my syllabus for my spring class at Duke, Comparative Health Care Systems and think this article by Henry Aaron and Paul Ginsburg sets the essence of the challenge facing the U.S. health system and provides a useful lens through which to compare the US to other nations (exhibit 1 in the paper is especially useful). The article poses two basic questions.

Is health spending excessive? If so, what can we do about it?

You can only answer these questions meaningfully by thinking about the benefits and the costs of health care spending at the same time. Most people focus on one or the other while essentially assuming the other doesn't exist.

I think the answer to the first question is a slam dunk yes. We spend two dollars per capita each time most nations we view as our trading partners and allies spend one, and our outcomes are about the same, sometimes a bit worse. But, certainly not twice as good. Or even 10 % better.

The second question (what can we do about it) is hard to answer well, and learning to do so is the hard work we will have to do if we are to restore any sort of fiscal sanity to our health care system. As they note, the key is to cut spending increases while not harming welfare. This should be possible, in part, because so much we now spend money on does not improve health. But, it won't be easy. Eventually you push up against the point where more cuts hurt welfare as they call it (or health). In different areas we may be very close to this others very far. We need to figure out how close we are to this point on a systematic basis.

The bill that is likely to emerge from a conference and become law is a step toward being able to undertake the hard work of addressing this question, and aligning incentives with the answer. But, it is not the last step.

Importantly, there is a broad change in our culture needed if we are going to address how much we spend on health care, and the fact that it has been rising so much faster than other things. Other nations seem to be able to ask these questions in a more reasoned manner than we do. Our inability to do so is a cultural puzzle. If you demonstrate that we spend $2 each time most nations spend $1 on a per capita basis, and then show that our outcomes are about the same, or a bit worse I would next expect such a consumerist society as ours to be outraged and want to know where the money went? Why aren't we getting our monies worth?

Instead, the gut reaction of many Americans is to say 'but our system is the greatest in the world' as an article of faith and all the other nations (that produce similar outcomes for half the spending per capita!) are far worse. And you by asking the question do we spend too much clearly want to kill your fellow Americans via rationing, etc. I find this to be a bizarre reaction.

We need to grow up.

And just to be clear, I am not saying we should copy another nation's health system. In fact, in my comparative health systems class, I hammer home to my students that you can't copy another system. All of them are birthed and exist in a particular history and context. It is useful to compare, especially with respect to spending per capita and outcomes to see if it is possible you could do better and still spend less. But, in the end, each nation has to figure out what works for them, at that time.

The two questions posed by the Aaron and Ginsburg need to be front and center as we try and figure it out in the U.S.

Saturday, January 2, 2010

More on constitutionality of individual mandate

Opposing health reform bill based on the notion that individual mandates are unconstitutional is being viewed as the last line of defense for those opposed to the Democratic reform bills.

I am certainly no constitutional scholar, but when the branch of government the Constitution says can pass laws passes a law, I think there is a fairly strong assumption that it is within Congresses right. This is obviously not always the case, but seems a reasonable place to start.

There are obviously others who spend lots of time thinking about such things, and here are two scholars who say the individual mandate is constitutional.

Here is Erwin Chemerinsky's take that it is clearly constitutional...he is the only constitutional law expert I ever met, so I am partial...he used to be a prof at Duke (he is now Dean of Univ. of California-Irvine Law School). Here is another view on the mandate being constitutionally sound by Mark Hall, who used to be a law prof at Wake Forest but who is now at Seton Hall. He specializes in health law. Here is a longer, more scholarly (fully referenced, etc) version of his argument.