Monday, March 29, 2010


Here are two polls, purporting to measure the U.S. on views about the health law just enacted. Here is Rasmussen, and here is Washington Post. They are pretty different. Of course we will have an official poll on the first Tuesday in November.

Donald Berwick nominated for CMS head

Donald Berwick, an MD researcher who has focused on quality improvement has been nominated by President Obama to head the Center for Medicare and Medicaid (CMS) services. This is a key role in implementing the changes recently passed, and particularly in getting straight the Independent Medicare Advisory Community. He is very much a policy/researcher insider, as opposed to a politician. Here is the web site of the organization he now directs, Institute for Health Improvement. However, I am sure his confirmation hearing will be bumpy in the Senate.

While the public will pay less and less attention to health policy (a truly tragic turn of events), the hard work of implementation and making the system work better is just starting.

Friday, March 26, 2010

Reconciliation bill passes

both Senate and the House yesterday.

Ryan and moving forward

Rep. Paul Ryan (R-WI) writes in yesterday's New York Times that the key step in addressing health care costs is reforming the tax exclusion of employer paid health insurance. I wrote yesterday in the News and Observer that this--capping or repealing the tax exclusion whereby persons with good employer based health insurance gets tax free income while the uninsured get none--is the key to addressing health care cost inflation. He is not on my speed dial, so we didn't coordinate this. It is just obvious that that is the next step. And Ryan is a member of the Deficit Commission created by President Obama.

However, I puzzle over Rep. Ryan and the Republican party on health reform. He mixes cogent policy thought with mindless repetition of slogans (govt behemoth; I guess he means insurance regulations?). In many ways they are in a very bad position now. They have been saying health reform as espoused in the reforms debated was not only bad policy, but (fill in the blank--no matter what one Republican said, the next would say something more hyperbolic). And a lot of their most ardent supporters believed them. Now it is hard to shift and say, well 'maybe it wasn't literally the end of the republic' and here are some ways that our ideas could help address costs better......Hard to shift from the end of the republic back to actual policy. But, that is what they must do, both politically and in policy terms.

Ryan is a co-sponsor of the Patients' Choice Act, which I have written about. In policy terms, I understand the Patients' Choice Act and what just became law to be cousins.

At its heart, the PCA takes the federal insurance subsidy of employer paid insurance as provided in the current tax code which now differentially benefits those with higher incomes and redistributes it so that everyone gets the same amount in the form of a tax credit. Yes, at its heart, the PCA is fundamentally about redistribution and ending the employer insurance link. Both the PCA and the reform just passed seek to expand the role of the individual in purchasing their own insurance. By ending the tax exclusion, the PCA would likely fundamentally lead the decoupling of health insurance from employment; employers could still arrange cover and pay premiums but they would be taxable as income under the PCA. The reform just passed would over double the number of persons purchasing their own insurance (from about 14 Million today, to around 32 Million in 2019; these are not all the newly insured, about half of those would be covered under Medicaid). The current reform would leave in place the current system of employer paid insurance, though the tax on high cost insurance would begin to address the inflationary effects of the tax exclusion. Of course, that is being delayed until 2018, and that was the point of my News and Observe column, in the waiting time we should go ahead and address directly the tax exclusion.

So, many in the Republican party are vaguely schizophrenic at this time. They desperately need and want to get back in the health policy game. And the country needs for them to do so, because we will probably only fundamentally address costs if both parties are involved.

If I were trying to devise a Republican health policy strategy it might go something like this:
1. Say, we are sorry we overstated the case against reform. We really missed a chance. If a few of us would have jumped in, we could have written the malpractice section of the bill and perhaps could have gotten the financing of the bill done without the expansion of the payroll tax if we could have helped give cover to cap the tax exclusion. But, it is not too late, and the delay in implementation of many aspects of the reform mean we can now make the case for how we would change things.
2. Our Democratic friends made a big step ahead, and they know coverage expansions. It is in their DNA, but not in ours. We think they went too far, and here are some ideas to add most cost cutting to the new framework. We have talked a lot about costs, but now we are going to get concrete.
3. Cap the tax exclusion at 75% of the national premium average in 2011. Lets assume that is $20,000. This means if your employer pays premiums equal to $20,000 that is tax free income. If they pay $21,000, the $1,000 extra is taxable as income. Drop this amount to 50% of the national average in 2012, and 25% in 2013. Say, you will replace the expansion of the payroll tax with the money raised from this.
4. Propose that the individual mandate apply only to a catastrophic level of coverage. So, you must have catastrophic coverage, with other levels of insurance made available.
5. Propose a 10 year plan to move away from Medicaid for the financing of acute care, by providing subsidies to let persons covered by Medicaid purchase private health insurance. This will likely cost more. Say that you are willing to pay more in the short term to move persons out of a financing system with stigma into private insurance.
6. Say you will add more stringent medical malpractice reforms. But, don't talk only about the cost savings, tie this with quality and moving toward a more patient safety approach to dealing with medical errors.
7. Say you will open the exchanges to everyone, perhaps with a phase in. This would be expanding the Wyden approach, in which an individual who got employer based cover could take a lesser amount than what the employer was paying and go and shop with it in a health insurance market (exchange).

And next time you feel inclined to say something like 'end of the republic' 'government takeover' 'socialist statist fiat' '_____will kill your grandmother' and the like, don't. No one is listening.

Thursday, March 25, 2010

Step 2 for cost control

I have a column in today's Raleigh, N.C. News and Observer, that proposes a step 2 for addressing cost inflation in health care: capping or ending the tax exclusion of employer paid health insurance. An obvious way to motivate this policy is via momentum for such a proposal from the Deficit Reduction commission created by President Obama. I believe that all of the Republicans on the commission have supported this policy, and members Rep. Ryan and Sen. Coburn proposed total repeal of the exclusion as the primary financing mechanism for tax credits to finance private health insurance (that should sound familiar) as part of the Patients' Choice Act, of which they were co-sponsors. Sen. Richard Burr, my Senator is also a co-sponsor of the Patients' Choice Act.

And President Obama fought hard to maintain the tax on high cost insurance plans, a de facto capping of this exclusion (even as delayed by the reconciliation bill), at some political cost within the Democratic party. His main health policy advisors know this is an important step, and the Deficit Commission could help build momentum for this policy as a part of its overall work.

The new law signed by the President is a very good step 1. It expands coverage, and employs a kitchen sink approach of trying a variety of measures to slow cost inflation, most importantly an Independent Medicare Advisory Commission. However, step 2 (and 3 and 4 and so on) will be needed to get a handle on health care cost inflation.

In health policy terms, there is no single policy that will more clearly slow health care cost inflation than limiting or ending the tax exclusion. I have written a lot about this over the past 9 months, here and here and here and here. And while most people say that politicians will never summon the courage to actually get around to enacting hard policies necessary to slow health care cost inflation, I say those who most fundamentally aren't willing to do it are us, the patients.

But, we can change our minds. We need to.

Wednesday, March 24, 2010

Is individual mandate unconstitutional

I don't think so, and here is the take of the only constitutional law expert who also does health policy that I know, Mark Hall, from Wake Forest. And a friend who is a lawyer looked at the suit filed by some of the state Attorneys' General, and said it is a press release disguised as a lawsuit--a political stunt. But, politicians do political stunts, it comes with the territory. It is a good thing to have a legal challenge though, as we do need to get this straight. If we can't have an individual mandate, then the logic of the reform that just passed won't work. I have seen several Republican politicians easing down off the repeal ledge into complete policy incoherence--lets keep the insurance reforms (ban pre-existing, end recission) but do away with the mandate. That is called certain insurance market death spiral.

The leading Republican lawmakers (Sen. Berger and Rep. Stam) in Raleigh say they will introduce legislation that says North Carolinians do not have to abide by the mandate. Of course, federal law generally supersedes state law unless the law is judged to be unconstitutional.

The argument against an individual mandate as a limit of individual freedom and liberty is the most profound and basic argument against the new law. Leaving aside the irony that individual mandates have often been the position of Republicans who were interested in health reform [it is possible they have just changed their mind], it is a legitimate question to ask whether a law is worth the limitation of liberty and freedom that is implied by the law. Every law that the North Carolina General Assembly has ever passed--including those supported by Sen. Berger and Rep. Stam--have limited freedom. By voting yes on any bill, they decided the limits of freedom inherent in a given law was somehow 'worth it.'

I think the limit of freedom and liberty associated with an individual mandate are worth it. They, do not, which is fair enough. They can make the case and make the election in the fall about this issue if they think it helps them.

I think I could favor a revision of the individual mandate that allowed someone to not purchase insurance, but in return that person would be ineligible for Medicaid and other state assistance if they became ill. In this way they could be free, and the rest of us could be free from having to pay for their helath care costs if it turned out that they choose poorly.

Tuesday, March 23, 2010

Early Poll

from Gallup taken yesterday....with a new question related to is it a good thing that the health reform bill passed:

*Overall: 49% yes, 40% no, 11% not sure
*Dems: 79%, 9%, 12%
*Reps: 14%, 76%, 10%
*Ind: 46%, 45%, 10%

Bill signed into law

President Obama signed the Senate bill this morning. Several State Attorneys' General have sued the federal government over the individual mandate, saying it is unconstitutional. That is good. We need to get it straight. As I have said, that seems ridiculous to me, but it (Constitutional law) is not my field....which of course doesn't stop most folks from holding forth. The most practical definition of constitutionality is whatever 5 of 9 members of the Supreme Court say. Not sure if this case will get there or not. We shall see.

Monday, March 22, 2010

Lots of good links

by Ezra Klein focusing on different aspects of the bill.

E Pluribus Unum

....From Many, One.... is the motto of the United States, etched on the base of the statue atop the nation's Capitol, the Lady of Freedom, who is grounded in the United States but looking back towards England. I had a long planned trip to Washington, D.C. this past weekend, and had my boys with me--ages 13 and 9--my 9 year olds first trip ever to Washington, D.C. What a weekend to introduce him to the nation's Capitol. As we emerged from Union Station on Saturday morning and saw the dome, I got goose bumps, in part because I like public spaces, but also because it was a momentous weekend.

He was far more interested in riding the airplane simulator in the Smithsonian that lets you "flip upside down until you nearly puke."

If you haven't visited the Capitol since they opened the relatively new underground visitor center, you should, as it is very well done. The movie they show, E Pluribus Unum, tells the story of the United States as one of trying to fit many people and notions into one nation. The story and this inherent drama, continues to unfold. During the tour of the Capitol, it was great to see it again, but also to experience my 9 year old seeing it for the first time. "Dad, can you believe our whole house could fit inside the!"

Outside after the tour, my boys got a very practical introduction to a key American value, dissent and protest. We waded into the middle of the anti-health reform protest and listened to a bit of it, and took in the scene. "Dad, there are a lot of mad old people here" was my 9 year olds take. However, I noticed more families with younger/adolescent kids of my children's age than I would have guessed and the most vivid image of protest for me is a kid of about 10 chanting 'Kill the Bill' over and over inside a Metro stop later in the day.

The tea party crowd did not have the market cornered on dissent on this beautiful first weekend of spring. When we arrived at the North entrance of the White House later in the day, Lafayette Park was filled with an anti-war protest as it was the 7th anniversary of the Iraq War. In many ways, the signs at the tea party protest and the anti-war protest had more similarities than differences. And I tried to explain to my boys that if you ever find yourself resorting to calling other people "war criminals, nazi's, communists, totalitarians," etc. in political discourse, there is a good chance you are not proving to be very persuasize.

The passage of the Senate bill last night is a tremendous move ahead for our nation. It is certainly not that the bill is perfect, but it provides a flexible framework that can be returned to easily, and which could tweaked and changed in directions generally understood to be left or right. In the end, we have kicked the ball down the field and taken a step toward being able to make our system a sustainable one, but only if we remain at work over the next years and decades.

It is possible that I am sorely mistaken, and that the nation will rise up to demand repeal of the Senate bill framework and that the Republican party will paint an overarching vision for health reform that wins out in the end. I doubt it, but time will certainly tell. And even if that comes to pass, it would not have done so without yesterday's breaking of the log jam that is the status quo of our health care system.

I didn't call it

The New Republic said just after Scott Brown's election that reform would still fly, but I certainly thought it was a very long shot (I said 1 in 20 chance of the House passing the Senate bill on State of the Union day). The policy case was still clear, but I just didn't see a way through the politics, especially the House passing the Senate bill. I am glad I was wrong.

Sunday, March 21, 2010

The Senate bill passes

the House of Representatives 219-212. 2 more votes (one procedural that would recommit the bill with instructions related to abortion to a committee, which would effectively kill it or at least delay it; but it would be surprising for it to pass after the first did). If the second vote loses, then there would be a third vote on the reconciliation bill.

11:00pm. Stupak arguing against motion to recommit....motion designed to peel him and his supporters off. So, the vote hasn't happened yet, but the Senate bill will become law almost certainly.

11:12 Motion to recommit is defeated 232-199 ...will be interesting to see who voted against the bill and against the motion to recommit. The Senate bill will be law within the next few days.

11:33 House passes reconciliation bill, 220-211. On to the Senate. Even if that dies in the Senate, the Senate bill will be law.

On the Cusp

I had big blogging plans for the weekend but didn't pull it off because I was with my two boys (7th and 3rd graders) in Washington, D.C. and just couldn't get to it. If you are reading this, you know all the big news. The deem and pass bad idea went away, now just a vote on the Senate bill and a vote on the reconciliation bill. And a deal was struck with Rep. Stupak whereby the President will issue an executive order that restates that federal money can't go for abortion. This has gotten the pro-life votes of Stupak's bloc, save apparently Rep. Lipinski from Illinois, I believe. The procedural votes have been getting around 220-24 votes in favor; it will take 216 to pass the bill.

Thursday, March 18, 2010

Pass the bill

I have read through the side car bill, and will read it closely tomorrow on a train ride to Washington, D.C. This is mostly as reported and noted in the document released by the President prior to the summit in late February. The most notable change compared to what has been discussed over the last 10 days or so is the exclusion of a new federal role to regulate insurance premiums for private insurance companies; that is not in the side car/reconciliation bill.

The thing I like the least about the side car is the delay of the tax on high cost insurance (until 2018 for all policies) becuse this reduces the cost saving potential of the bill. The lost revenue is made up via applying the Medicare payroll tax to unearned income for those with incomes above $250,000. The cost savings of the high cost insurance tax provision is increased in the second decade and the subsidies reduced in the second decade, making the cost saving attributes of the legislation get stronger over time.

I would gladly vote for this bill because I believe it provides a clear step toward developing a sustainable health care system. We wouldn't be there (to sustainability) if this was the last step, but it is a good step. I should say clearly that I don't believe there is any hope of dealing with cost inflation without moving toward covering everyone first. Or at least there is no practical way to do so....meaning that if we systematically denied care to the uninsured and they got nothing you could slow cost inflation, but I don't believe we as a society will or should do that. We are now in no man's land. The rescue principle operates, but we do not have a practical way of guaranteeing cover for everyone.

As with much of the debate the past year, the focus now is on process. The deem and pass strategy is dumb and bad politics so far as I can tell. But, I strongly prefer the bill passing with this strategy to no bill.

The real focus of what will happen this weekend should be this: either the Senate bill will become law, or it will be defeated once and for all. If the Senate bill is passed and signed by President Obama, 90% of this years reform discussion is over. The reconciliation bill could be defeated in the Senate, or amended and sent back to the House for more discussion, but the Senate bill will be law under either of these scenarios. And if the side car/reconciliation passes as is, the essence of the policy is still contained in the Senate bill.

The Senate bill does six fundamental things. First, it creates an individual mandate to purchase insurance. Second, it reforms insurance to ban pre-existing conditions and recission. Third, it sets up an insurance market in which uninsured persons and small businesses can shop for policies and hopefully benefit from competition among insureres. Fourth, it provides income-based subsidies for middle class persons (families ~$28,000-$88,000, sliding scale) to purchase private insurance and expands Medicaid for lower income persons. 32 Million persons will have insurance in 2019 who will otherwise be uninsured, taking us to 95% coverage of persons legally in the country. Fifth, the bill cuts planned Medicare spending and raises taxes to pay for the increased spending. The CBO says it reduces the deficit by $138 Billion over the first 10 years and $1.2 Trillion over the next 10. Care has been taken to do this in a responsible manner, certainly as compared to legislative actions of the past decade. Sixth, it has a kitchen sink approach to trying to slow health care cost inflation. Most of the big ideas are included.

A vogue argument is that it doesn't do enough to address costs. This is undoubtedly true as compared to an ideal reform (I am certain I know exactly how to fix it if you would just listen to me!), but totally false as compared to the status quo.

Republicans say they will run the Fall 2010 campaign on repeal of the Senate bill should it pass. I hope they do so. We need to work out a way forward. If this passes though, the burden will shift a bit to the Republicans to make the case for what they would do. They will have to shift from defense, to offense. I submit that while they are expert on defense, they have no offense, but maybe I am wrong. They definitely have their big chance to say what they would do with health care if they win the House and Senate. In short, bring it.

And I hope there is a challenge of the constitutionality of the individual mandate. If the Supreme is going to rule it unconstitutional then we need to know that and move ahead. This seems absurd to me, but I am no constitutional scholar. And many members of the Republican party were on record as late as last Summer supporting an individual mandate. If they are truly and absoultely opposed now, I hope they make that clear during the upcoming campaign. I see obvious ways within the Senate framework to make the bill more palatable to conservatives; I don't believe it will be repealed even if the Republicans take over Congress. The framework sets up private insurance market and more than doubles the number of Americans purchasing their own policy....I think if you had been asleep for 2 years and were told that, you would assume it was a Republican plan that was on the cusp of passage.

Passing this bill is step 1 to a sustainable health care system. Step 2 will likely come from the Deficit Reduction Commission as a look at the deficit cannot help but focus on health care, no matter whether the Senate bill lives or dies on Sunday. There will be many steps necessary from now until I reach Medicare age if we are to have a sustainable health care system. The next steps will be inevitable if the Senate bill is passed as we have a framework to return to and tweak. If it fails, it is hard for me to see the next step, how we return to this issue.

My thoughts as this year's reform discussion has gone on are chronicled in the columns and blogs I have posted. As we approach a vote this Sunday, I feel a certain amount of exhaustion, but also a sense of clarity. It is time to act. Pass the bill.

Obama Postpones trip

to Australia and Indonesia. Here is the text of the side car bill. MSNBC says they are within 5 votes. Intrade is over 70%. Here is the CBO score. Here is a nice comparison of CBO scores of the Senate bill, the House bill and the reconciliation bill, section by section. Another comparison.

More on the score

12:30pm: Here is the text of the CBO score....digesting, off to teach class..... Ezra Klein latest.

Ezra Klein has more on the score....he has typically had details before they were public. $130 Billion in deficit reduction in first 10, $1.3 Trillion over combined first 20 years, 32 Million covered by 2019 who would otherwise be uninsured, putting us at 95% coverage for those in the country legally. More as details emerge.

Interesting op-ed by Marjorie Margoles-Mezvinsky who cast what was understood to be the 218th vote for President Clinton's first budget (also known as what gave us the tax code the last time we had a balanced budget). She reflects on losing and says the Dems need to vote what they think is correct. Yep.

Update 10:45am. Politico saying key change in the reconciliation side car is indexing the tax on high cost health insurance by the inflation and not inflation plus 1 point. Keep in mind that health care costs are going up by triple inflation or more in some years. Even with the delay in the high cost tax, the Senate bill high cost tax is being indexed for the first 10 years of the bill (as written by CPI plus 1 point). The reconciliation parts fall away after 10 years (why the tax cuts are running out next year and in 2013) and then the high cost insurance tax will come online in year 11, and if it is indexed for a decade at inflation, it will hit a great proportion of private insurance plans....effectively capping the tax exclusion of employer paid insurance, my hunch is at less than the mean. This is 10 years a big change in coming...I have hopes that we will get rid of the tax exclusion explicitly at some point in the next 10 years, but if not, this is a pretty big long range reduciton of the exlcusion, even though its effect in the first 10 years is quite muted. In short, this cost saving aspect is much stronger in the second 10 years than in the first 10 years.

Update 2, 12:25pm. Subsidies for private insurance are also slowed to grow at inflation on longer run (meaning after 2020). This also increased cost savings in second decade.

Count at 208

per politico....with rankings of the likelihood of switching. Kissel of North Carolina listed by them as 9th most likely No to Yes. The final calculus seems to be how many of the Stupak voting bloc change to no over abortion, but at this point the abortion argument against the Senate bill is not holding much water. I suspect these are folks who want to be no votes and are just using abortion as cover.....but only they know. CBO score later today.

Update: prelim CBO score....reduce deficit $130 B over 10, $1.2 T in next 10 outlays over 10 $940 B. My hunch is that there will be a group move to the bill or away from it once the score is digested. With Kucinich, it is up 1, and the calculus then is you have to get a No to Yes, for each Stupak Yes to No you lose.

Wednesday, March 17, 2010

Kucinich and Shadegg in 2012

Single payer advocates of the world unite! and support a bipartisan team in the next Presidential election....Democrat Kucinich and Republican Shadegg. gotta check out the video. You see how tricky that President Obama is, by not actually supporting single payer he has caused some Republicans to support single payer in order to defeat his plan, or at least win a TV segment.....or something. Who knew?

The 'Mo

seems to be moving toward passage in the House. Kucinich is not a surprise....a single payer guy who was going to vote against this because we would be closer to getting a single payer if this went down? Yea, right. A much larger development is Rep. Kildee annoucing he will vote for the Senate bill. He trained to be a Catholic priest for 6 years, and has been a staunch pro-life Democrat in Congress for 34 years. His move to voting for the bill (he voted for the House bill as one of the Stupak 14) would seem to be the cover for the rest of the Stupak 14. His kicker quote, "I am convinced that the Senate language maintains the Hyde Amendement, which states that no federal money can be used for abortion."

Procedure Stuff

I think the Senate bill is a good step in policy terms and the best that can be got now. I'd vote for it easily. However, I think the deem and pass strategy is dumb. Apparently it has been used before and these procedural discussions are always the same....the majority party says it is within the rules and the minority says it is unprecedented. The same discussion has been had before with parties flipped and will be had again. Yawn.

I prefer the bill passed via 'deem and pass' to the bill failing, but I don't get it. If you are a vulnerable Dem and you vote for the deem and pass rule you are going to get hit with you voted for reform and the procedural jujitsu. The politics of the 'deem and pass' are seems obvious to me that they are worse than simply voting for the bill and then voting for the reconciliation clean up of the Nebraska Medicaid thing, etc. Count me as not getting it.

Update: more.

Problems with high risk pools

Many states have high risk pools, programs that seek to help uninsured persons who are uncovered because they can't get coverage because of their health (pre-existing conditions). Within the current system, such efforts are laudable, and represent the rescue principle--the fact that many persons want to help the uninsured get care, because as much as people say they like markets, they necessarily create winners and losers. A many people don't want people to lose in this way. Here is a write up of the problems of one such effort in Pennsylvania, and the slide toward death spiral that seems to be taking place in this program. Most such programs have this and other problems.

The most fundamental problem with high risk pools is that they segment risk, and seek to provide help to make coverage affordable for a relatively small group of the least insurable persons. If we are going to worry about people being uninsured and seek to cover those who are sick, the correct approach is to spread risk as broadly as possible. The healthy will subsidize the sick one way or another, the question is how efficient and straightforward the subsidy will be.

Tuesday, March 16, 2010

Jump in Cali uninsured

Study from UCLA documenting a huge increase in the number of uninsured during the nearly 1 in 4 non eldelry Californians are uninsured. The biggest increase came among workers where 5.4% of the employed were uninsured in 2007, but rising to 12.3% of workers by 2009. The saying 'so goes California, so goes the country' does not portend good things.

Meanwhile, back in Washington, all the action is behind the scences. Who knows what the actual count is on the legislation? My gut says it is going to pass based mostly on how much conservatives seem to be freaking out and giving sober assessments of how bad it will be for Democratic fortunes in the Fall election if it passes. I wrote on the morning of the State of the Union there was only a 5% chance of the Senate bill passing, so if it does pass, I am not such a good prognosticator. Intrade is up to about 70%. The policy big picture has been unchanged for half a year with the politics going up or down.

It reminds me of what my grandfather said one night in Church after a longish discussion of some issue that I don't remember. The preacher called on brother P.L. to say a few words on the topic (he was a quiet man and often needing prodding). If I close my eyes, I can hear his voice saying....'there's been enough said, it's time to vote.'

Monday, March 15, 2010

Just pass the bill

The House is apparently considering different routes to pass the Senate bill and the proposed clean up or reconciliation between the House and Senate bill. Let me suggest the following: (1) pass the Senate bill; (2) pass the clean up/reconciliation bill. Then the President can sign the Senate bill and they can declare victory and have a big party.

Then the Senate can take up the relatively small clean up/reconciliation bill and at that point, after the law has been enacted. If the Republicans then block the clean up bill they are advocating to keep things like the Nebraska deal. But, if the House passes a convulted we deem this passed if the Senate passes the clean up bill, then the Republican can still be arguing to block the entire thing by blocking the clean up bill.

It is time for the House Democrats to cowboy up. Pass the bill or not but move ahead one way or another.

Update: this says Speaker Pelosi has ruled out passing the Senate bill via the 'we deem the Senate bill passed only if...' option. That is good if true. This says the House will pass a rule that says the Senate bill is deemed passed once the House passes the clean up bill. So, there is some pointless jujitsu from where I stand, but if they pass this rule, reform will pass this weekend with the President signing the Senate bill, and then the Senate taking up the clean up bill passed by the Senate....but with the fate of the overall bill already decided.

Saturday, March 13, 2010

Republicans named to deficit commission

The Republican congressional leaders named their 6 members of the deficit commission to be chaired by Alan Simpson and Erskine Bowles. They are Sens. Crapo, Gregg, Coburn and House members Ryan, Hensarling and Camp. These folks have all supported repealing the tax exclusion of employer paid insurance. There is movement within the Democratic party to realize this is both needed to ever truly slow cost inflation and it is also likely inevitable (certainly moreso among policy types than politicians, but the Republican politician support may be largely becuase they know it can't pass at this time). Even a delayed tax on high cost health insurance in the Senate bill as modified by the proposed reconciliation clean up is the 'camel's nose under the tent' for the $250 Billion per year tax expenditure. Capping the tax exclusion at the national mean (~$13,500 family cover, $5,500 individual) would reduce the deficit over 10 years by between $500 and $600 Billion per CBO. Enacting the Senate bill and limiting (or preferably ending) the tax exclusion via the political cover and broad tax reform solution likely to be proposed by this commission, and we would have the 'we need to do more on cost control' that so many of the brave cost cutters claim to want.

Pass the Senate bill and then turn to capping/ending the tax exclusion, likely as part of an overall tax reform that lessens the political heat on any change to the tax exclusion on its own. We would be in business then per cost control. Don't pass the Senate bill and this Comission must tread much more lightly in health care because of the lack of no coherent means of addressing the uninsured, and the way they now get care influences cost inflation due to cost shifting.

You say there is no way the commission will lead to anything? Maybe. But, if the past is a perfect predictor of the future with regards to fiscal sanity, we are sunk in any event.

Friday, March 12, 2010

President delays trip to Australia

per Robert Gibbs via twitter this morning. It rolls by a week from tomorrow or dies.
Update:Pelosi says vote by next weekend. Update on Saturday: Pelosi predicting win within 10 days....not clear exactly what state of the process is.....guess we will have to see what happens.

End game

approaches, with some much needed clarity coming to bear. As Pelosi says, the choice has to be made.

The House has to pass the Senate bill and the President sign it before a reconciliation with tweaks can be begin per the Senate parliamentarian. And once they are taking up a reconciliation bill after (if) the House passes the Senate bill, the question of the overall bill will be mute. It already got 60 votes in the Senate, and if it gets a majority in the House the President will sign it immediately. At that point, trying to stop the reconciliation bill in the Senate will mean trying to maintain the Nebraska deal, for example, so I expect the reconciliation bill could turn out to be a bit of a whimper in the end. If the House had used a rule that only 'passed' the Senate bill if the Senate adopted Stupak-like abortion language in a reconciliation bill, the Senate could have still blocked the entire thing by managing to defeat or delay forever the reconciliation bill. But, the Senate parlimentarian's ruling along with the decision that any Stupak-like abortion language can't be included in a reconciliation bill, has rendered the Senate largely irrelevant for the last act. These two decisions may make it harder for the House to pass the Senate bill, but they have also made things much simpler and clearer.

Time for everyone in the House to stand up and be counted.

Thursday, March 11, 2010

Senate parliamentarian

rules that House must pass Senate bill and the President must sign it before a reconciliation bill getting rid of the Nebraska deal, etc. can be passed. Makes sense and makes it clearer. Really guys, pass it or not but move along....the policy essence has been unchanged for half a year.

Reid letter to McConnell

Sen. Reid letter to Sen. McConnell announcing his intention to use reconciliation after House passes Senate bill. Reid writes more clearly than he speaks.

CBO new score of Senate bill

fairly similar, but done more detailed and accounted for the shift in preventive care services that happened just before the vote, the provision that is most different from what they scored in December. They say the bill reduces deficit by $118 Billion over 10 years instead of their Dec. 19 assessment that said $132 Billion, and they have also now accounted for the fact that obviously the bill wasn't law on Jan 1, 2010. This is not a score of the provisions the President released that would be modifications to the Senate bill that would be introduced should the Senate bill be passed by the House.

Are too many heart caths done?

Yes, so says a study from Duke. Around 6 in 10 patients getting a heart cath don't have any blockage. Now, the point of the heart cath is to figure out if you have blockage, but if 6 in 10 show no, the question is whether there is a less invasive (and less risky to patients) and cheaper way to figure out there is no blockage.

Lets think about how we might address this issue, focusing on Medicare for a second. The Senate bill includes an Independent Medicare Advisory Commission. This is the type of stuff on which they would focus. When should a cardiac cath be paid for by Medicare, and how should in be reimbursed. The current state of nature is that Medicare will pay for it if I doctor says you need it. And the doctor and the hospital will get paid more for doing this test than another less invasive test. So, the current system has incentive to over provide.

And the definition of over provide here is the study saying 6 in 10 tests showed no blockage. If there was never a test with no blockage, you would be under you are looking for the 'correct or appropriate' rate of provision, which is not so easy to figure out, even conceptually. Stick with me.

Medical malpractice. If the test is overdone, some of it could be driven by fear of getting sued. However, the evidence on the degree to which reforms of medical malpractice actually reduce the cost of health care is not so strong. Texas is typically held up as a poster child for malpractice reform. Doctors malpractice premiums have dropped, but not the cost of medical care. That is likely because of the fact that what gets termed over provision has multiple motivations, first and foremost, that doctors and hospitals get paid to do this. Changes in medical malpractice won't have as much effect on this as most think.

Change the way the providers are paid. In simplistic terms, if physicians are salaried, they have no incentive to over or under provide. However, even a physician who is salaried understands that the volume of procedures done influences the bottom line of their employer (say if employed by a community hospital) and therefore their salary. So, just moving toward something like salaried docs won't get rid of the incentive to over provide.

Change the cultural expectation that more is always better. Patient preferences and desires are very important in driving this. Presumably, choices are given to the patient in these situations whereby they can have a cath or they can do something less invasive. However, this study looked at folks with some chest pain and some abnormal stress testing. So, they are scared and/or in pain. The way the choice is provided will have a tremendous impact. This is about physician/patient communication and how people decide. So, we have a cultural preference for more, over laid with a situation in which a person is scared and vulnerable, so I suspect the people who get this are given a choice in which the physician says 'you should do it' and the ones who don't get it done are responding to a doc saying 'don't do it.' This will never change.

Market or expert rationing? The IMAC approach can be understood as expert driven rationing. Seeking to answer some of the questions raised by this study, when should test x be done, and then moving to either limit the use of a test/technology in given circumstances and/or altering the payment to lessen the incentive to over-provide (so called 'bundling' of care, or moving toward capitation based payments and away from fee for service).

This scares people, mainly because they assume more is always better. And this sounds like sometimes getting less. Yes. Because the test appears to be over used. And it is not risk free. Some will say, lets let the market fix it. That phrase makes great sense culturally to Americans, but what does it mean?

Paul Ryan's proposed fix for Medicare goes like this. If you are 54, when you turn 65 you will not be enrolled in Medicare. Instead, you will be given a voucher with which you can purchase private health insurance. Now, the voucher will be worth less than what Medicare per capita spending will be in that year for the persons still in Medicare. It will be set by taking the Medicare per capita expenditure next year and letting it rise between general inflation and actual health care inflation for a decade. This will do several things:
*reduce the federal government's costs for insuring elderly persons.
*shift more of the costs to individuals
*the two items above should slow the rate of health care inflation

How would this arrangement influence the cardiac cath story? I think in the following ways:
*probably reduce the volume of cardiac caths because people face more of the true cost of getting one, and presumably insurance will pay less for them.
*it is not clear whether unnecessary tests will be the ones most likely to be avoided. There are so many variables at work. How will private insurers alter payment for such tests? Will they set standards for when such tests can be ordered which will reduce the number of tests? Will insurance companies have to insure all comers? The voucher amount would differ by variables related to risk, but the details are murky.

The capping of the federal government's cost for insuring elderly folks is a blunt tool, and it is not clear how all the effects will work out. However, when you get down to the patient encounter level: chest pain, and an abnormal stress test, I guarantee you that fear and wanting reassurance from your doctor will be foremost in you mind and not 'shopping around.'

So, it seems clear that we overuse expensive technology. But, it is hard to do anything about it. There seem to be two choices out there. Expert driven physician rationing of care that provides guidance of when tests can and cannot be done, presumably with options that allow discretion. Or a voucher-based approach that fixes the federal government's costs and assumes the rest will work out. Both approaches have as their goal reducing expenditures over the level they will be with no intervention.

When the rubber meets the road, if we reduce the rate of doing this procedure, either Medicare or a private insurance company will have to intervene and place a constraint of the use of this procedure, or at least on their paying for it. The country has to figure out which one it prefers to be involved in this decision.

The barrier now

is the House acting. Ezra Klein has it about right. The House has to pass the Senate bill and then they can try and do a reconciliation bill clean up. The biggest barrier now seems to be institutional hatred of the Senate by the House, with a fake abortion controversy second. In the end, if the House can't pass the Senate bill the story is that the Democratic party can't govern the country. It is harder to govern given the type of ideological rhetoric used in opposition, but in the end that is like saying no fair the other team shooting three pointers if you lose a basketball game. Strident rhetoric is the best play the Republicans have, because they have no credible health reform offense; they have ideas, are good on defense, but have no offense. You have to expect them to run their best play. And you have to go ahead and govern. If the House doesn't pass the Senate bill the primary message heading into the election for the Democratic party will be we can't govern the country.

More on health reform as poker and who plays the best from TNR. And I revised the above....earlier said have no ideas and no offense. It is they have ideas, but no offense. And Barone in WSJ on the math in the House.

Wednesday, March 10, 2010

People don't really want to save money

David Leonhardt with a nice article noting that everyone says they want to slow cost inflation/reduce spending....until you try to slow cost inflation/reduce spending and then they go nuts. He further notes (correctly in my view) that it is certainly easy to say the Senate bill doesn't do enough to address costs....but the status quo does nothing. And many of the folks leading the way saying 'this doesn't do enough on costs' have no track record of trying to address costs in the health care system.

Ryan's roadmap doesn't raise enough revenue

When Paul Ryan sent his Roadmap proposal to CBO they didn't score the tax revenue side, but assumed that receipts would be equal to 19% of the GDP. The Tax Policy Center, a joint initiative of Brookings and Urban have estimated that his tax reform would raise 16.8% of his plan won't balance the budget. His plan is useful, because it does say 'if the tax system brought in 19% of the DGP, here is what cuts would be necessary to balance the budget and pay down the debt.' It is just that his proposed tax code ($25,000 personal exemption, 10% on income from 25k to 100k, and 25% on all income above. It would be interesting to see the Joint Committee on Taxation score Ryan's proposal to see how close to what Tax Policy Center found....they score tax side of proposals.

Again, his laying out of the cuts he would make is useful, but we will have to have something on the order of 19-20% of GDP in tax receipts to have a hope of fiscal sanity.

Update: Rep. Ryan responds here...saying that tweaks can be made but that taxes being too low is not the problem. Actually, it is part of the problem given the spending commitments....taxes will have to go up in terms of percent GDP from what they are (I am somewhat agnostic about the mix/type of taxes used to collect the revenue) and cuts will have to be made. Keep in mind our tax receipts given a normal economy should bring in around17% of GDP.....which is roughly equal to what we spend on military (5% GDP), Social Security (5%), Federal health (Medicare, Medicaid, VA 5%), and interest on the debt (2%). Everything else (FBI, homeland security, NIH, federal highways, etc etc is straight to the deficit if tax system brings in 17% of GDP.

Tuesday, March 9, 2010

Profits and rising insurance premiums

One of the ways this current health reform discussion has differed from the Clinton Plan discussion is that insurance premiums seem to be rising more rapidly than normal in the midst of the discussion, whereas they seemed to slow somewhat during the period 1993-94. And there has been a great deal of discussion about profitability of insurance companies and what sorts of regulations might be needed given profitability. A few brief comments.

Why are some insurance companies profitable? Because they take in more in premiums than they pay out in claims [you heard it here first]. Many find the amount of money earned in profit to be obscene, but that is of course, a normative claim. Some think it is immoral to have for-profitness in health care and I follow their logic, and their perspective. But, the reform ideas discussed this year, stick firmly with, and expand the use of private health insurance. There are nations that cover everyone using private insurance (Switzerland and the Netherlands) so it is possible to use the vehicle of private insurance for universal coverage in an affordable manner.

Keep in mind that private insurers consistently paying out more than they take in would also be bad for consumers, because the insurance company would fail because they would be insolvent. And policy holders would be left holding the there is risk aversion to this happening. When states regulate insurance they must strike a balance in protecting consumers--if premiums are too high, or too low, consumers could be harmed.

Is increasing premiums due to price gouging? I am not sure. Some of the profits seem quite high, and the rate of increase in premiums also seem quite high. But, this may simply be signalling the increasing instability of the system, with healthier persons in the individual purchase market dropping cover when the economy is bad. Either story points to the need for reform. What things would help to lower premiums:

*force/get more people into the insurance market. This is the point of the individual mandate. This is especially important because currently uninsured persons do get care, but their costs are socialized throughout the system in ways that are hard to understand and predict, and they tend to receive care in the most inefficient settings. Not to mention that they usually get care late and suffer health effects from delays.

*slow down the rate of increase in using health care. A key reason that health care costs and premiums rise is that people seem to like to use health care. There is a link between use of care and premiums. There must be. There is certainly a societal disconnect whereby many persons say they want to save money in health care (by which they mean slow the rate of growth), but any time you discuss a policy that help bring this about, people go insane talking about rationing. You can't have it both ways.

*slow down the increase in intensity of care. This means that over time how we treat disease or condition x is getting more intensive....meaning more stuff and time spent. The rate of intensity increase is going up lots faster than inflation. There is mixed evidence on whether it is worth it or not, and you would expect it to differ across condition, etc. Again, everyone says they are for this slowing down until you try and do it and then they freak out.

*you could reduce the benefits that are mandated. However, you really need to provide some definition of what is insurance so that consumers know what they are buying. If you totally deregulate or move in that direction, premiums will fall, but when people get sick they will discover premiums were low because of all sorts of back end exclusions. [if you get cancer, the first $10,000 is covered, but you pay the next $50,000....donut hole writ large]. There is of course a balance to be struck here, but I favor expansive benefit definition and allowing more options in degree of out of pocket cost that you face when you use care. When one goes up, the other goes down.

So, there could be some good that comes from adding a federal regulatory framework to the individual insurance market that has been proposed by President Obama. But, the most important way in which reform will address the issue of rising premiums in the individual purchase market is by getting more people into the risk pool in the first place.

Monday, March 8, 2010

Kucinich still no, abortion front and center

Rep. Kucinich, a leading liberal in the House today said he would vote no on the Senate bill because it does not contain a public option and does not move toward a single payer (Medicare for everyone) which is his preferred choice. And several Dems who voted yes have made clear they will only vote yes if the Stupak language or something like it is included in a clean up reconciliation bill. Stupak said today he is more optimistic than he was a week ago.

There is no policy discussion left, just abortion politics and the Democratic party deciding whether they can govern the country or not. There have been a variety of times that reform seemed dead over the past year.

*When the original CBO score of HR 3200 came back in June 2009, saying the bill greatly increased the deficit over 10 years; they went back and greatly increased the fiscal responsibility of the bill
*The August recess and fictitious death panels
*The President's speech in September bought some time and the Senate finance committee passed a bill with Olympia Snowe's vote
*And Sen. Reid added the public option to the Senate bill, lost Sen. Snowe and eventually removed the public option from the Senate bill
*The Scott Brown election

It could have ended at any of these times. But, it is still alive.

As many have noted, ideas like reform die when all goes quiet, people pledge support but say we don't have time now we will get back to it. Much the opposite, the President has forced this back front and center. He must think he can deliver the votes in the end. The day of the State of the Union, I said there was a 5% chance the Senate bill was passed by the House. I think now I would say the chances are 50-60%. We will see.

Sunday, March 7, 2010

Reconciliation history

Interesting chart giving outlines of how budget reconciliation has been used over the past 30 years, with who controlled congress and the white house when used, effect of deficit and the vote on final passage.

The House passing the Senate bill will not require reconciliation. Reconciliation is being discussed to enact several relatively (with respect the overall Senate bill) small changes to the Senate bill should the House pass it.

Friday, March 5, 2010

Abortion and the tax exclusion

I have been writing about this for awhile.....the abortion debate as defined by the Stupak amendment is a concocted controversy and not based on principle....the federal government already subsidizes abortion via the tax exclusion of employer paid insurance and has done so systematically since Roe v. Wade became the law of the land (tax exclusion has been in place since WWII). I don't mean to imply that abortion is an irrelevant issue, or that Rep. Stupak is not earnest in his opposition to abortion, only that it doesn't belong in the health reform discussion. It is about as devisive an issue as there is. I don't think I have ever met anyone who changed their mind about it.

The members of the House Democratic caucus pushing this are either (1) trying to kill reform in a way that gives them an out, (2) don't understand one of the most basic aspects of the US health care system (the tax exclusion), or (3) they like attention.

Individual mandate and are docs the problem?

Paul Starr with a useful suggestion about an individual mandate....modify it and let people opt-out of the mandate, but in doing so, they forgeit their right to federal subsidies such as Medicaid for 5 years. I would go one step further, and say they lose right to Medicaid and also waive their rights to be treated under the IMTALA laws that mandate that uninsured persons be treated in emergency rooms if that facility treats Medicare and Medicaid beneficiaries (ie all of them). If persons opted out of the mandate, they could apply for insurance but insurers could underwrite and exclude them based on their health. This is a way to both allow people to exercise their freedom as well as to reduce the free rider problem.

An interesting interview with a doctor saying that doctors are not innocent bystanders to the rate of cost inflation and criticizing them for seeming to say lets do reform so long as our income stays the same. His idea of each specialty identifying a 'top 5' procedures that are commonly done that typically don't help patients much but that cost alot is a good idea....and the kind of work I would hope that an Independent Medicare Advisory Commission would undertake. You don't like such expert driven rationing? With Ryan's road map, you really have two driven rationing or vouchering of Medicare and letting the market work it out (with the it being rationing). Status quo is bankrupt program. Our we could just jack the payroll tax......but you really have to pick one, or some combination. What this doc is writing is sort of what I had in mind when I wrote this in terms of 'docs leading the way.'

Thursday, March 4, 2010

Klein and Ryan

Good stuff from Ezra Klein and Paul Ryan talking about Ryan's comments at the summit (wonky).

End of life spending

Here is a post from last Summer on Medicare and end of life costs with lots of links. Here is the paper I did with colleagues here at Duke that shows hospice reduces Medicare expenditures that is referenced in this fiscal times story.

Ad Nauseum

More on the policy reality doesn't match the rhetorical hyperventilation. The 'can you guess who said it' buried in the post is entertaining. It will be interesting to watch Mitt Romney try and run for President, and away from his health plan which you would think would be a feather in his cap.

Wednesday, March 3, 2010

Intrade Market

The intrade market for the contract 'health reform passes by June 30' went up 14 points today and now sits at a last price of 55....with a maximum contract price of 100. This means the intrade market puts the likelihood of passage of reform by June 30 at 55%. It hasn't closed above 45 since Scott Brown's election until today.

Blue Dogs and Abortion

The calculus seems to be how many Blue Dogs who voted no may switch since the Senate bill is center of House bill and how many Stupak amendment voters will bail due to Senate abortion language. The net must be +1 in favor for the Senate bill to pass. On a related note, I saw Stupak on TV tonight and he seemed to inching back from the brink and saying a separate bill reaffirming the Hyde Amendment would be ok with him.

Fiscal Times

A new online publication launched this week called the Fiscal Times (a million laughs, I know). But, it has some interesting stuff, including the first of a 5-part series on the cost of care at the end of life. I talked with the author about his series and some of my research that shows that hospice saves Medicare money while improving quality of life (there aren't so many examples of this dual occurrence).

Other interesting items include this one on tax expenditures in the federal budget such as the exclusion of employer paid insurance premiums from income, an article on bipartisan indifference to slowing health care cost inflation, a profile of Paul Ryan, and lots of other stuff.

It appears to have a variety of voices/views with columnsts/bloggers ranging from Cato Institute types to former Gore staffers. Check it out.

President's Speech

Has just been completed....I watched as I cleaned my office. This is the first time I have heard him couch the proposal in terms of the wide variation of possibilites: on the left a 'gov't run health care system' and on the right a 'reduction of regulation in the hopes that things would improve' and placing 'his proposal' in the center. In policy terms, the Senate bill is quite center and he invoked the notion of building on the current system.

Update: here is text.

The only other thing that caught my ear was his saying something along the lines of 'the cost of our approach is about $100 Billion per year but it is paid for primarily from within the system because much of what we spend in non productive.' Something like that....I can't find the text yet. I was thinking, 'thanks for the set up Sen. Coburn' on that one. As I wrote last week, the most puzzling part of the Summit for me was Sen. Coburn absolutely hammering away that one in three dollars spent on health care is non-productive, which actually helps make the case for financing coverage expansions via Medicare cuts.

I thought the President was also effective at asking for an up or down vote on health care. This is of course laying the stage for a clean up bill after the House passes the Senate bill. I found him persuasive. Someone who thinks all of this is a socialist plot will not. The question is what will folks in the middle think? I really don't know.

Finally, I thought his statement that he wasn't sure of how the politics of this work out, but that he thinks that it is the right thing to do at this time regardless of the politics. Amen.

Update: interesting article focusing not only on the politics and policy of health reform but the need to explain/make the case to skeptics and what reform says about first year of Obama presidency.

The Definition of a Republican

is the main thing that has changed since 1993-94 when the main Republican alternative to the Clinton plan was an individual mandate, setting up a private market, income based subsidies to help persons purchase cover, and national regulation of what insurance covered. This according to Dave Durenberger, a Republican Senator from Minnesota, back in the day in an interesting interview with Kaiser Health News about a week ago. I wrote this back in October on this issue.

As this health reform discussion comes to a conclusion one way or another, I think the big picture of what has happened is this. As the policy details of reform moved center, the rhetoric in opposition moved toward the apocalyptic. Has there been a true change in what Republicans/Conservatives think on reform? Or was this just blocking President Obama? Time will tell.

Fundamental difference

As the reform discussion has waxed and waned, different arguments against the Senate bill framework (individual mandate, set up private market for uninsured to buy in) have been in vogue. I think the most fundamental objection at the end of the process is that an individual mandate limits personal freedom. Of course it does, just as every law ever passed does. You have to decide if the limit of freedom is worth it.

The most popular aspect of the Senate bill is the ban on pre-existing conditions and ending recission (denying cover after someone gets ill due to say there was a pre-existing condition that wasn't disclosed). The individual mandate and the insurance reforms go together. And the general approach of reform normatively assumes that everyone should be covered. This assumption could be based on some notion or morality, or could be more practical. If the uninsured get care eventually, we might as well cover them in a more straightfoward manner. I believe the only way to ever have a hope of controlling the rate of cost inflation is to first cover everyone and end the cost shifting. There are a variety of reasons in this vein.

Republican opposition to a mandate based on limits to freedom is a coherent argument, meaning you could believe such a mandate is a limit of freedom (of course it is, just like every other law), and that this limitation is not worth it. Fine. You will never get to anything near universal coverage without a mandate of some sort, but you could decide freedom was more important than universal coverage.

But this logic should then lead to a denial of care to persons who are uninsured. With freedom comes responsibility. If you are free from having to purchase insurance, shouldn't I be free from having to pay for you if you are not covered? Republicans aren't quite ready to go this far, at least not many of them or those who have to get elected. The hardest thing for them politically is how to appeal to the fact that even persons who don't like mandates like bans of pre-existing conditions. The Republican answer is high risk pools. If you took Republican opposition at their word, you could say their policy is to be opposed to mandates on freedom grounds. But, to say those who are uninsured/uninsurable due to health conditions are worthy of being helped, and their preferred method is high risk pools. This implies a sort of 'freedom with a net' approach in which some are worthy of extra help depending upon the reason they find themselves uninsured.

The biggest problem with high risk pools comes from the basics of insurance. The best way to deal with risk is to aggregate as much risk together in one pool in order to spread/share the risk. High risk pools do the opposite, and put the sickest worst risks together. Even adding more cases of high risk to a high risk pool is not likely to reduce the premiums because risk pooling of anything (health, car, homeowners) works because the healthy (or those who don't crash) subsidize those who are sick (and do crash). Here is a useful entry about the inevitable problems is high risk pools (30 states have them now). They are not only chronically underfunded, but they likely also serve as adverse selection magnets as people forego and wait until they get sick.

It is useful sometimes to pull back from the gory details and think about what you think.

Tuesday, March 2, 2010

Conrad and Reconciliation

Ezra Klein with interview of Sen. Conrad, chair of budget committee on reconciliation, and what he did and did not say.

President Obama's Next Step

The White House released a letter this afternoon identifying several Republican ideas that they seem to be willing to add to the President's proposal. The text, released on the White House blog is here. The President had been set to make a speech or statement regarding the way forward sometime tomorrow. It is not clear, but this could imply there have been some discussions with select Republican on different ideas, and this letter is one last chance to stimulate some final negotiation/agreements on add ons.

The items highlighted in the letter are noted in terms of Republican ideas that he is open to, or adopting. They include:

(1) Senator Coburn's waste, fraud and abuse notion of undercover 'stings' on doctors and providers. The President notes that his document of last week adopted several Republican proposals on waste, fraud and abuse, which is correct.

(2) Increasing money to states for medical malpractice demonstrations....the Pres notes his proposal has $23 Million for grants to states for medical courts, and today says he will appropriate $50 Million more toward this. He places this all in the context of agreeing with/adopting provisions of the Patients' Choice Act (PCA) which Sen Coburn and Burr and Rep. Ryan and Nunes sponsored. While I expect many will say this is not that much or not enough, it is the case that it is in line with the PCA, the most comprehensive Republican alternative. In many ways, the most puzzling aspect of the PCA was that it didn't propose more on medical malpractice. The appropriation lanugage v. authoriziation means guaranteeing these demonstration grants will be funded.

(3) Says he is open to Sen. Grassley's suggestion/worry that if expanding Medicaid by 15 Million persons, need to expand physician payment for Medicaid in a way that will make it more attractive for doctors to treat Medicaid beneficiaries.

(4) Says he is open to including language that will ensure that high-deductible plans are able to be offered in exchanges per Sen. Barrasso's comments at the summit about catastrophic coverage. The Pres says he thinks they are now allowed, but willing to clarify. This is the biggest of the developments here (more on that below).

(5) Says he will include language to end the Florida Medicare Advantage deal that Sen. McCain pointed out at the Summit. In addition, he already had included an end to the special deal for Nebraska Medicaid.

The biggest deal is #4. If there is a move to make clearer or easier a route to high deductible plans, then such plans may plausibly be more palatable to younger persons, the persons that might be most likely to not follow an employer mandate. As I noted in my last News and Observer column, a move to let an individual mandate only apply for catastrophic cover would be the likely direction of an actual negotiation on policy terms between the Senate bill and the Patients' Choice Act, for example. There is not really any evidence such a negotiation is underway behind the scences. However, moves toward making a high deductible plan more readily available in exchanges could help entice younger, healthier individuals act on an individual mandate.

The President also clearly stakes out his position that 'piecemeal reform' is not the best way forward. This stands in contrast with Sen. Alexander's notion at the summit that we don't do comprehensive well.

Next step is the President laying out the way forward, presumably tomorrow. Then, can the House find 216 votes to pass the Senate bill? At this point, based on how members of the House voted in November on the House bill, they should be 1 vote short. 220 voted yea (1 Republican, Cao who says he will vote no; Murtha died; 3 Dems who voted yes have resigned to run for other offices since) so based on how they voted in November, that is 215 for, 216 against.

The President and the Speaker have to find 1 Democrat to change their vote yes, while maintaining all those who voted yes in November. Leading candidates to switch would be 3 retiring Democrats, and Dennis Kucinich, who is a single payer guy and voted no because the House bill didn't do enough....and in his terms, the Senate bill does even less (no public option, etc). Does he prefer the status quo to the Senate bill? We will see.

Any blue dog who voted yes in November will get the full monty on being a socialist, wanting to kill your grandmother, hating America, etc. based on that vote....if they switch to no they will also get 'he was for it before I was against it' and will generally be (rightfully) understood to be wusses (this is a technical term). And the Senate bill should be much more to their liking in any event as it is more center than the House bill. So, I think those who voted yes should hold.

There are, of course the 14 Dems who voted yes and linked their vote to the Stupak abortion language. I have no idea how that plays out. I have never gotten Stupak as an actual health policy consideration, since using the logic of Stupak means that the federal government has been subsidizing abortion via the tax exclusion of employer paid insurance if one woman has had an abortion paid for by employer sponsored insurance since Roe v. Wade came into effect. I have always assumed these folks were a mixture of people who wanted to kill reform but have an excuse and/or folks who thought this was a way to advance their advocacy of their abortion position. To the extent these folks are more conservative than average in the Dem caucus, they should like the Senate bill more than the House bill.

The morning of the state of the Union, I said 5% chance of a comprehensive bill when making the case for the Senate bill. Today, I say the chance is better, because of the belief that the President can convince 1 Democrat to change. However, I am not sure of how the abortion language plays out...that is the real wild card, and the way this all goes down if it does.

Update: 8:55pm: I heard a radio report with the AP saying there are 10 Dems who voted no on the House bill in November who are considering/open to voting yes on the Senate bill. It would seem very likely 1 of these will change.....but the 14 Stupak abortion votes remain the wild card.

Monday, March 1, 2010

Excise tax and process

I understand the only way to pass a comprehensive reform this year to be for the House to pass the bill passed by the Senate on Christmas Eve. It will take 1 roll call vote to enact this into law (assuming the President signs it). This does not involve reconciliation.

Reconciliation would come into play to enact modifications to the Senate bill, essentially along the lines of the agreement that was emerging between the House and the Senate when Scott Brown's election took place in mid-January. For example, ending the Nebrasksa Medicaid deal had been agreed to by House and Senate leaders back in early January, and a deal to allow the tax on high cost insurance start later for labor Union health plans leaked out. This was basically undoing one deal that people hated, but creating another.

The Senate bill has been preferred by the President for some time, and it was functioning as the de facto starting point for House/Senate negotiations in early January. And the President clearly preferenced the Senate bill last week in the brief document he put out that listed a variety of tweaks to the Senate bill. Among them, ending the Nebraska Medicaid deal, adding some Republican ideas in the area of fraud and abuse, but also undoing the deal the preferenced labor Union insurance policies. But, in doing so, he proposed delaying the imposition of the tax on high cost health insurance for all plans until 2018 and raising the value at which the tax applies. This did away with the political problem of favoring unions, but also delayed one of the key aspects of the bill with promise to slow the rate of cost inflation.

In short, the tax on high cost plans has been delayed and the level at which it will be imposed has been raised (meaning fewer policies will be subject to the tax n 2018). This is not good from a cost saving standpoint, but I think that some are overstating the proof that this means such provisions will never come about. This is my take of how it would go.

First, the House passes the Senate bill and it is law. There is no reconciliation and therefore no sunsetting (provisions end after 10 years; this is why Bush tax cuts go away as default, because they were passed via reconciliation). Under the Senate bill, the tax on high cost insurance starts in 2014. The threshold is $24,000 for a family plan. It is indexed at 1 percentage point above the CPI, meaning much slower than actual health care inflation. Thus, over time, more and more policies will run up against this limit.

Second, a reconciliation bill will be passed that among other things, delays imposition of this tax until 2018 and with a higher value for the tax to apply.

Third, in 10 years, the reconciliation piece and provisions sunset, meaning, go away, cease to exist. The Senate bill, does not. And the tax of $24,000 will have been indexed at 1 percentage point above CPI for 10 years. This tax on high cost insurance will then be in effect, beginning Jan. 1, 2021. We don't know what the value that will trigger the tax will be, because we don't know what inflation will be over the next decade.

Fourth, Congress could pass a new law to do away with the tax on high cost insurance (say in 2020), but in doing so will presumably have to come up with 'pay fors' to offset the revenue that the CBO will say is going to be lost from the imposition of this tax. Read this as something else will have to go from somewhere, and it will be a lot of money.

So, I would prefer to not delay the imposition of the tax. In fact, I would prefer to just severely limit and move toward completely ending the tax exclusion of employer paid insurance, but something that radical would certainly take Republicans and Democrats working together and that seems impossible right now. However, folks saying the effect of the tax on high cost insurance is now essentially completely gone, I think, are incorrect. It is certainly delayed.

In one sense, this could be viewed as conceptually similar to many of the provisions that Rep. Paul Ryan (R-WI) has proposed for Medicare. There is essentially a 10 year warning that says come 10 years from now, things are really going to change. In the same way, 10 years from now a tax on high cost health insurance with a pretty big punch (meaning 40% rate on excess amount, with more and more policies above this limit because of how it is indexed) is coming on line. The point of this tax is to be avoided by folks with insurance having less insurance. The way you avoid it is to have less generous insuarance, which will slow cost inflation. So, this lead time could induce some of this of behavior in the private market as employers and employees negotiate around wages/benefit tradeoffs differently as we approach 2021 because of the coming of this tax. In this way, even the delayed tax could have more impact on cost savings in the first 10 years of the bill than most are saying.