Thursday, May 27, 2010


One of the strongest trends in health care delivery is the rise of the hospitalist. They are docs who work only in hospitals. There are many reasons that the old model of community doc who sees patients in their office and in the local hospital are going away. And the rise of the hospitalist is also driving an increase in the number of physicians who are paid a salary. There is evidence of decreased length of stay and reduced readmission with hospitalists, and they are present to the hospital at all times. Issues related to the hand off of the patient from the hospital setting back to the community exist.

Monday, May 17, 2010

Good presentation about budget situation

The CBO Director has new presentation up and available here. Note especially slides 7 through the end, with slides 10 and 11 giving the expected makeup of the 2020 budget. All of these are shown assuming the 2001 and 2003 tax cuts are extended and the AMT indexed, and then assuming this doesn't happen. This is well said, from his slide 13:

"The United States faces a fundamental disconnect between the services that people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services."


Saturday, May 15, 2010

Rounding errors

Eric Cantor (R-Va) who is the minority whip in the House of Representatives has announced a new budget cutting discussion (YouCut) being sponsored by the House Republicans. You can vote on one of the 5 programs to cut as offered by the House GOP; the winning cut will be introduced for an up or down floor vote in the House of Representatives if they take over the House (actually the web site seems to say they will introduce it now, but I am not sure about that). The budget deficit and the general unsustainability of our current fiscal state as a nation is the top priority as i see it. In one sense, you could say any discussion of priorities and what could be cut is good. However, the programs identified as the 5 choices are laughably small. They are:

*End Presidential Election fund, cut $260 Million
*tax preferences for Unions, cut $600 Million
*end HUD doctoral dissertation fellowships, cut $1 Million
*change TANF reforms, cut $2.5 Billion
*limit community block grants to high income areas, cut $2.6 Billion

The fiscal year 2009 federal budget was around $3 Trillion dollars. That is 3,000 Billion. In one year. The budget categories go like this:

*Social Security 22%
*Defense discretionary 20%
*Medicare and Medicaid 21% (14% medicare)
*Net interest on Debt 8%
*Non defense discretionary 16%
*Other 12%

They have proposed miniscule cuts to the non defense discretionary portion of the federal budget. Now, maybe they are just pacing themselves.....but these proposed cuts are laughable unless you get to the big boys: Social Security, Defense, Medicare and Medicaid.

Anyone telling you they have a plan to reduce the budget deficit but who does not mention reductions in at least one of: Defense, Social Security, Medicare/Medicaid and/or some increase in taxes either does not understand the situation or is dishonest. The long term structural budget deficit is almost completely driven by Social Security and Medicare and Medicaid.

You can also submit your own idea to the website: I submitted the following. Raise the eligibility of Medicare by 1 month per year starting in 2025 the Medicare eligibility age would then be 67, saving between $50-$60 billion over 10 years. The Medicare age would then be unified with the planned increases to the Social Security retirement age. The out year savings (years 11 to 50) would be in the Trillions.

Now if they want to really get the discussion about potential budget cuts started, lets have an up or down vote on that.

Friday, May 14, 2010

More on will employers drop coverage?

NY Times daily health policy question is about what if my employer drops insurance coverage. I agree with the sentiment of the responder, I don't believe them, especially if they are a large employer. But, there is no law and never has been, saying employers must provide coverage. There is a tremendous tax subsidy to workers getting coverage from an employer because premiums are not taxable as income.....wages are lower because of benefits, but most workers don't seem to know this.

If they do drop coverage, starting in 2014 you can shop for your own insurance in the state based exchanges (insurance markets) and if your income is less than 400% of Poverty, you will get a sliding scale subsidy; if you make more than 400% of poverty, you will get no subsidy.

Thursday, May 13, 2010

Recent CBO stuff on health reform

CBO has released several reports over the last few days focused on estimating discretionary spending that may be appropriated in the context of implementing health reform. This post from CBO has links to the other recent posts.

The $105 Billion over 10 that was not included in the March 20, 2010 CBO estimate inlcudes $86 Billion for existing programs that have already been authorized for existing programs; that is why they weren't included in the cost estimate for the legislation. The balance are new administrative (mostly) costs of implementing reform. The prior CBO reports said that such costs would be required and would have to be appropriated at a later time, but that they didn't have the final estimate on the magnitude of those costs. The new estimates are the initial estimates of those costs.

Future appropriations will either have to be offset by increased revenue, reduced spending or they will increase the deficit. Just like everything else that Congress appropriates each year.

Twilight of Welfare State?

Interesting NY Times blog discussion on 'Twilight for the Welfare State?' asking whether Greece problems foretell those coming for the US and whether it is spending, taxes, both, or neither that is the heart of the problem.

Long term deficit problem in US is mostly a health care system problem. The tax code is also set in such a way now that deficits are inevitable, but long term health care cost inflation has to slow in addition to a more predictable tax system that can bring in about 20% of GDP in all federal taxes is needed or else the country will go bankrupt at some point in the next 10-40 years.

Wednesday, May 12, 2010

Taxes lowest in 60 years last year

Report discussing fact that taxes as a percent of income were lower in 2009 that they have been in 60 years. The lower is not a typo. In fact, they have been cut since President Obama took office. About ~$250 B of the ~$800 B stimulus was tax cuts (that will expire in 2011 unless extended). Of course, the only thing worse than tax and spend is don't tax and still spend. To have a responsible federal budget taxes will have to rise and spending will have to drop over projected levels. All the balanced budgets achieved since World War II have come when the total federal tax receipts (all sources) were around 20% of GDP. They were 15% of GDP in 2009 due to recession, and the tax code we have now will bring in around 17% of GDP in a normal economy.

I think there needs to be a reconsideration of the mix of taxes used, but if the federal government's receipts aren't around 20% of GDP we will have a deficit.

There is a certain delusional quality to much of the conservative congressional candidates 'pledging', at least in North Carolina. One of the House challengers who won their primary last week is pledging to restore fiscal sanity to Washington. And this is her plan from best I can tell:
*Continue the 2001 and 2003 tax cuts
*Have further federal income tax cuts
*Have no cuts from Defense, Social Security, or Medicare (the federal spending of these 3 combined, if you include Medicaid, are equal to around 15% of GDP).

Again, the only thing worse the uncontrolled tax and spend, is don't tax, but still spend.

Tuesday, May 11, 2010

Social Security is the low hanging fruit

Brief article noting that fixing social security is lots easier than fixing the deficit problems related to health care. The reason Social Security is lots easier to fix is that its benefits are indexed to inflation (in one way or another; some of the fixes would change the indexing), while health care costs routinely go up 2 or 3 times faster than overall inflation. Medicare (and Medicaid to a lesser extent) both contribute to this state of nature, and also are affected by it. The long term deficit problem is primarily a Medicare and Medicaid problem. The reform just passed lays the basis for being able to address this issue, but the critical question is what are the next steps? What will come next to move us toward a sustainable health care system, and therefore a chance at a sane federal budget.

If the President's deficit Commission did nothing more than propose a fix for Social Security, a capping of the tax exclusion of employer paid insurance, and raising the Medicare eligibility age to put it in line with the Social Security age, that would be a good start. If all they could agree on is a fix of Social Security, then fine.

Thursday, May 6, 2010

Will big companies drop insurance benefits?

A story about some large corporations considering dropping health insurance plans and paying penalties that would accrue if their so-dropped employees got government subsidies in health exchanges. A couple of thoughts about this.

First, I don't believe them. Second, there is nothing to keep them from dropping coverage today, or last year. Third, I wouldn't mind if they did it, because getting rid of the tax exclusion of employer paid insurance is the next step toward having a chance to control health care costs. If all the employers agree to drop employer-based coverage, that is certainly a way to get rid of the tax exclusion! Fourth, it would be very dislocating if it happened, meaning it would change things. But, everyone says the system is messed up and it needs to be dislocated. Fifth, from a research standpoint, it would be fascinating to see some companies drop employer based cover while others did not. You could see what would happen to wages in the company dropping insurance coverage (because employees are mostly paying for the coverage now through lower wages). If employers drop coverage, wages will rise, and tax receipts will increase since wages are taxable while employer paid premiums are not. If all employers dropped cover simultaneously, maybe wages wouldn't rise as much since no company would have as much incentive to increase wages if no one else did...they could quietly collude. Even if that happened (employers dropped cover and didn't increase wages, in which case all econ text books would have to be re-written) then the businesses would have a huge infusion of 'extra cash' in the manner of lower expenses, which presumably would lead to increased hiring.

If FedEx dropped cover but UPS did not, then you would have a fascinating natural experiment.....the number of disserations done on that would be endless.....

Again, I don't believe it, and if it happened it would be a big change, but it is not so clear the change would be bad.

Monday, May 3, 2010

Teaching Docs about cost

Interesting article discussing a trend in medical schools and residency programs to educate physicians about how much health care costs. It would seem that everyone needs more information about how much care costs: doctors and patients. The old diddy that 'I only think about one patient at a time' is not realistic, likely never been true, and if so, helps explain why we spend so much on health care in the U.S. And likewise, patients need to know how much health care costs, not just their co-pay or out of pocket amount, but how much insurance is paying for care as well. This seems quite basic and obvious, but if docs and patients actually knew what care they provided/received costs, it would be a radical change.