Deficit Commission Delays Vote

The President's Deficit Commission delayed its final vote until Friday, but the final report will be released tomorrow. The final report will be a tweaked version of the draft proposal released a few weeks ago by Erskine Bowles and Alan Simpson. I think their health policy proposals are right on target as I wrote earlier, though I don't particularly like their Social Security proposals. I would rather not raise the retirement age, but would rather increase the payroll tax back to the 90th percentile of wages as it was in 1983 faster, and to reduce benefits for high income workers more. For what it is worth, I would prefer raising the Medicare age to 67 (unifying it with Social Security) beginning in 2014, when the health exchanges from the ACA will be fully on line.

Another key aspect of what Bowles/Simpson put out was that it shone a bright light on tax expenditures, or aspects of the tax code that benefit one group of taxpayers over others. We must address those if we are ever to achieve a balanced budget. A balanced budget means the ins (taxes) match the outs (explicit spending [like Military] + tax expenditures [like the mortgage interest deduction]).

The Bowles/Simpson draft proposal released a few weeks ago aimed to balance taxes and expenditures at 21% of GDP; liberals say that is too low, and conservatives say too high. That probably means it is a good place to start. For a bit of history it is worth noting that 21% of GDP would be the highest proportion of GDP collected in taxes at any time the past 40 years (it was close in 2000 at 20.6%). However, it is also worth noting that federal expenditures were higher than 21% of GDP in 1975, 1980, 1985 (22.8% in 1985), and 1990, for example. And the baby boomers were paying taxes in those years, not collecting Soc Security and Medicare. It is hard to imagine spending lower than 21% of GDP without tremendous cuts to Military, Social Security or Medicare. Federal spending of course was much higher in 2009 during the terrible recession (24.7% of GDP).

My point is that 21% of GDP would represent a historical raising of taxes, and cutting of expenditures. It will be interesting to see what target the report to be released tomorrow sets.

If you think 21% is too high, great, say what spending you will cut. If you think it is low, great, say what taxes you would raise.

Taxes and Spending as Percent of GDP, 1970-2009

Year	Taxes Collected, % GDP	Spending, % GDP	-Deficit/+Surplus, %GDP
1970	19.0	19.3	-0.3
1975	17.9	21.3	-3.4
1980	19.0	21.7	-2.7
1985	17.7	22.8	-5.1
1990	18.0	21.9	-3.9
1995	18.4	20.6	-2.2
2000	20.6	18.2	+2.4
2005	17.3	19.9	-2.6
2009	14.8	24.7	-9.9

source: my calculations from CBO sources.

Federal Worker Pay Freeze

President Obama is announcing today a 2-year federal employee pay freeze. This will save about $28 Billion over 5 years, and $60 Billion over 10 years.

This is a beloved policy of Conservatives, and the President has now played this card. Politically, they cannot play it now, though apparently they must pass it. It is a modest savings, but it is a savings of federal spending. Of course, it is a reduction of peoples wages and therefore their ability to spend as well....

It is possible that this move is related to the looming vote of the President's Fiscal Commission which is due to come on Dec. 1. Perhaps a deal is in the offing and some members of the Commission wanted a public move by the President to show that he is serious?

We need to develop a long term plan for a balanced budget, and the Bowles/Simpson 'chairman's mark' is a good place to start. And Liberal/progressive deficit reduction plans are starting to proliferate. Of course, Conservatives have long talked about deficit reduction and balanced budgets, but they have mostly talked about it and not acted. It would be good for the country, and good politically for the President, to call the bluff of conservatives and begin to seriously engage the difficult work of developing a plan for a balanced budget.

New Book on Palliative v. Hospice, etc.

Good post from Maggie Mahar reviewing a new book that is a collection of essays on palliative care edited by Diane Meier and others.

Engage with grace

Here is a one-slide tool designed to help families think through decisions related to health care when they are very ill, before they are very ill. The questions on the slide are designed to be conversation starters. The conversation is best started before a family faces the very difficult questions related to health care at the end of life. If a holiday is a practical time to start this conversation, this tool may help get it started.

Facing Death

The PBS Frontline Documentary, Facing Death aired tonight at 9pm. Here you can watch it online. Sunday night, a group of folks interested in palliative care viewed it online and simultaneously held a 'tweetchat' in which we commented on the documentary and asked questions of one another. Here is a write up of that event. I am glad that PBS Frontline did this documentary. Here are a few thoughts:

• The patients, family members and medical staff at Mt. Sinai allowed incredible access into very personal matters and did so in ways that made them vulnerable. I am appreciative that they allowed this window into this part of our health care system and death in an ICU. Each of the people shown in the show is someone's mother, father, husband, wife, child....and I want to say thank you for allowing this show to be filmed.
  
• I hope PBS Frontline will follow up later with a show that focuses on palliative care, which is care that focuses on maximizing quality of life, regardless of disease state or prognosis. The documentary just shown provides a vivid look at the process of dying in an Intensive Care Unit, but does not realistically or effectively chart out other care choices that are available to patients (non-hospice palliative care and hospice, for example). In that sense, the show doesn't provide a full account.
  
• There is a continuous use of the phrase 'do nothing' in the documentary. It paints the only choice as 'doing everything for a cure, no matter how remote and no matter the side effects' v. doing nothing. This language paints a false dichotomy. Palliative care and hospice are something. Non-hospice palliative care can be received while patients receive chemotherapy or other treatments designed to cure illness. Hospice is a comprehensive team based approach to providing palliative care to persons who are believed to be very near death. Both non-hospice palliative care and hospice are something, and are available in Medicare, Medicaid and private health insurance. The do-nothing language is a disservice and is incorrect. Again, the best way to remedy this is a follow up show that charts out the other choices.
  
• I wanted to hear more from the nurses. My wife is a Peds HemeOnc nurse and I generally find nurses to be quite straightforward and I think ahead of the curve (ahead of docs, families) in realizing when a given treatment plan may no longer make sense. They may just be the most honest. I don't think they have as much ego tied up in the death of a patient as do physicians.
• There is a skewed nature of the deaths this show chronicles. A little over 8 in 10 deaths in the USA occur among persons who are age 65 and older (they represent around 13.5% of the population). These patients are typically covered by Medicare, the government single payer health insurance system for the elderly. Only 1 of the 5 or 6 patients shown in the documentary are age 65 or older. I am not sure what that means, or why this was done, but simply point this out as a fact.
  
• This show is a small part of improving our ability as a nation and a people to talk about hard things related to death and dying. All of us will die, it is only a matter of when and from what. And what options and choices we will have. The absurdity of the death panel nonsense during health reform shows how far we have to go to learn how to have an honest discussion about the limits to what medicine can do. This show and more like it are a step in the correct direction.
  

Social Media

Last night, Christian Sinclair, a palliative medicine physician and social media meets medicine leader hosted an online tweetchat/viewing of the PBS documentary to be aired tomorrow night, Facing Death (9 pm Eastern). The full documentary has been available online for a week or so, and you can watch it online now.

We watched the video and tweetchatted throughout, with extended tweetchatting at the end of each chapter of the video. It was easily the best and most informative twitter type event in which I have participated. Here is a blog post recapping the discussion.

I will write a bit more about what I think of the special soon. The short version is that it is an honest look at agonizing decisions, but the show doesn't accurately portray all the choices. Also, 83% of the deaths in the U.S. occur to persons who are age 65 or older; the show provides the story of 5 deaths, only one of whom is age 65 or older, so the sample is a bit skewed if it is meant to document 'how we die in America.'

More on MedMal

I had this News and Observer column from August 7, 2009 reprinted in KevinMD.com this past week. Several have written me asking for back up stats and the like for the column. Here is an old post when the column originally came out with these links. Here is a blog post I wrote a few months back discussing why malpractice didn't become the source of a deal between Republicans and Democrats on health reform.

Palliative Care

Diane Meier with a clear description of palliative care and making the distinction between non-hospice palliative care and hospice care. Palliative care treats symptoms and focuses on helping patients achieve the best possible quality of life regardless of the overall prognosis of their illness. You can receive chemotherapy and other treatments while also receiving palliative care.

Hospice care is a comprehensive, team based approach to providing palliative care for persons who are imminently dying. In the Medicare program, you must unelect curative treatments in order to receive hospice care....but you can receive non-hospice palliative care alongside treatments designed to cure your disease.

It should be a policy priority for Medicare to open up the hospice benefit and allow 'concurrent' care, meaning get rid of the requirement to 'unelect' curative care to receive hospice; the current policy set up is almost certainly a barrier to Medicare beneficiaries receiving all the palliative care services that they need. Medicare needs expanded funding and flexibility to maximize the availability of palliative care to Medicare beneficiaries.

Update: here is more detailed post from this past August talking about palliative care and needed policy changes for the Medicare hospice benefit.

HRSA Negotiated Rulemaking Committee Day 2

I think we made some progress yesterday toward developing new proposals for Health Professional Shortage Area (HPSA) and Medically Underserved Areas (MUA) designation. Some colleagues on the committee don't agree!...but hey, as the Eagles said, "you got to go through Hell before you get to Heaven"....

In all seriousness, we have begun to grapple with the hard issues of data sets, units of analysis and the like. This morning we will continue our discussion of special populations and designation methods for such designations. Examples of current special-designation populations are homeless, low income, migrant populations, and HIV-positive individuals. An issue that is inherent with special-population designation is the lack of data that describe such groups.

Update, 11am: Good and interesting discussion of special population designation issues. I have learned a lot in the last 90 minutes, especially from Patrick Rock, Exec Dir. of the Minneapolis Indian Health Board, who gave the clearest explanation I have heard of how the various initiatives of the Indian Health Service and its constituent components work together, and how HPSA designation currently overlays with these providers.

Update, 12:45pm: moving into discussion of counting supply of primary care providers. Issues include what type of docs count as primary care, how to count medical residents (in terms of FTE), how to consider federal resources such as National Health Service Corps providers, etc., whether/how to count non-physician primary care providers (NP, PA, CNM), and what data sources are used to count providers.

Update, 2:15pm: continuing with presentation on data sources and estimation approaches for primary care providers.

Update, 3:00pm: wrapping up the data/supply discussion and moving to the public comment section. We have added a sub-committee to consider designation issues related to special populations, and will continue with our data/technical subcommittee that will try and push ahead with testing some various data options for consideration by the full committee at the January meeting. Public comment period is next.

All in all, a productive meeting. We are making progress.

Now Three Deficit Proposals

Igor Volsky with a nice post showing a side-by-side-by side comparison of the Bowles/Simpson Chairman's mark deficit proposal, Rep. Schakowsky's plan (she is a member of the President's Deficit Commission) and the Bipartisan Policy Center report that was released today. All the links to all the plans are embedded within the link above.

Rep. Schakowsky's plan* is not as strong on health care costs.....we need to do more beyond the Affordable Care Act. Hers does not do that. The other two plans do much more, and both the Bowles/Simpson and BPC each cap and in the case of BPC move toward ending the tax exclusion of employer paid health insurance. This is easily the most obvious and consequential next step in addressing health care cost inflation and am glad to see this policy coming up.

I will need to look more closely at what the BPC proposes around Medicare beyond their straightforward call to increase Part B premiums.

*Rep. Schakowsky's plan does include a public option which could have a positive effect on costs if it imposed Medicare payment rules, but this seems completely unrealistic at this point.

Update: CBO score of Ryan/Rivlin health proposal to alter Medicare and Medicaid.

HRSA Negotiated Rulemaking Committee

I am participating in meeting number three of this committee that is considering alterations to the Health Professional Shortage Area (HPSA) and Medically Underserved Area (MUA) designations methods/processes, as stipulated in the Affordable Care Act. We are beginning to move into the nitty gritty of discussing the many issues related to this task.

Update, 2pm: We have been looking at how measures of utilization overlay/relate to measures of self-reported health status and then outcome as measured by standardized mortality ratio. Had some presentation/discussion about the Notice of Proposed Rulemaking (NPRM-2) attempt to redo the HPSA/MUA designations in 2008 that went down in flames during the comment period of the rulemaking process. We are trying to to take account of the many issues that lead to the proposed rule not being adopted in 2008.

Big issues ahead: considering different data sources, how to deal with sub-populations and/or small geographical areas, and finding the correct balance between conceptual purity and creating something that is both understandable and which can be effectively applied by local areas and states.

Update, 3:30pm: Lots of discussion about the desire of the committee to fully consider outcome/need based approaches to designation, and not to accept proxies until we have fully investigated outcome/need based approaches. Of course, data and unit of analysis will remain limiting factors.

Update, 4:15pm: The data/technical committee will do more work on health care status/outcome based approaches and report back to the entire group. Now shifting into discussion of sub-population designations, both the types of sub-population groups now designed, and various rules related to these populations as compared to area-based designations. As always, data concerns and trade-off between burden of collection/specificity will be paramount.

Dartmouth study of EOL Quality

David Goodman and colleagues at the Dartmouth Atlas have a new report "Quality of End of Life Cancer Care for Medicare Beneficiaries" out today that shows large variation in the types of care that Medicare beneficiaries receive when they are very ill with Cancer. Most persons think of this issue as only being linked to access to aggressive therapy, but a key issue is access to palliative care which seeks to improve quality of life, and hospice care that is team based palliative care for those believed to be very near death. They document tremendous differences in access to palliative care and outcomes that are believed to be against the wishes of many patients, such as dying in the hospital. The Dartmouth researchers believe that if patients and families better understood their prognosis and their choices, that many would not opt for the same patterns of care that are commonly observed.

A few related items:

• Here is the link to the study I did with colleagues at Duke showing that hospice reduce Medicare expenditures by around $2,300 in the last year of life as compared to normal care that is being noted in some news stories in conjunction with this report. Note that hospice and palliative medicine focus on improving quality of life, but have often been found to reduce costs as well.
  

• Here is a link to a Health Affairs blog post I wrote with Amy Abernethy noting that while health care costs aggregate near the end of life, it will be hard to reduce health expenditures a great deal by focusing on end of life (how close people are to death) as the locus of trying to intervene to reduce expenditures. In large part, this is because it can be hard to figure out how close someone is to death. We called EOL savings the Fools Gold of health reform. A more fruitful line of policy is to systematically ask whether care improves quality of life and/or extends life. If you do this, it will almost certainly reduce costs near the end of life, but it is a much more productive line of policy.
  
• Here is some in depth discussion on my blog of the Temel et al. paper published in the NEJM in August that shows that palliative care improved quality of life, reduced costs and extended life for patients with stage 4 lung cancer....and me wondering if it had been out one August earlier if the preposterous death panel stuff would have been avoided. Nah, probably not. Igor Volsky with new post that would seem to suggest one more study wouldn't have made a difference, at least not with one Senator who was at the heart of the 'pull the plug' nonsense.
  

CLASS

I attended an event focused on implementation questions related to the CLASS provisions that were passed in the Affordable Care Act. Here is what I wrote about CLASS last December as it was being debated. The big idea of CLASS is to make planning for long term care become a normal part of being a young adult, and to provide a flexible set of benefits that would not be enough to finance a nursing home stay, but would instead help finance community based long term care.

But, there are many tricky implementation questions as outlined by Joshua Wiener at RTI. The panel today at the National Press Club discussed many of these issues. [I tweeted from the conference today, my tweets from around 9am-10:30am @DONALDHTAYLORJR] I think I left the event a little less optimistic about CLASS succeeding than I had been....not disparing or giving up hope, but it will be a challenge to set up a benefit that is self-financing and manages to attract a large number of persons....of course the more who sign up, the more likely it is to be self financing....but worries that it won't be self financing which would lead to premium increases down the road cause some not to sign up and so on.

You might ask what is the problem that CLASS addresses and the answer is that most people don't plan ahead for LTC, in part due to their lack of understanding of their risk of needing care and their misjuding how large the costs of care happen to be. CLASS could both finance care that is not now provided, and potentially delay institutionalization and therefore reduce the public exposure to paying for such care via Medicaid.

The biggest issue is setting up a benefit at a premium that attracts customers and to do so in a manner that is not overrun by adverse selection. From looking at the legislation, the biggest problem is that the definition of work is too lenient (you have to be working to be eligible to buy in and you must do so for 5 years before you are eligible to receive benefits). It is unclear to me how much discretion the Sec. of HHS has in implementing CLASS and defining the definition of work more narrowly (currently work is defined as having wages of $1,800/quarter, quite a low definition of work). It is not that person who are disabled but able to work some are not in need, or not worthy of support, it is just that CLASS is not a mechanism that can help them AND set up a self financing long term care plan. If you get CLASS set up and it is working there will probably be room to expand the buy in....but if you blow it up with death spiral right off the bat, not only will it not work, but we will never come back to it.

Finally, there is one policy option that can solve all these problems:have a mandate and compel people to participate. The premiums would then be quite low. But, that is not going to happen. If you have great ideas about how to implement CLASS, you should nominate yourself to be a member of the CLASS advisory board, the notice of the creation of this body is in today's federal register.

NYT Deficit Calculator

The New York Times has a nice deficit scenario tool that allows you to balance the budget yourself. I will give you a hint....cutting foreign aid and ending earmarks won't do it....

Here is my take. No problem.

Orszag on Bowles/Simpson

Peter Orszag in today's NYT defending the Bowles/Simpson plan to extend actuarial life of Social Security. I would prefer the proposed Soc Security fix to not fixing it, but would still rather not raise the retirement age. However, I agree with the spirit of this piece (as I wrote in the previous two posts) that the Bowles/Simpson proposal is a serious one that is very useful to help us move ahead. In particular, for all the politicians who were saying they would support health reform if only it did more on costs, what Bowles/Simpson outlines is what that will look like: capping the unlimited tax expenditure for private insurance, and amping up the Medicare programs ability to influence what/when/how care is reimbursed.

Social Security and Rev Cap

I mostly like the health care aspects of the Chairman's mark of the Fiscal Commission. I don't like the Social Security proposals so much, and understand people not liking the revenue target of 21% of GDP for revenue and could personally live with higher taxes, but think it is a move in the correct direction so can support this revenue cap.

• The problems facing Social Security are relatively small compared to those facing Medicare. Social Security can pay out promised benefits until 2037 or so. If we do nothing, then Social Security will be constrained in 2038 or so to pay out only the total money flowing in. This would mean a substantial benefit cut of 20-22%. This is the default way to 'fix' Social Security; to impose a large benefit cut. The CBO put out a list of 30 policy options to address Social Security and extend the life of the program. They include different ways to increase taxes or decrease benefits....of course you could have a mixed strategy.
  

• I think the Chairman's mark is correct in suggesting the the maximum taxable wage should return to the 90th percentile of wages. This was the essence of the Greenspan Commission in 1983. Bowles/Simpson want to do this slowly. I would prefer to do this faster and to add to this a reduction in benefits for higher income persons to extend the life of Soical Security instead of doing so by increasing the retirement age for Social Security. Extending the OASDI payroll tax to the 90th percentile of wages in 2012 would extend Social Security ability to pay full benefits to 2050, by itself. The Chairman's mark would eventually put the full retirement age to 69 by 2075 (68 by 2050). I respect the argument that the retirement age should rise due to increased life expectancy, but the reality is that these gains have not been equal across income levels. I think for blue collar workers this is likely to be a hardship, and I would prefer to deal with the problem in another way. I would rather apply the OASDI payroll tax more rapidly to the 90th percentile and to choose one of the ways to reduce benefits (or make more benefits taxable) for high income persons and leave the full retirement age at 67. In fact, I would rather unify the eligibility age for Medicare to 67 staring two months per year in 2014 (along with the planned Social Security increase) and maintain the Social Security retirement age at 67 in 2025 and beyond. Keep in mind that in 2014 the exchanges will be fully in operation and income based subsidy will be available for persons not eligible for Medicare. So, I don't think the Social Security suggestions in the Chairman's mark are the best ways to address the relatively small (as compared to Medicare) Social Security problem. But, I am willing to listen.
  
• Revenue/Spending targets. The Chairman's mark aims to cap revenue at 21% of GDP, and spending at 22% of GDP by 2020 and then dropping to 21% in later years for a balanced budget. Several points on this. (1) I agree in general that I would prefer to not have hard targets/caps because flexibility and actual policy choice would be better. However, I think that given our longstanding difficulty in having a balanced budget I think a cap is a good idea, and will help bring some folks along for what are some large changes we will be undertaking if we do something anywhere near to the Chairman's mark. (2) A basic question if you accept the notion of a cap is what should the cap be.... (3) 21% Of GDP is being criticized by some progressives because it is too low (they would prefer to deal with deficits with more tax increases relative to benefit cuts), however, it is important to remember that if we have a tax code that raises 21% of GDP in revenue that will be the highest proportion of GDP raised in revenue in the past 40 years (we were close in 1999/2000). So, 21% of GDP is a substantial tax increase over what amount has been raised the past 40 years....that is why we have had a deficit 36 of the past 40 years!
• The Chairman's mark stabilizes the debt and gets to long term balance by roughly cutting $2 for each $1 raised in taxes. This is a policy choice. It could be 50/50, which would mean the revenue target would be greater than 21% of GDP, or it could be $2/$1 the other direction, which would mean the revenue target would be even higher. Conservatives are correct in saying the proportion of the GDP to be redistributed by government is a profound choice. The trouble is that they only want to talk about reducing taxes and don't actually propose spending cuts....hence, large deficits. We progressives need to stick in and commit to a long term balanced budget. Conservatives have gotten away with massive hypocrisy on this issue, in part because progressives ceded the political territory of worrying about budget deficits. We can argue and make the case that the correct percent of GDP that should be raised by taxes should be above 21%, but we need to commit to long term balance, and we then have to live with less spending than we would prefer if we cannot make the case. Our country needs to have a discussion about what level of government spending we desire, and then develop a tax code that pays for it over the long run (you will always have deficits in emergencies; our problem is long term structural deficits under the default, do nothing). So, I can live with a 21% of GDP cap on revenue as a starting point, even though I would be willing to have taxes a bit higher. I don't see any way they can be lower if we are to have a hope of a long term balanced budget.
  

Deficit Commission--Health Portions

I have had a chance to read the Bowles/Simpson 'Chairman's mark' of the Deficit Commission. This isn't the final report. The 18 members of the Commission will have to vote on what they can agree on. There had been a previous commitment that any parts that 14 of the 18 members agreed upon would be submitted as a piece of legislation into the lame duck Congress. 14 of 18 would mean that at least several Republicans would have to sign on to anything.

The Chairman's mark is a serious and comprehensive proposal. In early twitter chatter, it seems that most can find things they really like and really hate. This is in one sense the best test of whether the Chairman's mark is balanced, broad ranging and actually addresses the issues of long term sustainability. It everyone loved it, it would mean that it didn't really address the issue with hard choices.

Here are my thoughts on the health policy provisions.

• It is a broad proposal, that not only addresses long term health care issues, but even offers a detailed 'doc fix' which is of course an immediate issue that must be dealt with in the next few weeks. Their proposed doc fix: (1) provides payment cuts; (2) introduces what they call a comprehensive medmal reform, I think along the lines of what the CBO scored last Fall that they said would reduce the deficit by around $54 Billion over 10 years. Key in this provision is capping non economic damages; (3) expand Medicare beneficiary cost sharing, by ending first dollar coverage in Medigap plans [note: updated 9:10pm, 11/11, earlier I wrote erroneously, Medicare Advantage plans here], and to have a unified deductible across parts A and B of Medicare. In return for expanded co-pay there is a cap on catastrophic or max out of pocket expenses for beneficiaries; (4) expand the authority of the Independent Medicare Payment Advisory Board (IPAB). They propose allowing IPAB to address all types of providers (incl hospitals: good idea, see Willie Sutton), and include benefit design issues and payment decisions. Further, they want to further preference the recommendations of IPAB by saying if Congress rejects them, other automatic cuts of equal value would be made. I totally support this idea. Medicare is really the only payer that can lead the way on this. It seems paradoxical to most, but Medicare has lead with most of the insurance innovations of the past 30 years or so. (5) Medicare would create a replacement for the current payment schedule by 2015.
  
• On balance, this is a plausible doc fix, especially given that Congress has been kicking the can down the road for over a decade on dealing with the SGR. Politically, medmal seems inevitable and a good thing. There are non cost saving reasons to address this issue, not the least of which are that it could lead to better quality improvement efforts that are harmed by an adversarial system. I have written about the role of medmal being important above and beyond cost savings (cost savings will be modest, but we need what we can get).
  
• The proposal asks for large scale tax reform that would begin by repealing all tax expenditures and then 'adding back' any ones that Congress and the President can agree upon. I totally support this process; these are hidden and silent spending that even the folks benefitting don't often understand. These tax expenditures are worth around $1.1 Trillion next year according to the report and reforming the tax exclusion of employer paid health insurance is the policy option with the best hope of slowing health care cost inflation in the private portion of the system. Slide 24 is one of the most important in this document. It provides the direct trade off between what the marginal tax rates would have to be in order to achieve $80 Billion in deficit reduction over 10 years with no tax expenditures (this would make employer paid premiums totally taxable as income, no Earned Income Tax Credit, Child Credit, cannot deduct mortgage deduction, etc) and then if you add back certain tax expenditures. I favor capping the tax exclusion of employer paid insurance and moving to ending it eventually. I hope that slide 24 will help draw attention to the concept of tax expenditures and how they create to the budget deficit.
• They suggest $200 Billion of further health cuts over the next 10 years (what they call medium term) and provide a laundry list that are a mix of relatively small cuts who together add up to a consequential amount.
• They discuss moving dual eligibles into Medicaid managed care programs. The dual eligible population (around 8.5 Million people or so) are elderly and have become impoverished due to disability, long term poverty, and/or spending down to Medicaid eligibility via paying for nursing home care. An issue that should be considered is federalizing the LTC portion of Medicaid. I will write more about this later, but Medicaid is essentially two programs: pregnant women, children and young adults via PPACA and then elderly and disabled persons. The more numerous persons are the young and they are much cheaper as compared to the elderly and disabled. Shifting responsibility for LTC financing to Medicare would help states and allow for better care for these most vulnerable citizens since it would make one payer responsible (Medicare) instead of having Medicare and Medicaid shifting costs back and forth.
• Long term cost control growth targets (starting in 2020) would set overall federal health spending at GDP growth +1%. This is much slower than costs have grown the past 40 years. I think setting this (or some) capped target or goal makes sense, but the real key is the heavy lifting necessary to implement PPACA and do something along the lines of what is outlined here.

My bottom line is that the health aspects of the 'Chairman's mark' are tough, good and balanced policies. I like the health aspects more than I like the Social Security aspects of the plan (which I will write about later...getting on a plane now). The most important aspect of the chairman's mark for health policy is that it provides a route to a doc fix in the very short run and draws bright attention to the role of tax expenditures generally, and the tax preference of employer paid insurance, particularly. It also moves to expand the IPAB in ways that will allow for the nitty gritty of health policy to move out of Congress, and into a more expert driven model. I think this is good. I also think the notion of some sort of cap in growth rate in health care is good (not sure if GDP + 1% realistic in 10 years) and is the type of thing that Congress should be doing.

Update: The proposed doc fix they put forth is lacking on important details...it doesn't say how much doc payments should drop, for example. However, it is a route to a political deal on the doc fix that is paid for: some payment schedule cuts in return for medmal that is very important to doctors.

Quick Thoughts on Commission Report

co-chairs Erskine Bowles and Alan Simpson today released the 'chairman's mark' or their draft of the Deficit Commission report. This is a serious and broad-ranging proposal. All the brave politicians elected to Congress last week on platforms of dealing with the deficit and fiscal responsibility are currently running for the hills. I am travelling and reading it on my Droid (really) so it will take me awhile. Quick thoughts are

• that I don't prefer their Social Security options, but am willing to listen. I would rather raise the Medicare age than the Social Security age.
  
• They put tax expenditures, and notably the tax exclusion of employer paid insurance front and center. I am a big fan of this.
  
• And they talk of expanding the cost cutting aspect of PPACA, like the Independent Payment Advisory Board, and clearly assume that we need to implement (and improve) PPACA.
  
• They have some fairly detailed tax reform initiatives, notably around limiting many tax exclusions and simplifying the code. I am with all this in spirit....will need to pour through the details.
  
• If we are going to address/change the corporate income tax (which is a relatively small source of revenue and very uneven in terms of actual rate paid) I would prefer abolishing it than reducing it. If you just reduce Conservatives will say it wasn't low enough, that is why it didn't create jobs....
• More later after I read closely.
  

Thoughts on what next for health policy

Mostly if you read my blog and columns you have heard it before. A few emailed and asked. Briefly:

• Repeal is like the dog actually catching the car. System unsustainable before PPACA, will be again if repeal. Still not sustainable with PPACA without much more heavy lifting to address cost inflation. If you repeal, then you need a plan for how to start over. The Republicans don't have an actual plan to do anything, just ones designed to argue against something. Insurance across state lines is a great slogan, but not a consequential policy. Malpractice reform, I am for it because the system is a total mess, but it is not a cost savings panacea (though will reduce spending some).
  
• Keep in mind the numbers 218 (votes needed in the House) and 60 (votes needed in the Senate) and 1 (President that must sign). The repeal talk is fantasy and/or political theater. Maybe House should just pass one sentence repeal bill, Pres can veto and then they can get down to business. Rs can say we tried but the scary President vetoed, the Pres can say I prevented the scary Rs from repealing. Whatever. So long as they get down to business.
  
• Here are some tweaks within PPACA framework moving toward Republicans I suggested before the Feb. summit. Perhaps they can have a cross-Congress compromise. In policy terms it is there and always has been.
  
• Here is what I wrote about Deficit Commission, and the next (obvious in policy terms) step to address health care costs.
  

Post Election Forum Today @4:30

The Sanford School of Public Policy is hosting a post-election forum today at 4:30 is room 05 Sanford. I will (lightly) moderate a two-person panel. Frank Hill, former chief of staff of Sen. Elizabeth Dole (R-NC) and Pope "Mac" McCorkle, a Professor of the Practice in Public Policy at Duke and former Democratic campaign strategist will give their views and take questions. Open to the public and all are welcome.