Thursday, September 23, 2010

Changes from PPACA that take effect today

from Kaiser Health News.

If the Republicans wanted to be taken seriously

In other news, the Republicans pledge with America is out and it is roughly speaking laughable, at least from a health policy standpoint (haven't looked so closely at the rest). They are trumpeting that they will repeal and replace with something that prevents pre-existing condition exclusions FOR PERSONS ALREADY COVERED. That is already banned in federal law.....that is a meaningless change, and is far less than what PPACA does. Further, it doesn't say what would be included in the way of benefits, or what premium could be charged. In short, this is a phony policy pledge.

If the Republicans wanted to be taken seriously on health policy, they could say something like this, in a face saving manner.

"We thought PPACA wasn't the right way to go [forget about the fact that it was essentially the Republican alternative to the Clinton Plan plus a Medicaid expansion, but I digress]. However, now that PPACA has been passed, we have decided that even though we were opposed to it, we now want to improve upon it. The recent Census report shows how dire the status quo is for our health care system. We applaud the President's commitment to covering uninsured persons with insurance. However, we are very worried about costs. So, we propose the following steps:
  • Medical Malpractice reform. There are many problems with malpractice as I have written, and there are things that could be improved upon. They have proposed med mal reform, but not the items below.
  • Change in the tax treatment of employer paid insurance. They could have said it like this, "The President was on to something in proposing a tax on high cost insurance. However, he lost his nerve as the tax was delayed in the reconciliation bill until 2018. But, the original tax on high cost insurance is still in the Senate bill, and being updated by 1 point above CPI annually. That means that in 10 years when the reconciliation provisions run out, the tax on high cost insurance will likely apply to two-thirds of policies. We propose a more straightforward capping of the tax exclusion of employer paid insurance. It is time to level with the American people--they are the ones getting the tax expenditure benefit from this aspect of the tax code, and reducing it will definitely slow health care cost inflation. The President demagogued the issue by calling it a tax on insurance companies when everyone knows that the tax on insurance companies will be passed on to consumers in any event. We therefore propose capping the tax exclusion (how much premiums paid by employers that is tax free) at the national mean for insurance premiums (around $14,500 for families).
  • Finally, we are certain that the baby boomers do not want to leave their children with debt to pay for their basic needs, such as health care. Given that PPACA has developed a sliding income premium support for health insurance staring in 2014, we suggest raising the Medicare age to 67 by 2025. This would mean that persons who turn 65 in Jan 1, 2014 will now be eligible for Medicare on March 1, 2014, and so on.
The above would reduce the deficit by around $600 Billion over 10 years or so (most of it not coming from the med mal provisions). If the Republicans staked out positions like these, then they could plausibly claim that they were serious about reducing health care costs.

Negotiated rulemaking committee, Day 2

Lots of interesting, good-willed folks on the committee. The going has been slow to even agree on the issues to be discussed. [I should say it seems slow to me, one of the facilitators told me that it is just an average group in terms of getting started]. At this point, the meeting has felt a bit like running into a brick wall in preparation to visit the Dentist.

Update 4:40pm: we have agreed that the following topics will be next step priorities for us to discuss: (1) how to measure need; (2) whether there should be two designations (a la HPSA and MUA) versus one; (3) what are the definitions of two key concepts: underservice and access.

Update: 6:00pm. We ended with a plan for the next meeting in October, focus on the issues of whether there will be a single designation v. two (HPSA and MUA) with some input from HRSA about the range of programs that use the various designations. Further, we will discuss the concept of need moving into the related concepts of underservice (which I would define as the fit between the needs of a person and the health care available to that person; those obviously aggregate to population levels), and access. There is an interest in not moving directly to what can be measured as the first, even though data issues are an issue. Instead, I think we will try and decide what we would like to measure to designate areas as underserved and/or suffering from a provider shortage and then move to what we can measure. There are also several who rightly note that some things will be impossible to measure in any way other than via local efforts.

Wednesday, September 22, 2010

Negotiated Rulemaking committee Day 1

The HRSA negotiated rulemaking committee to reconsider health professional shortage area (HPSA) and medically underserved area (MUA) designations got underway today. There was a great deal of process work today, with the group discussing what consensus would mean. The statute that created the negotiated rulemaking process defines consensus as unanimous agreement....which gives me a bit of pause and makes me worry we are wasting our time. However, the facilitators have quite a bit of experience and said that many groups have been uncertain about their ability to reach consensus, but have been pleasantly surprised. They went on to further give a practical definition of what it would take for members of the committee (all 28 of us!) to agree: 70% comfortable with what was decided (no one will like it completely), with 100% willingness to publicly support the result of the committee process.

We also worked on the rules governing our committee and how we would work together. This seemed laborious to me, but is important ground work.

General Thoughts from day 1:
  • The committee is filled with passionate advocates for underserved persons and groups.
  • Most committee members have a fairly clear sense of 'who they represent' on the group. For me, I do not have such a clear sense. I was involved in research in this general area for most of the 1990s, but honestly had given it up because past efforts (in 1998) to reconsider many of these issues had failed and it seemed intractable. So, I have a history with the topic and an interest (it was my dissertation research), but have been away from it for a decade. I don't feel as though I am representing any particular group, and most want to ensure that we allocate scarce resources to aid underserved groups in the best way possible.
  • There will be a great deal of technical discussion around data and the like. A big challenge will be to remember the main point: looking at a means of allocating scarce resources to best aid the disadvantaged and underserved in our nation.
  • We need to get it right. History shows a great deal of inertia in such efforts to designate aeas and groups. The MUA and HPSA methods are largely unchanged since I was in elementary school and middle school. No pressure guys, but we don't need to screw it up...
  • We need to land the plane. The Clinton Administration sought to reconsider these designations in 1998; the Bush administration did so in 2008. In both cases the plans went on the rocks due to lots of negative comments from those who expected to be adversely affected by any changes. We will have to navigate this.
  • In several instances, people said 'what does the law say?' meaning PPACA which specified creating this negotiated rulemaking committee, or the Public Health Service Act provisions in the 1970s that did things like create the National Health Service Corps which is why HPSAs were created....often the laws are fairly vague. So, the committee will (and HHS for the past 35 years has) had to exercise a great deal of discretion in working out the nuts and bolts of these designations and programs.
A member of the committee this afternoon said, 'pie in the sky' what would you do if you could do anything? My first answer is, "I am not sure." My second answer is that I would try and figure out a way to tie extra resources to the underserved, disabled and disadvantaged individuals in a way that helped to create a market to provide care to these marginalized groups, who do not have good access to medical care, even if they have insurance. Not sure how to do that....

Tuesday, September 21, 2010

HRSA Negotiated Rulemaking Committee Work Begins

The Negotiated Rulemaking Committee appointed by Sec. Sebelius to review the criteria and process of identifying Medically Underserved Areas (MUA) and Health Professional Shortage Areas (HPSA) begins its work tomorrow in Rockville, MD. These designation methods have been essentially unchanged for many years, and the designation makes available monies and programs such as a Medicare bonus payment for primary care physicians practicing in HPSAs, National Health Service Corps Physicians who repay medical school loans via service in underserved areas, and Community Health Centers that provide a key safety net, and in some communities the only viable primary care system. The committee is to complete its work by Spring, and if a consensus is reached, that consensus would become a recommendation for the Secretary to adopt an interim rule that would then be open to public comment. Final decisions rest with HRSA and the Secretary of Health and Human Services.

If a new set of criteria and rules are developed and adopted, they will be used to allocate resources and monies that are designed to create and support health care services for underserved areas and/or groups. The point is to develop a meaningful way in which to allocate scare resources available for this important task.

The committee was created in the PPACA, under the auspices of the Negotiated Rulemaking Act. Here is the charter of the committee. I am one of 28 members of this committee. Since the meetings are public, I am planning to be blogging and tweeting during the meetings and deliberations as the context and setting allows and is appropriate. The goal is to share a bit of insight into how this committee--one small aspect of implementing health care reform--works. I am honored to have this opportunity, and look forward to sharing it with you.

The ins and the outs

must be the same for there to be a balanced budget. WaPo with a story noting that doing nothing--which means the tax code will return to 2001 levels would come close to balancing the budget by 2015. Extending all the tax cuts (enacted via reconciliation--that is why they go away after 10 years) will add around $4 Trillion to the deficit over 10 years. That is around 4 times larger that the ARRA and the TARP combined....PPACA reduces the deficit per CBO....even the outlays alone in PPACA with no spending cuts or tax increases are around $1 Trillion over 10.

The Senate Dems have a plan to extend some of the cuts, adding about $2 Trillion to the deficit over 10 years.

Neither party at this point has shown they mean it when it comes to fiscal responsibility; the Republicans are more culpable than the Dems in my book because they talk about 'fiscal responsibility' so much (and only talk).

Perhaps extend the rates for 1 year given the recession....CBO says it will stimulate the economy a bit, but that effect will be eroded due to borrowing by mid-decade. Then, lets try the tax code the last time we had a balanced budget and see what happens.

Why do we spend so much on health care?

I get this question a lot (I usually say we need more research, would you like to give me a grant?.....) However, Aaron Carol, over at the Incidental Economist yesterday began a 10 part series addressing this question, and providing an answer. The first post is an overview, and he frames the issue by pointing out the strong correlation between a nation's wealth and its GDP per capita (how productive the nation's economy turns out to be). The USA has the largest GDP/capita in the world, so it is not surprising we spend the most per capita on health care. The relationship between GDP/capita and health care spending/capita is shown in this graph, which is a part of a report by consulting firm McKinsey titled "Accounting for the cost of U.S. health care: a new look at why Americans spend more. (from Nov. 2008)" The report addresses in a matter of fact manner why we spend so much on health care in the U.S., as compared to other high income nations.

Given the wealth of our nation, it is basically inevitable that we will spend the most on health care, as virtually all nations invest more in health on a per capita basis as their wealth grows. What is truly remarkable is how much more the U.S. spends compared to other high income nations. The really hard question is whether we get our monies worth for the extra spending?

The U.S. in 2006 spent around $650 Billion more on health care than the GDP/capita and health spending/capita relationship would suggest; this year that number is likely around $750 Billion. This is the extra spending beyond what wealth predicts that makes the U.S. the most expensive in the world by far in terms of health care expenditures per capita.

The McKinsey report (and Aaron Carol) focuses on where the money is going, meaning literally where are we spending the extra dollars beyond what is predicted by wealth levels on a per capita basis? In post 2, Carol describes that inpatient spending is actually not the part of the system that is driving the spending gap between the U.S. and other nations; that accounts for 'only' $40 Billion of the $650 billion gap in 2006. Beneath these numbers are some interesting findings; Americans are less likely to go into a hospital than persons from other nations (we do more in outpatient settings), to stay fewer days in a hospital given that we go, but when we do go to hospitals, we spend a lot more per day.

The most important question that needs to be asked when looking at how much we spend in the U.S.: are we getting our monies worth? Meaning do we have a higher quality of life and/or live longer with the extra spending than we would without it? Carol plans a further series looking at this and related questions, but it is certainly not obvious that we do get our monies worth (in terms of quality of life gains and/or life extensions) for our extra spending, but that is easier to conclude than figuring out how to lessen spending.

If you have ever said 'we spend too much in health care' 'our system in unsustainable' 'we are spending ourselves into oblivion and saddling our kids with too much debt' then whether you realize it or not the two questions you want answered are "how much of this excess $750 Billion we will spend this year could be cut without harming patients?" and "how will we figure this out?"

Monday, September 20, 2010

The Default Option

As the 2010 election looms, the rhetoric about health reform is muddled. Repeal of Obamacare is an effective rallying cry for people who dislike the President and/or his policies. However, outright repeal has some big problems, mainly that the default option in our health system is for increasing numbers of uninsured persons even while the health system in unsustainable due to cost.

The U.S. Census annual report on health insurance came out last week and reflects the experience of the nation in 2009, so the baseline or default to which we would return with outright repeal of PPACA. Several points stand out:

  • This is the first time since figures were tracked the absolute number of people with insurance declined (255.1 M to 253.6 M)
  • There were more persons covered by Medicaid than by Medicare, also for the first time (48 M v. 45 M)
  • The proportion with employer based insurance is the lowest in percentage terms ever, as is the proportion with government financed insurance
Big picture, if PPACA is repealed, we default into a system described by 3 in 6 Americans with employment based health insurance; 2 in 6 with government provided, either because the beneficiary is low income or age 65+; and 1 in 6 who is uninsured.

PPACA will expand the ranks of the insured, with the expansions roughly equally split by Medicaid and private insurance. We will still face many hard decisions necessary to develop a system that is sustainable due to cost. However, the default places us firmly in the camp of still having to face the same difficult questions about sustainability, but without having taken any steps toward doing so, and with many more persons who are uninsured.

We will never gain control over spending without providing at least some manner of insurance coverage to everyone. PPACA does not reach this goal, but is moving in that way. And it doesn't do enough to address health care cost inflation, but again, is a great deal better than nothing, in one sense because the first steps of PPACA ensure follow up steps.

For many, the cry of repeal PPACA has a pleasing ring to it. The health policy reality if that were achieved is grim.

update: Kaiser Health News has story about how 'repeal' is better as a slogan than a health policy strategy. Update 9/21: still more on lets catch the car.

Friday, September 17, 2010

More on gridlock

The Duke Chronicle has an article here about the first meeting of a group of students interested in finding out more about the Sanford School of Public Policy's planned two-year focus on Gridlock: can our system address America's big problems? Here is the blog we have started.

I hope to get back to blogging on health policy....I have been buried writing a research grant that is due early next week.

Tuesday, September 14, 2010

Announcing Gridlock...

Gridlock...Can Our System Address America's Big Problems? The Duke Sanford School of public policy is going to have a programmatic focus on this general topic up until the 2012 Presidential election. Of course we have a blog. David Schanzer and I have been talking this up in the hallway for the past year or so (his office is by the bathroom) and Dean Kuniholm has agreed to support this effort with speaker monies and the like. David does security policy and I do health policy, but we hope to engage a variety of interests, and to keep the structure loose enough to develop organically. Karen Kemp and Mary Lindsley are providing insight and elbow grease.

We mostly want to engage the students, to be involved and have a say, and to model grown up behavior in practicing talking about difficult problems.

At this point we are planning a post-election discussion on Nov. 3 (featuring Mac McCorkle and Frank Hill), and hope to formally announce soon that David Brooks, columnist for the NY Times will be coming to Duke on Nov. 9, 2010 to address this topic of 'Can our system address America's big problems?'

You can probably figure that we start from the point of answering this rhetorical question with 'no'.....but we don't have a choice. We must address the big problems. Lets get started.

Tuesday, September 7, 2010

Health Affairs does Med Mal

Health Affairs new issue focuses on Medical Malpractice. Here is a link to the briefing Aaron Carroll has a useful summary of several of the papers.

Here were my thoughts a few weeks back about why medical malpractice wasn't a larger part of the health reform discussion.

Thursday, September 2, 2010

More on can vouchers save Medicare $

There has been a flurry of writing about whether the Medicare Advantage (MA) program and vouchers in general, are a way to save the Medicare program money. This is an old debate, invigorated by Rep. Paul Ryan's proposed 'Roadmap' plan that would move to a voucher approach for Medicare. Austin Frakt wrote a piece in the Kaiser Health News that I think is about right on. Avik Roy didn't like it so much, and now James Capretta has weighed in as well, and Austin is back to the fray, again making sense.

Just a couple of quick thoughts.

First, Medicare Advantage and all of the predecessors which have paid private insurance companies fixed amounts based on the avg. amount spent by Medicare in a beneficiaries county of residence (therefore, tied to historical use) have been a 30 year failure to save money. Even when they paid 95% of the average adjusted per capita cost in a given county, they did not save money for Medicare because the people who choose them were healthier than average and would have spent less than 95% of the AAPCC. On average, healthy people sign up for private Medicare.

Second, so long as people are allowed to choose to enter private plans, while others remain in fee for service Medicare, this seems likely that the sickest folks will stay in FFS Medicare. I am not sure if it is brilliant marketing by Medicare Advantage plans (and predecessors) or that sicker folks aren't interested in the various limits of physicians that may come with such plans or what. Perhaps a good Ph.D. dissertation topic there.....This means that private plans being more efficient will allow them to make more money, but they cannot save Medicare a great deal unless the sickest, most expensive folks enter private Medicare plans, however formulated.

To truly test whether vouchers could work to lower costs, you would need to run an experiment whereby all persons in some geographical areas have to choose among several private plans, using a voucher amount that would (presumably) be associated with their health status. It seems politically impossible to force all persons in a county or region into a private plan, but that would be the test to see if vouchers could reduce Medicare spending.

Austin's original comments actually focus on the political problems of cost control, not a technical risk adjustment or bidding problem. The political problem is that everyone says they want to save money in health care in generally, and Medicare in particular, but they really don't. The instant you try something that might save money, they go nuts. Patients don't like limits. Doctors like to get paid more than they do. Hospitals want more and so on. So, cost control is hard enough....when you add private insurance companies who have to run a business, that just adds one more group who says 'we must save money' but what they mean is 'so long is we don't get paid less.' I don't blame them or think they are bad, they are doing their business. They just don't offer much hope to save the Medicare program a great deal under any voucher based scheme that has a chance of being enacted.

Here is what I wrote last year about Medicare Advantage in the Raleigh News and Observer, and here is what I have written recently about our culture saying we want to save money in health care but not actually meaning it.