I now blog at the Incidental Economist

As of Friday, March 18, 2011 I am blogging at the Incidental Economist. Please follow me over there, you can subscribe here.

I especially would like to encourage my hospice and palliative care colleagues to join the fray at the Incidental Economist as that area will remain one of my key topics and your perspective would be valuable at the blog.

You can also follow the Incidental Economist on twitter @IncidentalEcon
This twitter feed tweets nothing but the posts from the blog

I will continue to tweet from @donaldhtaylorjr and will tweet some, but not all of my posts from the Incidental Economist.

The blog Freeforall will stay live for the time being. Eventually, the posts will be migrated to the Incidental Economist, and the donaldhtaylorjr.blogspot.com domain is likely to become a blog I use for the courses I teach at Duke only.

High Cost Tax v. Cap Tax Exclusion

Steve Pizer has been writing this week on how health reform will change private and public insurance, based on a recent working paper he co-authored with colleagues Austin Frakt and Lisa Iezzioni. In particular, he has focused on the role of the excise tax on high cost insurance policies that is contained in the ACA (aka 'the Cadillac tax'), and its effects on low wage workers. Generally, high cost insurance policies are associated with high paying jobs, which is mostly true and documented in their paper and posts. However, firms with expensive health insurance plans do have low wage workers, and Steve has looked at the role the excise tax could play in crowding out low wage workers from private, to public insurance under the ACA. CBO estimates that around 3 Million (net) persons who would otherwise have employer based private insurance in 2019, would instead purchase subsidized coverage in the exchanges, or move into Medicaid under the ACA. It was never entirely clear to me who they would be.

The Cadillac tax contained in the ACA is one of the primary policy tools that should slow the rate of health care cost inflation. The tax was sold politically as one on insurance companies, but this tax will be passed on to employees, with the intent of the tax being for employers to provide lower cost policies to employees whose premium value is above the tax trigger point. This will mean less insurance and more out of pocket costs, which will slow health spending. This should also lead to wage increases over time as some premium dollars are converted to wages as employees decide they would rather have cash than premiums if the latter is taxable income. In short, it is a tax that is designed to be avoided, and in doing so will shift some compensation from a tax free form (employer paid premiums) to taxable wages while increasing out of pocket health care costs.

The current budget debate has been noisy but hasn't focused on the actual crux of the long term budget problem: health care costs. If the current budget debate is actually going to deal with the budget deficit problem, it either has to replace the ACA or add something in addition to the ACA that further addresses costs. Nearly two months after the House voted to repeal the ACA, the Republicans have not offered an alternative plan.

In looking for a bipartisan down payment on health reform for this Congress, the most (and maybe only) area I can think of that leaves the larger question about the direction of health reform to the 2012 election is to modify the tax treatment of employer paid health insurance. Since World War II, employer paid insurance premiums have not been taxable, giving those with good employer sponsored plans tax free income and resulting in more insurance than we would have if we bought policies with after tax dollars. Addressing this would be a consequential change.

The Cadillac tax that is part of the ACA could be started earlier, say in 2012 instead of its current start date of 2018. Even better would be to replace the Cadillac tax with a reform of the tax code that caps the amount of employer paid premiums that are excluded as taxable income. I would prefer capping the tax exclusion to the tax on high cost insurance for several reasons.

• It helps orient the country that the subsidy being reduced has been flowing to people like me with expensive employer-based health insurance.
• Virtually all Republican health proposals typically include ending the tax exclusion (Sen. McCain's Presidential campaign plan; The Patients' Choice Act; Michael Cannon's plan from CATO, etc.).
• Democrats have already voted for a back-door capping of the tax exclusion via the tax on high cost insurance contained in the ACA.

I believe there are two additional reasons to move toward directly capping the tax exclusion instead of using the excise tax on high cost plans, one that appeals to Democrats and one to Republicans.

• Capping the tax exclusion is more progressive in that it doesn't hurt low wage persons working for firms with high cost insurance as much as the excise tax would.
  
• Capping the tax exclusion should lessen the crowd out effect of low wage workers from private coverage into exchanges or Medicaid which Pizer and colleagues believe are at greatest risk of this; this issue is of great interest to Conservatives.

I tried to test my intuition with a simple example that builds off of Pizer and colleagues' work by using their estimates of what the 2018 high cost tax would be deflated into 2009 dollars (40% applied to total premiums including flexible spending accounts above $5,850 for individuals; $15,750 for family coverage in 2009$). I picked a simple example of two individuals working at the same firm with the same coverage with one having wages of $10,000 and no other income and the other having wages of $100,000 and no other income, and a personal exemption only. I then used a family of 4 with the same family coverage (4 income tax exemptions). The value of the total premium used (medical, dental and flexible spending account) was an assumption, used simply to demonstrate: $8,000 for individual coverage, $19,000 for family, in 2009$. I used a 2009 income tax calculator to do my estimations, estimating how income and payroll tax liability would change with an excise tax applied as compared to capping the tax exclusion.

For the family coverage with premium value of $19,000, the amount of excise tax owed would be $19,000-$15,750=$3,250 x 40% = $1,300 (green box in chart above). For single coverage the amount of excise tax owed would be $860. Note that the amount of tax owed for the excise tax is the same regardless of wages because it is based on the value of the policy.

If you instead use the excise tax trigger points as the amount at which to cap the tax exclusion of employer paid premiums ($5,850 for individual; $15,750 for family) you find that the total tax increase (income and payroll tax) with a capping of the tax exclusion is around $100 less for individuals with initial wages of $100,000 ($766 v. $860) but much less for individuals with $10,000 in initial wages ($379 v. $860) [gold box in chart]. Note that in the case of a single person with $10,000 income even with an increased income tax liability they would still receive a (smaller) income tax refund ($335 refund without capping tax exclusion, $120 if capped, hence +$215 in column labeled Change in Income Tax).

For family coverage (4 persons, 2 dependent children both eligible for child tax credit), the change from the excise tax to a capping of the tax exclusion of employer paid insurance would have an even larger impact on low income families, as total tax paid (income and payroll) by a family with $10,000 in initial wages and an expensive insurance plan would be -$419 with a cap v. +$1,300 with the excise tax. Note, income tax liability drops with increased income from $10,000 to $13,250 because of the EITC. The total tax owed will always be less under capping the tax exclusion as compared to the same dollar value as the excise tax trigger because the highest marginal income tax rate (35%) is lower than the excise tax rate (40% on the amount above the trigger value). The benefit is greater for lower income persons because they are in a lower marginal income tax bracket.

Keep in mind that the goal of both policies--tax on high cost insurance policies and the capping of the tax exclusion of employer paid insurance is for persons to avoid these taxes by having less generous coverage. This will slow health care cost inflation by exposing those with expensive private plans to more out of pocket costs. It will also shift compensation over time to taxable wages away from tax free income via insurance premiums, increasing both disposable income and tax receipts. The amounts estimated here are best thought of as relative signals to employees and employers to change their insurance offerings and choices, and I have admittedly used simple examples. Let me know if you think I have made errors, because there are lots of things going on even in this simple example.

In summary, moving in this Congress to reform the tax treatment of employer paid insurance by capping the amount of employer paid premiums excluded from income would:

• mean the budget debate actually addressed the biggest long term budget problem, health care costs.
  
• do so in a more progressive manner (more beneficial to low wage workers) that I believe would lessen the crowd out (into exchanges or Medicaid) incentive of low wage workers at firms offering high cost insurance.
• provide a bipartisan down payment on health reform that is flexible. Doing this would improve the cost saving potential of the ACA, and of any imaginable health reform strategy. The big picture of whether to move ahead with the ACA or to adopt the (forthcoming?) Republican alternative could then be reserved for the 2012 election.
  

If the budget debate in Congress really addressed the long term problem with our budget, the debate would be around issues like those above.

Update: I had an error in the original table for family of 4, $10,000 income; correct reduction in income tax if capping tax exclusion at premium of $15,750 is -$668 (I had -$488 in original) and the correct net effect of a cap is -$419 reduction in total tax liability (I had -$239 in original). Sorry about the error; it doesn't change the analysis.

Moving to the Incidental Economist Blog

Big news. I am joining the Incidental Economist blog as a regular blogger. This is a great move for me because I think TIE is the best health policy blog around, and I admire both Austin Frakt and Aaron Carroll as bloggers, and have enjoyed my recent interactions with them leading up to this announcement. The move to TIE is the first step in some exciting new plans that we hope to announce over the next few weeks.

Please subscribe to the Incidental Economist as that will be my primary blogging home by Friday, March 18, 2011. This site will remain available for links and searches....there may be a migration of posts at some point in the future, but not right away.

Freeforall was started on a whim as a way to aggregate some background information related to the columns that I wrote on health reform for the Raleigh (N.C.) News and Observer. It has become an important part of my professional life, and having to explain myself and take public responsibility for my words on a (near) daily basis has helped me refine what I think, learn to make the case, and realize that I am sometimes wrong (my wife and kids already knew this). The people that I have met because of the blog have convinced me that we academics must go beyond simply publishing a paper in a peer review journal if we truly want to have an impact, but paying attention to the research has been what I have tried to do. Beyond that, I have wanted to give others the benefit of the doubt because that is what I would like to receive in return as we debate and discuss our way toward a better health care system. The tag line of the Incidental Economist is "Contemplating health care with a focus on research, an eye on reform." Sounds perfect for me.

When Will The Actual Budget Debate Start?

Matt Yglesias noting that the focus on keeping the government running week to week is preventing a debate about next years budget, the medium term budget (next 5 years), and the long term budget. Further, domestic discretionary spending is a trivial part of our budget problem, and health care costs are the main source. Nearly two months after the House passed the repeal of the Affordable Care Act (ACA), there is no coherent 'replace' plan.

Limiting the tax preference of employer paid insurance starting in say 2012 is a simple, consequential and flexible policy that will work to slow health care costs regardless of the future direction of health reform. Doing so would improve the saving potential of the ACA and will work as intended under any imaginable health reform Republicans might someday pass. Anyone claiming to be interested in the deficit who is not advancing policies to address health care costs is only talking.

Update: Steve Pizer at Incidental Economist with fourth in a series on the tax on high cost health insurance that will begin in 2018 under the ACA. Democrats have already voted for limiting the tax preference of employer paid insurance via this provision, and most Republican plans talk about ending it all together. So, bring this tax, or a more direct limiting of the amount excluded from taxes in a tax reform context into 2012. It will actually work to slow health care costs!

Further, if I interepret Pizer's figure correctly, a shift from a tax on high cost insurance to a similar capping of the tax exclusion of employer paid insurance premiums should lessen the crowd out (from private to subsidized insurance, Medicaid) effect on low income workers who would be less likely to have their tax liability increased due to a capping of the exclusion. So capping the tax exclusion is more progressive than the tax on high cost insurance (I think). There is some cap of the tax exclusion that can raise the same amount as the tax on high cost insurance, but which might do so with less crowd out (I think). I need to noodle on that a bit.

Hospice/Palliative Medicine Blogs

Great list from Christian Sinclair. Update: Related post at Pallimed blog on a documentary looking at end of life issues.

Hospice Margin Projections

Memo from a consulting firm (Moran) to the National Hospice and Palliative Care Organization (NHPCO) projecting large reductions in hospice margin over the next decade. I pass it on with only brief comments at this point because I can't go into it in depth right now. The memo says the median Medicare margin now is 2%, and will drop to -14% by 2019 (worse in rural areas), a more gloomy picture than painted by MEDPAC in their March 2010 report (see pp. 156-57). The Medicare margin is even more important for a hospice than other types of health care providers since around 8 in 10 people who die each year are covered by Medicare. A couple of quick points about the general discrepancy, at least in tone between the MEDPAC report and this memo:

• The memo is more recent, so things could have changed, and do change with the ACA (on the revenue side).
• MEDPAC appears to have not considered volunteer costs in calculating margin, whereas I think the Moran memo did; so the two sources don't appear to have used the same costs in calculating margin.
• MEDPAC notes that cost structure of hospices was the key driver in differences in margin, which in one sense is a tautology given hospice has a straight per diem payment (MEDPAC report has gory details).
• Large cost differences give rise to questions about quality.
  
• As with most discussions of hospice and costs, quality is not addressed here (in the memo; is discussed a bit by MEDPAC). We really need to move toward discussing quality and cost together so that we can have some sense of value being provided to patients. This is generally true in health care, but is acutely true in hospice because it seems to be the only part of the Medicare program that is expected to improve quality of life and save money for Medicare overall.

Update: New MEDPAC report out today, here is fact sheet overview of recommendations. In hospice area, biggest item is their renewed call for a U shaped payment to replace the straight per diem (higher payment in first few days of hospice, and higher in last few). I think this is third year in a row they have called for this. Goal of this would be to incentivize short lengths of use to be longer [think 5 day to 15 day] while perhaps discouraging longer stays [over 180 days] depending on how/whether payment levels changed 'in the middle.' I think a U shaped payment approach should improve hospice margins. Here is an older, related post.

h/t @ctsinclair Christian Sinclair who blogs at PalliMed blog. Update: just got a grant from the HCFO Initiative of RWJ Foundation to study these issues (note the email they list for me in the link is wrong; don dot taylor at duke dot edu).

More on Vouchering Medicare

Yesterday I wrote that the current budget discussions don't address the main driver of the long term deficit which is health care costs, and suggested a consequential policy that would address costs: limiting the tax subsidy that has been afforded to employer provided health insurance since World War II. This policy would be flexible, meaning work with just about any imaginable health reform direction and there is bipartisan support for this change since Democrats already voted for it in the ACA (tax on high cost insurance), and most Republican plans assume more of it.

I further stated that I would prefer Michael Cannon's health plan to the status quo, though it is not my preferred choice. A key aspect of his plan is the vouchering of the Medicare program, in which beneficiaries would get age and risk adjusted vouchers with which to purchase private insurance. This is similar to the Medicare option of Paul Ryan's roadmap proposal.

A commenter to yesteday's post (Steve) asks a question about vouchering Medicare:

"Has anyone priced out what private insurers would charge these elderly for insurance. I have asked my broker and they will not quote prices for Medicare aged buyers."

This question, and many related questions that flow from it are the primary reasons that vouchering Medicare is not my preference. I cannot decide if I am skeptical for political only, or political plus technical reasons. Leaving aside the political concerns, and the irony of critics of the ACA essentially wanting to create the structure of the ACA for Medicare, here are a mixture of assertions (end in period) and questions (have a question mark) I have about vouchering Medicare.

I would be interested in people's insights, especially if it is in the form of 'no, we can deal with that in this way' or 'no, you are wrong and here is why.'

• Insurance is the trading of a known cost (premium) for protection against an uncertain occurrence of a potentially catastrophic cost
• Many/most Americans think of health insurance as a mechanism to finance care
• Before Medicare was passed, about half of the elderly had no health insurance, though private insurance did exist
• There have been private plans in Medicare for about 35 years or so; until the BBA of 1997, they were straight cherry pick deals in which healthier people signed up and the HMO actually increased costs. Subsequent modifications of the program have resulted in continued overpayment and muddled answers to questions about which are more efficient or higher quality.
• Vouchering Medicare will require 100% of beneficiaries to be included, including the 7.5 Million dual eligibles.
  
• In FFS Medicare, around 10% of the beneficiaries consume around 60% of the dollars in a given year.
  
• Everyone dies, and it is well known that costs rise near death.
• Medicare insures 13% of the population, but covered 83% of the people who died last year.
  
• Private Medicare plans are increasingly focused in a few large private insurance companies. This would seem to be bad from a competition standpoint, but good from a risk pooling standpoint. Would the vouchering of Medicare not simply produce a few very large private plans who would function like public utilities? Would that be bad from the perspective of advocates of vouchering? If a small entrant got a bunch of dual eligibles in their pool, wouldn't they be sunk?
  
• Why would an insurance company want to be in this private Medicare insurance business in the first place since the profit in insurance is not in volume, but in margin? And Medicare is about volume (high costs).
• If private vouchering Medicare works and saves money, doesn't that mean that less care is delivered and/or less is paid for the same care? Is the real reason to voucher because advocates don't think FFS Medicare can say no (via expert driving rationing say), but they you assume that profit driven insurance companies will be more incentivized to say no?
• Are there ways in which this is mostly semantics and Medicare is not as dissimilar as private vouchering?
  

I haven't sourced all of this because it is a bit stream of consciousness. Interested in thoughts of others.

Update: Austin Frakt has some interesting posts on competitive bidding (the way to set the voucher amount) in Medicare here and here (with many links to take up your entire day!). He is quite positive about the technical possibility of this approach mixed with realism that it will be hard to address costs in any way.

Rehan Salam on why he wants to voucher Medicare but doesn't like similar structure for non-elderly in ACA.

Ezra Klein: responding to Salam (who was responding to him) and making the point that structure of vouchering can work, the key is cost control (Ryan roadmap for example says 1% above general inflation).

The biggest problem for Conservative critics of the ACA is they have said that steps to slow costs in the ACA won't be taken because they are too hard, but their plans also rely on equally hard (or harder) steps. We need a political/cultural deal on how we will address coverage, and then focus on costs. If the focus is on policy, we can work it out. So long as it is only a political football 'your hard thing is impossible, but mine is easy' we are doomed to talk about cutting NPR while not addressing the real cause of the long range deficit: health care costs.

Bipartisan Down Payment on Health Reform

The current budget debate is all heat and no light. If we extend the current tax code to 2020, then even if we eradicate (read put to 0) all the domestic discretionary spending in the federal budget, we will have a deficit in 2020 just paying for health care (Medicare, Medicaid, ACA subsidies), Social Security, Defense and Interest on the debt. All the words being spilled about NPR and agricultural subsidies are a sideshow at best. The essence of this paragraph will not change even if the ACA is repealed.

Progressives need a balanced budget more than Conservatives, and Conservatives have no hope of ever having a balanced budget without having a long term health care reform plan that comprehensively addresses costs. Being opposed to the Affordable Care Act (ACA) is not a plan.

I asked Michael Cannon of the CATO Institute for his plan via twitter and he sent me this link. His plan has four basic parts:

• Voucher the Medicare program (age and risk adjusted) and allow beneficiaries to purchase private health insurance
• End the tax preference provided to employer paid health insurance and use this tax expenditure to help expand catastrophic coverage
• Change a variety of health insurance and provider laws to create more competition and reduce barriers to entry
• Block grant the Medicaid program

Let me say up front that Cannon's is not my preferred solution. Let me also say that I would rather try his approach than repeal the Affordable Care Act and replace it with nothing. Because the default of the status quo is that health care will bankrupt our country while systematically accepting 15-18% of the population as uninsured.

If the country decided we were going to try the CATO plan, we could work hard and implement it. Of course there would be unintended consequences and mistakes, but we could have continuous tweaks and clean ups each Congress for the next 20 years. I have no doubt that we could muddle through reasonably well, so long as the country bought into it as a strategy. The hardest part of Cannon's plan would be getting straight how we would deal with the fact that a vouchered Medicare program would provide less insurance coverage than would the current, projected Medicare program. If it did not, then it wouldn't save the federal government any money! This is not a technical problem, but a cultural and political issue. Vouchering Medicare can be done in a way that reduces the deficit, no doubt about it in policy terms. The real question is would the country accept it? Keep in mind that this would be a far bigger change than many proposed in the ACA that critics of the law say will never happen because they are too hard.

This is one of the biggest blind spots of opponents of the ACA--saying that the hard parts won't be taken to address costs while proposing hard parts that represent far larger changes to the current system than does the ACA.

We desperately need to decide on a way forward for expanding (or not expanding) insurance coverage so that we can focus on addressing health care costs. The ACA remains politically toxic and the legal challenges to the constitutionality of the individual mandate will likely continue for another year. I have proposed a set of compromises that would render the legal challenges moot, but any movement to make the ACA the reform of both parties seems unlikely before the next election.

Is there any room for a compromise in this Congress that could be viewed as a 'bi partisan down payment' on health reform that addresses costs? While leaving open the overall approach of health reform that may not be decided until the next election? It is very important to try and find such a compromise, because addressing health care costs is a necessary, but not a sufficient condition to ever have a balanced budget.

The most consequential policy this Congress could enact that would be flexible (meaning work as intended regardless of the outcome of legal challenges to the ACA and the next election) would be to change the tax treatment of employer paid health insurance. Currently, Duke pays my health insurance premiums and this money paid on my behalf by my employer is not taxable as income. This has been the case since World War II and has lead to people having more insurance than they would have if they bought coverage with after-tax dollars. This is part of why we spend so much on health care because many users don't understand how much their insurance, and therefore their care, costs.

The ACA addresses health care costs in part by imposing a tax on high cost health insurance policies that will take effect in 2018. Steve Pizer has a nice post describing the long term effect of this, which will be to slow the rate of health care inflation as more and more policies are hit by this tax over time if health care costs continue to rise much faster than inflation.

I would prefer to have a more straightforward cap on the amount of premiums that are not subject to taxation, even though both policies can have the he same ultimate impact on costs since insurance companies will just pass along the tax to consumers. Culturally, the passage of the tax on high cost health insurance in the ACA represents the 'camel's nose under the tent' in terms of ending the unlimited subsidy that those with employer provided insurance now receive, and have received since World War II. This will be a big step, but one that has been delayed.

Altering the tax treatment of employer paid insurance premiums is a flexible policy that would provide downward pressure on health care costs regardless of the future direction of health reform. Democrats have already voted for this in the form of the tax on high cost policies, and most Republican plans include changing the tax treatment of employer paid insurance. This would improve the cost saving potential of the ACA, and would improve the cost saving potential of just about any imaginable health reform. Democrats and Republicans should work together in this Congress to change the tax treatment of employer paid insurance sooner rather than later, and in so doing, make a bi-partisan down payment on health reform. This would prove they were serious about deficit reduction.

ACA Litigation Blog

if you are so inclined to read lots of legal briefs. They surmise that the Supreme Court will hear the case in October 2011 session and render final judgment before the 2012 election.

h/t via @jimhufford.....his blog Organon.

Palliative Care and Harvard Business Review

Interesting piece in Harvard Business Review by Susan Block on Palliative Care. The Palliative Medicine world was talking about this one on twitter last night, and Christian Sinclair at Pallimed blog has a good post on it. Some will probably say, 'oh gosh, not the Business Review' and be worried about the loss of something, but the fact that the Harvard Business Review is writing about Palliative Care (care that addresses symptoms of serious illness regardless of prognosis) shows that its time has arrived in the health care system. The need for better Palliative Care has been identified and the questions move to how to provide it.

Block sets up the cultural reality of her view of the place of Palliative Care in the health care system as follows:

"No one wants to think about the stuff I do — death, suffering, pain, heartache, grief, sorrow. Individual reluctance is mirrored in the health care system's belief that more care and technology can stave off death, and that what we don't talk about won't happen. And often that strategy works. But it always fails eventually, and when that occurs, our system, by and large, does a lousy job."

Block's post succinctly captures several realities of end-of-life care.

• It exists because everyone dies, it is only a matter of when and from what. This means that eventually interventions designed to forestall death will fail.
• It is hard to prognosticate death, and hence when you might begin to make different treatment decisions.
• There are financial incentives for providers (physicians and hospitals) to over-provide care.
• There is a little coordination of care across the many different providers who are likely to care for chronically ill patients.

She focuses on the humanity of physicians--their own fear of death as well as of professional failure--that prevents honest communication with patients who are fearful as the primary barrier to better Palliative Care. She calls this a "misguided collusion of optimism between physicians and patients" that prevents better communication that would lead to better care that focused on patient goals of maximizing quality of life. And this means that Palliative Care tends to enter the picture too late to provide maximum benefit to patients.

Block then suggests several things that would be true of a system that did a better job of dealing with these issues. The most interesting one to me is the use of checklists in Palliative Care. This is reminiscent of my asking a few days back what the difference was between Palliative Care and Disease Management? A few folks emailed me and were irritated by this question and said that the essence of the difference was that Palliative Care was a professional intervention that was best provided in a manner that can't be easily taught or transmitted. That would be bad news if true, because the problems noted above are widespread. I think the essence of the rub is that when people suggest checklists or disease management it implies non-personalized robotic care that misses a fundamental essence of what Palliative Medicine does.

Christian Sinclair in the HBR post comments puts the (reasonable) worry like this:

"I would imagine we have to make sure they do not make very delicate discussions into unemotional robotic programming. Having worked with you, i am sure there is a lot of concern about finding that right balance between the science and the humanity of health care. Obviously they can be complimentary, but we have to make sure we are not blinded by the checklist."

There is quite a lot of room between Palliative Care being best as a highly idiosyncratic 'I know it when I see it' endeavor and mass producing 1 page checklists and calling it Palliative Care. That the field now needs to work this out shows that prime time for Palliative Care has arrived.

Race, Class and Medical Treatment

An account in the Raleigh (N.C.) News and Observer of a physician at Duke Medical Center seeking emergency care, and how different things were before and after his doc knew he was a doc.

Legislative History and Individual Mandate

Interesting post from Jim Hufford on the use of legislative history in court cases, here in determining whether the individual mandate in the Affordable Care Act is a tax or not, which is a relevant point in determining the mandate's constitutionality. The irony is that during the political debate, supporters argued that a penalty for not complying was not a tax (it is a penalty), and opponents said that it was a tax. Now in the court proceedings, the arguments of the parties have roughly switched.

Update 5:20pm March 12: Hufford with a detailed follow up post that shows that what you paid if you did not comply with the individual mandate was called a tax by all initial bills save the Senate finance committee bill. Not sure if it matters to this discussion that it was the Senate HELP Committee bill that became the Senate bill which was then passed as-is by the House with a reconciliation bill that came a few days later.

In policy terms, the question is whether we will use public policy to expand insurance coverage. Any policy provision to expand insurance coverage is a mandate of some type. The choices are:

• government insurance like Medicaid, Medicare or a new program. But, imposing a tax and then providing coverage is a type of mandate.
• Employer mandate
• Individual mandate of some type. I say some type because in addition to the 'you must buy or pay a penalty/tax/contribution' (I don't care what you call it) there are also a variety of 'soft mandates' that are available in which you default people into insurance and let them opt out. It is unclear how well they would work.
  

Without a mandate of some type, the status quo of our health system appears likely to remain 15-18% uninsured depending on the economy, with the share of the insured being covered by government insurance increasing over time simply because they baby boomers will move into Medicare eligibility. More will be covered by Medicaid under the status quo in poor economic times, less in better times. Currently there are about 160 Million folks with private insurance and around 110-15 Million with some form of government provided health insurance depending on how you categorize Military dependents and a few other programs.

The real question is whether moving toward providing health insurance of some sort to all Americans is a goal that is worthy of public policy action or not? If yes, it will take a mandate of some sort. We need to decide on this basic question, accept the consequences of the decision, and move ahead.

update: corrected error as shown by Jim Hufford's comment...it was Senate HELP committee bill that didn't refer to it as a tax, not finance committee bill.

Is Medicaid Worse than Being Uninsured?

Scott Gottlieb wrote that it is this week in the WSJ. His conclusion is not a reasonable interpretation of the research evidence because association is not causation. Austin Frakt does a nice job running through the arguments, and discussing the papers Gottlieb noted. There are all sorts of problems and issues with Medicaid, but saying that people would be better off uninsured than covered by Medicaid is an incorrect interpretation of the research.

H2 Veto Override Still Alive in NC

The N.C. General Assembly is definitely more interesting this session than average! The day after House Republicans failed to override Gov. Perdue's veto of H2--which would declare that the individual mandate in the Affordable Care Act (ACA) didn't apply in N.C. and which directed the Attorney General to bring or join a lawsuit in opposition to the law--they moved to reconsider this vote at a later date. The three-fifths needed to override the veto remains (interesting audio interview with Speaker Tillis at bottom of link), but it is three-fifths of those members present, so now that the bill has been revived they could vote to override the veto any time some Democrats don't show up for a session. Or someone could change their vote.

So, going forward Speaker Tillis says that he will use a similar procedure for any bill vetoed by Gov. Perdue. This procedure essentially allows a vetoed bill to be open for being overridden for the entire legislative session, while the Governor only has 10 days to decide whether to veto the bill or not. I am sure a great deal of the writing today will be about the politics of all this. That is a dirty trick; no its not, you used to use dirty tricks when you ran things. Repeat (ad nauseum).

Sounds like it is within the longstanding rules of the House, so fine.

I am more interested in this as a health policy issue. It shows that the N.C. House and Senate Republicans are really opposed to the Affordable Care Act. And by their actions today, they have made the potential to override the Governor's veto of H2 an issue for every legislative day this session until and unless they successfully override the veto. And if they do override it, there will then be a showdown with the N.C. Attorney General who has said the legislature cannot make him join or bring a lawsuit against the ACA. As my granddaddy would say, 'sure is a whole lot of fuss.'

I realize I have been a broken record in asking what the N.C. Republicans are for in the realm of health policy. Yet, they too have been a broken record, spending quite a lot of energy in making clear their opposition to the ACA, but not making clear what they are for. They are poised to pass a reform of medical malpractice laws in N.C. Is that it?

The two biggest problems with the system are costs and lack of coverage (the uninsured). Speaker Tillis and Senator Berger seem like straightforward, nice guys to me. I wish they would make clear their views on the following. If they get their wish and the ACA goes away:

• Do they believe it is a worthwhile public policy goal to move toward covering all North Carolinians with health insurance?
  
• Will they propose legislation to expand health insurance coverage? By what mechanism do they plan to expand coverage?
• What do they propose to deal with cost inflation in health care?
• Do they believe that the medical malpractice bill (S33) they will pass will slow down health care costs? If yes, by how much? What will they do if these savings don't materialize?
  

It is very easy to be against something. Very hard to address the two main problems with our health care system, costs and coverage.

HRSA Neg Reg Day 3

Day 1 and Day 2.

Big Picture: The health professional shortage area (HPSA) and medically underserved area (MUA) methodology have been used by the federal government to classify areas as eligible for special resources such as National Health Service Corps providers, Community Health Centers, and insurance bonuses such as the 10% Medicare Part B bonus for physicians in HPSAs. There have been two failed attempts (late 90s by Clinton Administration; 2008 by Bush administration) to update these methods, which have been in use in a similar manner since the 1970s. The Affordable Care Act created this committee to develop a rule that would then be put forth by the Sec. of HHS as a proposed final rule that will then be open for comment from the public and interest groups. The point of having a negotiated rulemaking committee is to get the stakeholders that shot down the two previous attempts at developing a new rule involved in making the rule.

8:00am: Work groups are meeting for an hour, to reconvene the full committee at 9:00am. Key issue will be whether the Facility designation work group will be able to bring forth a proposal for the full committee.

9:15: having a report on rational service areas. For both geographic MUA and HPSA designations you have to pick a rational service area for medical services to then seek a designation. Bottom line for all of the various geographical units that could be used for rational service areas is that it is easier to identify the problems with any approach than it is to come up with something that is better. Key issues:

• what data are available at a given geography?
• there is a mixture of statutory requirements for rational service areas and flexibility that this group has
  
• what is the burden implied on local areas if primary data will be used? Throughout our work we have reproduced the following conversation in many contexts: (1) lets give local areas more flexibility in seeking designations; (2) the more flexibility we give them, the more work that it implies for them.
  
• is there any geographical conception of a RSA that makes sense for the entire nation? (probably not)
• Absolute distance and geographical barriers (mountains, rivers without bridges) are important in rural areas, and traffic and lack of public transportation are key in urban areas. Travel time can be a particular problem in both urban and rural areas
  
• Impact testing of the new rule will be key....but such testing will be limited by available data and geography units and/or whatever states can do quickly (for example, if they have legally defined rational service areas as 6 or 7 states have).
  
• How do you make the new proposed rule more flexible, meaning able to use new data methods and sources, especially in the area of potential future innovations in relating data to geography

The presentation on rational service areas has set the key decision as needing to pick a basic geographical unit of analysis, from which you would aggregate small units to create a rational service area:

• Census tracts
• ZIP codes

Again, much easier to criticize either than it is to provide a better approach.

10:00am: continuing discussion of rational service area. Some movement toward not picking a given geography for rational service areas in the actual rule but perhaps only picking one for impact testing. Others want impact testing of the possible geographies.

10:30am: wrapped up rational service area discussion. Will do preliminary testing of draft recommendations with both census tract, ZIP based and county based RSAs. Created a work group to give more attention to rational service areas between now and next meeting. Seemed to be movement among the group away from the idea that we must pick a basic geographical building block approach to define rational service areas, and to allow areas to use different regimes.

10: 40am: receiving a report from the facilities work group. This seemed non controversial to me initially, but the group seems hung up. Issues as to yet unclear to me.

11:25am: we had a 1 hour discussion around the facility designation issue. We did not reach a consensus and will create a new work group to deal with these issues. The main sticking point seems to have been the proposal to create a HPSA Facility designation subcategory of a 'magnet' or 'center of excellence' to deal with particular vulnerable populations such as those infected with HIV, LGBT, developmental disabilities, etc. The issues seemed to be:

• making clear this was a 'last chance' designation....meaning only available if no other types of designations applied
• whether to have a income test or not; issue goes to broadening definition of underservice to those with relatively high means but who still cannot get reasonable care
• it got tied up with discussion of prisons, which are now being discussed separately
• what types of organizations could apply for such a designation
• some extra level of heat amongst some committee members that I didn't ever get

11:35am: Now discussing HPSA facility prison designations. Discussion of difference between prison and county jails. Committee needs a group hug....

11:50am: talking about impact testing of draft alternatives. What will be used to assess how well the new methods are identifying medically underserved areas and health professional shortage areas.

12:20pm: lunch. I may not be blogging in the afternoon as I am making an early getaway to get home for a kid's school event.

HRSA Neg Reg Day 2

Day 1.

10am: work groups started up at 8:30am. We have hit the point where several work groups are close to having tangible recommendations for the parts of the process. The problem is that the last 10% of group discussions and deliberations often hinge on the question: it depends upon what the other groups recommends on.....

A bit stuck on process. We need to move some decisions closer to completion and look for a way to rank order what comes next.

Noon: the health status work group has brought a recommendation to the full group for how to represent the health status aspect of the new MUA index (yeah!). Now discussing this recommendation as a full committee. Would be good to nail down a draft for at least one portion of the new MUA index.

Full committee approved a recommendation to accept report from subcommittee on how to represent health status in a new MUA index. Big picture, the recommendation to be tested:

• Social determinants of health index (4 variables that we have shown to be related to outcomes). This could be thought of an index that shows areas at risk of poor health.
  
• Direct Measures of health. This would include standardized mortality ratio and three measures of morbidity (diabetes prevalence, low birth weight, disability). We will also test sensitivity of using low birth weight v. Infant Mortality Rate.

1:30pm: full committee received a report from the facility designation subcommittee. They have made progress but are still working on several issues. More work group meeting this afternoon.

1:40pm: Having initial discussion about how to put together the new MUA index. Big issues are the relative weight or importance of the 4 parts of the MUA (health status, accessibility, ability to pay, and provider availability), how the MUA relates to the HPSA, how to set the relative weights of the various parts of the index, thresholds, and how designation will be done.

General discussion of relative importance of factors, with biggest areas of disagreement seeming to be around the issue of how much to weight health status in the MUA index. In one sense, the HPSA is being viewed by some (many?) as being akin to the inverse of the MUA....meaning MUA is about health status and access and then accounts for availability of providers. HPSA is about absolute deprivation or lack of providers with some accounting of health status/barriers.

5:30pm: Access workgroup brought a proposal for testing, so we have a concrete initial test in the health status and access part of a new MUA index. Facilities group is getting closer to a recommendation, which will likely come tomorrow. An initial work group attempt to talk this afternoon about how to put all the parts together surfaced lots of disagreements....particuarly about relative importance of the various parts of a new MUA.

Palliative Care and Medicaid

Eric Widera at GeriPal blog reporting on a new study by Sean Morrison and others showing that hospital based palliative care services reduce Medicaid costs.

Results of this study were via Eric:

• Patients receiving palliative care consultations had on average a $6,900 reduction in hospital costs per admission.
• Patients who were discharged alive and received palliative care had an average decrease in hospital costs of $4,098 per admission
• Patients who died in the hospital and received palliative care had an average decrease in hospital costs of $7,563.

The study like most in this field couldn't relate detailed measures of quality to the cost of care, though patients receiving palliative care were less likely to die in an intensive care unit and had fewer days in the hospital. Patients had a variety of primary diseases, were insured by Medicaid only, and had a hospital stay of 4 days or longer.

I need to read the study closely, but palliative care continues to be shown to be advantageous to costs in a variety of settings and to improve quality. However, I think more work remains to be done to more precisely document the relationship between length of use of palliative care of all types (hospice as well as non hospice palliative care) and quality of care. In policy terms this is very important, because it goes to the issue of how important it is to extend length of hospice use from the 25th percentile of 5 days to the median of around 20 days. There is evidence that such an increase will reduce costs, but it is not clear how much such an increase will improve quality. This detail helps determine how important such expansions are from the patient perspective.

I have a new grant funded by the HCFO Initiative at RWJ Foundation along with Amy Abernethy at Duke that will investigate this question in a prospective manner, looking at both hospice and non hospice palliative care in conjunction with Janet Bull and colleagues at Four Seasons. More on this soon.

Two Things at Incidental Economist

Two posts caught my eye today at the Incidental Economist. The first is a post on how well the Medicare Physician Fee Schedule works which I pass on without comment. I want to study the post and graphs a bit more.

The second is Austin's post on the issue of whether the main point of the Affordable Care Act is to redistribute income, which is related to a past exchange he had with Greg Mankiw on this topic.

It is common that individuals criticize policies they don't like by invoking redistribution of income. Progressives and Liberals for example might say 'the Bush tax cuts redistribute income toward the rich from the status quo' while conservatives might say 'the insurance subsidies in the ACA redistribute income to persons between 133% to 400% of poverty', again, as compared to the status quo. Both groups are correct--as compared to baseline, the two policies noted above would advantage certain groups, which has the effect of redistribution, as compared to the status quo.

I think there is a bit of sloppiness for both Liberals/Progressives and Conservatives in assuming that redistribution makes it self evident that the policy is bad. Because both groups support policies that have the effect of redistribution.

I cannot think of anything that government does, or could do that does not have the effect of redistribution. For something done by government to not redistribute income would require a tax that would have to be collected and then returned in the same exact same amount to those who paid it. Anything else (which is everything else) and there is redistribution.

This is not the same as saying that government is appropriately engaging in an activity. For example, Article 1, sec 8 of the Constitution clearly notes that the federal government is charged with common defense (Military). However, in levying taxes and funding the military, income is redistributed. If you think not, you should visit my hometown (Goldsboro, N.C., home of Seymour Johnson Air Force Base) if there is ever another round of base closings and see what folks there think about what would happen if the base were closed.

I think everything government does has the effect of redistribution. Do I have this wrong?

March Meeting of HRSA Neg Reg Committee

to reconsider how Health Professional Shortage Areas (HPSA) and Medically Underserved Areas (MUA) are designated will meet today through Thursday March 10, 2011 in Crystal City, Va.

Past links with some background from the February meetings: day 1; day 2; day 3.

The Committee was created by the Affordable Care Act and must file an interim report to the Sec. of Health and Human Services in April, 2011 and wrap up our work by Summer. I will be blogging throughout the meetings, which are open to the public.

10:45 am: sub-committee work groups meeting this morning, with the full committee convening after lunch. The work group that was looking at facility HPSA designations has done much good work and has suggested draft regulations that are useful in helping to move us ahead.

The workforce sub-group is also meeting and a key issue for this full meeting will be to consider the threshold of population to primary care provider ratio for designation. A key decision made at the last meeting was to include non physician primary care providers into the supply of workforce available. This will mean the ratios used for designation will be very different from the old 3500:1 or 3:000:1 for primary care physicians only that has been used since the mid-1970s.

The barriers work group that was considering the 3 non-provider parts of the index of medical underservice (health status, accessibility, ability to pay) has focused most since the last meeting on how to represent ability to pay and on the various measures of access.

Key issues on ability to pay have been whether there is a better measure of local economic situation than unemployment, because of the issue of persons leaving the workforce. Items considered have included 1 minus the population employed which is really an employment rate, with all included in the denominator. Other issues considered were looking for an alternative measure to poverty rate that better measured purchasing power in a local community. I think in all these issues it was much easier to describe the problems of existing measures than it was to propose a workable alternative.

12:30pm: We convened as a full group around 11:30am and have discussed the roadmap for where we are going and what time frame we will need to complete our work.

Then we had a presentation on a proposed process for medically underserved population designations and how they relate to facility and population designations. Key issue is what groups may be advantaged in terms of granting a medically underserved population designation. Lunch and the reconvene at 1:15pm.

2:15pm: We have been receiving a report and voting on recommendations from the workforce subcommittee. We are working through a variety of decisions about what types of providers to count in a series of idiosyncratic (but important) groups. For example, backing out federally supported providers such as National Health Service Corps physicians to keep from 'yo yoing' designations. Meaning if you count a NHSC doc, this could de-designate an area....then the area may be underserved and later designated to get a NHSC physician. Deep in the weeds now, but important details that have to be nailed down.

3:05pm: receiving report from Facility designation subcommittee and working through many issues. Key question is what types of providers (incl FP) would be eligible for designation as HPSA facility designations. Also discussing the issue of whether there will be facility MUA/P designations. Other key issues here that some want to address is the fact that local county jails are not eligible to get HPSA facility desingations, whereas state and federal prisons can receive a designation. Apparently, a person in county jail awaiting trial loses federal benefits like Medicaid even before a trial....some counties have thousands of inmates either awaiting trial or serving short(er) sentences.

3:50: we have received all reports back from workgroups. Facilities designation and workforce group is going to meet for the next hour to try and work through some sticking points surfaced from earlier this morning. I think we are closest to having the facility designation issues wrapped up, then the workforce decisions with some hard work left for the accessibility, health status and ability to pay aspect of the MUA index.

5:00pm: back in full meeting talking through recommendations from the workforce group. Going to have to start putting the parts together soon. Reminder, the MUA measure must address four issues:

• Health Status
• Accessibility
• Ability to pay for care
• Availability of primary care providers
  

New Model

described in Washington Post that functions as a membership and not as insurance; docs sidestepping insurance are making more money and giving patients longer visits per this story. The viability of such a practice depends upon enough people singing up, so there is some risk pooling. The biggest risk of such models seems likely to be that I would expect such groups to be successful at skimming the healthiest patients. However, it is interesting to see new models tried, and would be interesting to see how well you could scale up such an approach. Especially if you went to a guaranteed catastrophic insurance model, had a market for underneath private cover, and let patients also decide to opt into setups like this, it would be interesting to see how widespread this approach became, and whether my notion that it will mostly just be young health folks who sign up would turn out to be true.

(h/t Brad Flansbaum)

CBO: Four Observations

about the federal budget were put up on the CBO Directors blog this morning, from a speech given by the Director this morning. Those points are:

• First, if current policies are continued, the gap between spending and revenues will remain very large even after we return to normal economic conditions.

• Second, fiscal policy cannot be put on a sustainable path just by eliminating waste and inefficiency; the policy changes that are needed will significantly affect popular programs or people’s tax payments or both.

• Third, policymakers face difficult tradeoffs in deciding how quickly to implement policy changes that would reduce future budget deficits.

• Fourth, there is more focus in Washington on federal budget problems today than there has been since the late 1990s, and that focus has led to a range of proposals for tackling the problems.

These messages seem fairly clear, but I think that Doug Elmendorf is giving some gentle nudges to the current political discussions in Washington about the budget negotiations. Here is my interpretation.

The first point means that the tax code that we now have has absolutely no hope of producing a balanced budget under any imaginable set of benefit cuts that could be sustained. In fact, if we extend the current tax code through 2020, we will have a budget deficit even if we have NO FEDERAL SPENDING other than health care (Medicare, Medicaid, insurance subsidies), Social Security, Defense and interest on the debt. Without an increase in taxes collected as a percent of GDP, we have no hope of a balanced budget.

The second and third points taken together mean that the current budget debate in Washington (how much discretionary spending to cut from the current budget) is both irrelevant to the long run budget deficit problem, and is therefore either a sideshow or harmful because we are reducing domestic spending during a fragile economic recovery. Put another way, without long term reform of health care, social security and consideration of how big a military we need, and a new tax code we have no hope of ever having a balanced budget.

The fourth point seems to be a gentle nudge toward everyone understanding that there is a big problem, different approaches to address it have been put forward, and these issues are not like fine wine--they are not getting better with age.

I think there is some developing conventional wisdom that the President is not serious about the budget because he is opposed to a good deal of the domestic discretionary spending cuts proposed by the House of Representatives. In fact, the passage of a health reform law that lays the framework for dealing with costs is far more important to any hope of a balanced budget at any point in my life than whatever domestic spending cuts may come about. Don't like the Affordable Care Act? Then what is your health reform plan that will expand coverage and address costs? Or, lay out a plan and a rationale to not expand coverage but to only address costs. Until the Republicans lay out a health reform plan, that can pass the 60, 218 and 1 test, they are far behind in terms of credibility on the deficit. However, they are once again getting away with talking noisily about cutting a miniscule part of the problem while not addressing the most basic issue. Curtailing health care costs is a necessary, but not a sufficient condition to ever having a balanced budget in the U.S.

I still believe that Progressives/Liberals have more to gain from a sustainable federal budget than do Conservatives because they believe that government has a key role to play in modern life. Republicans have shown themselves to be quite happy to cut taxes but not spending and then say the inevitable deficit proves government doesn't work. And then argue that more tax cuts are needed because spending is too high.

I think that the time to push ahead on tax reform, Social Security reform and remaining open to tweaks to the Affordable Care Act that could make it both parties way ahead on health care is now. I believe it is correct in policy terms and I also think it will help Progressives and Liberals in political terms because focus on the real issues will show that cutting domestic discretionary spending is like spitting in the ocean. Further, serious talk of tax reform, Social Security and openness on health reform tweaks will help smoke out the fact that Republicans have only said what they are against in health policy and have put forward no coherent health policy plan.

I don't think the serious issues are going to be addressed before the 2012, and the next election will be fought out over the same familiar ground as 2006, 2008 and 2010: each side essentially saying 'we are not as bad as them.' I hope I am wrong.

What is the N.C. Republican Plan?

Governor Perdue vetoed H2 on Saturday because she said the bill to declare that the individual mandate does not apply in North Carolina was at odds with the U.S. Constitution, not needed because the constitutionality of the individual mandate in the Affordable Care Act is already being litigated, and because of unintended consequences related to Medicaid funding. Senator Berger, Republican leader in the N.C. Senate says that:

"There’s no doubt this veto is a political move designed to protect the interests of Barack Obama, Nancy Pelosi and Washington Democrats. But it hurts North Carolinians by forcing them to follow an unconstitutional law. The people of North Carolina expect their leaders to change the course of state government, not score political points or protect their political patrons.”

I would like to say amen to Sen. Berger's last sentence. Toward that end, Senator Berger and the Republican leadership in the N.C. General Assembly have been very clear about what they are against. It is now time for them to be clear about what they are for in the realm of health policy.

They look poised to pass a medical malpractice reform that would limit non economic damages to $500,000 and make it very difficult to sue Emergency Room doctors (raise the standard to gross negligence, such as being drunk at work, from standard negligence).

Is that it on health policy?

If the ACA goes away, what is the plan of the N.C. Republicans? Similarly, what is the plan of the national Republican party for a replace bill? I have written with suggestions of what an overall compromise could look like that attempts to expand coverage rates while addressing costs as the ACA does. Does Senator Berger (or anyone else in the state) have a better way to expand coverage while addressing costs? Further, I have noted a potential route forward within the ACA framework using a Medicaid and a 1332 ACA waiver.

Maybe these are not great ideas and the N.C. Republicans have better ones. The people of North Carolina desperately need to hear whatever health reform ideas they have.

Budget Deficit and Health Care

WSJ report noting Speaker Boehner saying he is determined that the 2012 budget address long term Medicare and Social Security cost problems.

To do this, he will need a health reform plan, because the budget deficit is primarily a health care cost problem. Social Security faces a purely demographic problem (it is a problem that needs fixing). However, Medicare shares the same demographic problem, but joins it with the fact that Medicare pays for health care, whose costs have been going up much faster than inflation for 40 years. The entire health care system has a cost problem; Medicare both contributes to it and is harmed by it because it is nothing more than a government insurance program that pays private doctors and hospitals for care. So, you have to address health care costs in the entire system.

We have no hope of a balanced budget without slowing the rate of health care cost inflation; doing so is a necessary, but not a sufficient condition for ever achieving a balanced budget.

The Affordable Care Act (ACA) provides a path to expanding insurance coverage via an individual mandate and a Medicaid expansion while addressing health care costs in a variety of ways. It remains controversial politically, but Republicans have no alternative that can expand coverage while addressing costs. To do so (expand coverage and address costs) will require a mandate of some sort (expand government insurance, individual mandate, employer mandate). You could attempt to address health care costs and accept 17-18% uninsured and maybe higher. That is a plausible strategy, but so far the Republicans have not owned that it is theirs. They act as if there is a simple, cheap way to cover everyone and reduce costs. But there is not.

I thought that after the ACA passed the hullabaloo would subside, that the law would continually be tweaked making it the strategy of both parties, and that we would begin the process of muddling through toward a (nearly) universally coverage system that gave us a chance to address health care costs. I was obviously wrong about that, and politically, the ACA remains toxic.

If we ever succeed in addressing health care costs it will mean that we spend less on health care in the future than we are projected to spend on our current, pre-ACA path. This will mean less care of some sort provided to patients and/or less payment to providers as compared to the status quo projection. This will be extremely hard to do. The only hope of taking on such a tough challenge is to obtain a general agreement in the country about how to deal with insurance coverage first. The big picture choices are:

• Determine some type of mandate(s) that is/are acceptable to move toward universal coverage
• Decide that we will accept 17-18% (and maybe more) of our population to be uninsured, and say that we will seek to slow health care costs but not try and expand coverage

I think the best way forward is to tinker with the ACA, and this is my suggestion of what a compromise could look like; it is a mix of substance and political 'wins' that appeal to both 'sides' but it will take something like that for our nation to decide on a strategy to move toward universal coverage and prepare for the hard work of addressing health care costs.

If such a compromise is not forthcoming, then Republicans owe us their plan. If it has a chance of achieving universal coverage, it will look something like the ACA (private insurance markets, mandates of some sort), or will include guaranteed federal catastrophic coverage as I suggest in the link above. If they are not going to propose such a plan, they owe it to the country to state that they will not seek universal coverage, and instead prefer to address health care costs while not addressing coverage, and then make the case for why that is the way forward.

We have to address health care costs if we are to ever have a balanced budget. I see two choices: make the ACA the health plan of both parties to expand coverage and address costs, or have the election in 2012 be litigated over whether we will move to address health care costs while seeking universal coverage, or not.

update 2:15pm: Health Affairs blog from today discussing need to control health care costs generally; haven't looked closely and what they suggest.

The Hospitalist Leader is a cool blog

I like the blog The Hospitalist Leader. If you go there now, you will find thoughtful posts on medical malpractice, the need to move to electronic medical records and how well the ARRA monies designed to speed EMR adoption worked, couched in the context of world hunger, and a beautiful piece reflecting on what it means to be a human being, alive and moving toward death (the video from '35-'41 minutes is especially moving because it is given to a room of NIH scientists). Archived materials include analytical and reasoned consideration of sticky topics such as physician pay.

The rise of the 'hospitalist'--or a physician with a totally hospital-based practice that is not necessarily in an academic teaching hospital is one of the more interesting changes in medicine the past 10 years or so. I am sometimes unsure if hospitalist is a specialty (I think it is) or a job description (I think it is this as well), but I think that such physicians are trailblazers in the sense that many of them are working as salaried professionals, without an incentive to over or under provide. Of curse there are probably incentives that may be quite explicit and others that are implicit. In any event, you should check out this blog.

Judge stays his ruling

Judge Vinson, the Federal Judge from Florida who found the individual mandate to be unconstitutional and nonserverable (which would invalidate the entire law), issued a stay of his own ruling today which allows the law to remain in effect and be implemented while appealed, presumably to the Supreme Court.

Kevin Outterson's take.

How To Lose An Argument Online

These are good guidelines (via The Incidental Economist).

Broccoli Mandate

Jim Hufford digs into the Broccoli-mandate-as-tool-to-make-the-individual-insurance-mandate-sound-scary-and-absurd metaphor.

NC Senate Passes S33

The North Carolina Senate yesterday passed S33 (36-13), (I am interviewed in the story) a bill that would limit non-economic damages in medical malpractice suits to $500,000, and would change the standard for malpractice for care provided in an Emergency Room from negligence to gross negligence, making it harder to sue. The suit wouldn't alter the ability to sue for medical costs or economic losses, like wages. Over half of the states have passed some form of medical malpractice reform over the past few years, and as S33 goes to the House, it looks sure to pass.

Some opponents say the law violates the North Carolina constitution; I have no idea whether this is the case or not.

The debate over medical malpractice is a timeless issue, coming and going as health policy moves in and out of the front page, and always engendering strong feelings. In fact, when I teach undergrad health policy classes at Duke, the most predictable class each semester is when we talk about medical malpractice. Roughly one-third of the kids will have a parent(s) who is a lawyer, and another thing a parent who is a doctor(s). That class discussion is always hot, and the only topic easier to get a dinner party really going where I live is whether Dean Smith or Mike Krzyzewski is a better coach.

Once S33 becomes law, will 'the problem' be fixed? What can be expected to improve in our state? What exactly do the sponsors of the legislation claim will be the benefits of the legislation? It is important to keep the goals of policy in mind up front, because that is the only way you can tell later if it worked. What are the biggest claims of supporters?

• Medical malpractice premiums will drop. This will likely be the case. One of the main sponsors of S33, Sen. Apodoca notes that the law should slow the increase in malpractice premiums that physicians must pay, making our state a more attractive place to practice medicine. This is probably the most solid claim about what the bill could do based on what has happened in other states, and it makes sense because the law will make it harder to bring a suit, and will reduce the size of the largest awards. However, we could still have a malpractice premium crisis next Fall or the next. The most likely even to trigger one is not a blockbuster malpractice case, but a Hurricane hitting our coast and causing huge losses (because the insurance industry is highly integrated). Frank Sloan's book on Medical Malpractice has a comprehensive discussion of the integrated nature of the insurance industry, and how many factors that have nothing to do with claims experience have historically lead to spikes in premiums.
  
• Health Care costs will drop because defensive medicine will decline. This is a dubious claim based on the experience of other states. Sen. Rucho, another key supporter of S33 notes reducing overall health care costs that are driven up by defensive medicine as a primary motivation for the bill. Defensive medicine undoubtedly increases costs, with the best estimates ranging from 1-9%; Sen. Rucho says 10-20%. Most of the research that estimates the size of defensive medicine asks providers to note what tests are defensive and therefore not needed medically, but ordered so that a physician can defend themselves if they are sued. The problem is that there are multiple motivations of order more tests, including getting paid, patients wanting more information and assuming more tests are better and habit. Earlier this week I posed on a recent study that estimated the size of defensive medicine in one specialty and demonstrates why it is not likely malpractice reform will appreciably reduce costs.

What does this law not address?

• The problem of medical errors. A Nov. 2010 study in the New England Journal of Medicine showed that the rate of medical errors in North Carolina remained high (25 injuries, or medically caused harms per 100 admissions), a decade after the Institute of Medicine report on medical errors, To Err is Human was published. There is a large patient safety problem in our state and country, and if S33 is the only thing passed by the N.C. General Assembly, we will have done nothing to address this. There are many, many more persons injured by medical care than lawsuits filed in N.C. (around 450 suits last year; many more injuries per year based in our state based on the best research, on the order of 10 times more).
  
• The adversarial nature of the patient safety/medical malpractice system. When litigation is the primary means of deterrent of substandard care, the adversarial nature of the system prohibits identifying those harmed efficiently, and learning from mistakes to try and lessen their occurrence in the future. I know a great many doctors personally, and it is true that there is a psychic burden they have that is related to lawsuits, that I think flows out of the adversarial nature of the system. Especially after a few drinks, most docs who I know will share concerns about quality and errors, and that patients' lives can be ruined by mistakes. At the same time, they remained haunted by the idea that one lawsuit could ruin their life. Both of these are true, and this bill does nothing to change the reality of an adversarial system that is the essence of this conundrum.

Medical malpractice reform would be a part of a comprehensive policy effort to patient harm cause by medical errors that moved away from an adversarial system, and one that was based on the principles of identifying and compensating for harm, perhaps using a medical court; seeking to understand why errors occurred with a goal of making them less common; and having a separate process to determine the need for remedial education and/or sanctions against a physician.

S33 simply doesn't address the root causes of the patient safety/medical malpractice problem. However, the House could still amend this bill and make it a more balanced patient safety and medical malpractice law.

update: added N.C. to the title of the post.

Does Medicaid Make You Sicker?

No. Austin Frakt walks through the research details to get you there. Here is a summary, but this is the money quote:

"there is no credible evidence that Medicaid results in worse or equivalent health outcomes as being uninsured. That is Medicaid improves health. It certainly doesn’t improve health as much as private insurance, but the credible evidence to date–that using sound techniques that can control for the self-selection into the program–strongly suggests Medicaid is better for health than no insurance at all." (itals in the original post)

Update: Harold Pollack weighs in.

More on Palliative v. Disease Mgmt

Brad Flansbaum with a helpful suggestion in the comments to yesterday's post asking what is the difference between palliative care and disease management?

Brad says:

• 1) Dx Mgt: Organ based (CHF), infection based (AIDS, Hepatitis C), system based (Lupus)

• 2) Palliative care: "globally" based, not focused on specific diagnostic disease based criteria.

Anyone can meet the defined needs of palliative care, but not the reverse with dx mgt.

For example: folks with CHF can meet palliative care criteria (general application of SF-36, ADLs, depression scale, pain scale), but not the reverse, ie, NYHA or ACC criteria for heart function.

I find the notion that anyone could need palliative care (help focusing on goals of care, alleviation of symptoms) but not all persons needing palliative care would fit into a disease management paradigm to be helpful. I think that someone with CHF and being cared for under a CHF disease management program would likely be able to benefit from palliative care, but I think you could imagine someone being cared for under some disease management protocol not needing palliative care (high cholesterol for example).

From a research standpoint there is a need for more clarity in what is encompassed in a palliative care intervention, especially when thinking about external validity and how/whether you can replicate, and roll out the results in multiple locations.

Rep. Ellmers in Her Own Words

Rep. Renee Ellmers, a nurse who was elected in November to represent the 2nd District of North Carolina is here speaking about problems with the ACA. She ran her campaign at least partly in opposition to 'ObamaCare' but also talked of a replace bill. Repeal and replace. I would like to give her the benefit of the doubt, but I still don't hear what she is for. And some of her comments directly contradict one another. For example:

• Medicaid expansions are too expensive for states
• Doctors cannot afford to treat Medicaid beneficiaries because the payment rates are too low

The reason the ACA depends heavily on Medicaid expansions (about half of the 32 Million persons who would be covered in 2020 who would be uninsured without the ACA will have Medicaid) is that it is the cheapest way to expand coverage. It is cheaper than doing so through private health insurance precisely because Medicaid pays lower rates to providers. We could easily just raise Medicaid rates to providers, it would just cost more. These two specific problems she notes work in direct opposition to one another.

I have suggested a route to a compromise. Maybe it is still too grand for Rep. Ellmers. Fine. It is very easy to say what you are against, but much harder to come up with something better.

Reorg of Health Reform Office

The White House Office of Health Reform is dissolving with its former Director, Nancy-Ann Deparle becoming President Obama's Deputy Chief of Staff. The tasks of the Office of Health Reform are being assumed by the White House Domestic Policy Council (DPC). My friend and fellow UNC School of Public Health alum Jeanne Lambrew is moving from the Department of Health and Human Services into the DPC with the title of Deputy Assistant to the President for Health Policy. Jeanne Lambrew is one of the smartest, most dedicated people that I know. Good for her. And good for us to have someone like that advising the President. h/t@igorvolsky.

Setting Up Exchanges

The Affordable Care Act (ACA) contains one truly radical notion: individuals will shop for their own health insurance. That is a rare event in the U.S. now, with only 14 Million or so persons seeking a quote, going through underwriting, being approved, and paying premiums. Around 110-15 Million folks have government provided insurance (Medicare, Medicaid, VA, etc.) and about 160 Million people have employer based insurance. The remainder are uninsured.

The ACA tells states that they must set up an insurance marketplace (called exchanges) in which individuals who are otherwise insured and small businesses may shop for policies. States have broad discretion in setting up these exchanges, including the makeup of a board to guide the development of the exchange and its policies.

The Raleigh, (N.C.) News and Observer this morning has a story about an emerging dispute about who will have seats on the board that governs the creation of exchanges in N.C. At issue is who will be represented on the board. A current bill under consideration in the N.C. General Assembly would grant a seat to Blue Cross/Blue Shield of N.C., the dominant insurer in that state; seats for two other insurers; representatives from the business community; the State Medical Society; and the hospital Association. What is missing are consumer advocates, say critics.

I agree a consumer voice on such a board is important, but think that some other types of voices are also needed, notably:

• health policy type(s) from the large research community, both university based and otherwise that exist in our state;
• experts in communication of complex information. More than marketing is needed, but insight into how information on plan design is communicated to help people make their choice of plan. I am a health policy guy and my wife is a nurse, and we still often puzzle over the materials that Duke provides to help us decide what plan to pick. Communication of plan design, premiums and deductibles in a way that stands up to people then living their lives is crucial for success of any private-insurance based reform.
  

In the discussion of this issue there are hints of bad intentions and bad faith. I don't have any insight into anyone's motivations. But, the composition of the board to set up the most consequential health policy innovation in North Carolina in quite a long time needs to be broader than is currently being discussed. Both the makeup of the board, and all that they do needs to keep in mind that last step required for any reform based on private insurance to work is a consumer picking their own insurance plan. And remember that very few people do that today.

Palliative Care v. Disease Management

I was in a meeting yesterday planning the outlines of a NIH grant to test the effect of early palliative care on quality of life and costs among patients with Congestive Heart Failure (CHF). A key aspect of any randomized control trial (RCT) is having clarity around what comprises the intervention. In a RCT of a pharmaceutical, the intervention is clear--one group of patients receives a drug, while the other group (the control group) does not. The difference(s) if any in patient outcomes are then inferred to be due to the drug since randomization is assumed to balance out any other patient-specific and treatment variables that could influence outcomes.

A key part of developing the protocol for our study is defining what will constitute the palliative care arm of the study, meaning what will those patients randomized to palliative care receive that the control group will not? There are many details that I won't get into. But, in the discussion of what the palliative care intervention would be like, an interesting question was asked.

• What is the difference between palliative care and disease management?
  

For me, the key aspect of palliative care is focus on patient goals of care and the provision of symptom relief, regardless of prognosis. Listening to patients and knowing how to process conversations not only with patients, but also families is a key part of palliative care. When I think of disease management it invokes images of following guidelines and menus of options given clearly defined clinical markers/signs/milestones, and not as much discretion as exists in palliative care. For disease management, you obtain information about patients, and then look to guidelines to motivate what comes next. For palliative care, you obtain information about patients, and provide information about options, but the locus of control should then move back to the patient to chart the way forward.

Sometimes the simplest questions are the hardest to answer. Does anyone have any thoughts about the differences between palliative care and disease management? Generally, or in the case of CHF, specifically?

The Worst Generation

David Frum nominating the baby boomers who have held the power during the past 10 years (meaning moving into and now slowly out of the economic crisis) and who have not cared well for the younger generations in doing so.

I think he has it just about right. The college kids of today are a bit more practical than their parents, and I think the future center of the country is going quite liberal/libertarian socially, but what I would call 'cautiously progressive' meaning able to engage a debate about spending and taxes with the proviso that the two need to be the same over the long run. One of the political parties will better adapt to this emerging reality.