freeforall--a health policy discussion

Deal on health reform key to sustainable budget

2011-09-27T11:41:00.002-04:00

Someone who wanted to write about my book asked for a 200 word summary on the next steps after the Affordable Care Act that are the heart of my book Balancing the Budget is a Progressive Priority. Here they are:

Health care costs are the biggest obstacle to a sustainablebudget, and what our country most needs is a bipartisan way forward to addressthe inter-connected problems of cost, coverage and quality. This is what Ithink a bipartisan outcome would look like if the parties actually negotiated:

· Federally guaranteed, universal catastrophiccoverage with more insurance available in exchanges. This would render theindividual mandate moot

· Modify the tax treatment of employer providedinsurance

· End Medicaid by transitioning all dual eligiblecosts to Medicare, and buying private gap policies for other beneficiaries viaexchanges

· Enable Medicare to become an active purchaser ofcare

· Enact comprehensive medical malpractice reform

· Adopt a cap on overall federal health carespending, with a payroll tax based fail safe that is triggered if specified savingsare not achieved

This list includes policy options that I think are clearlywarranted along with others that I think are more political in nature. However,that is what we most need, a political solution that provides both “sides” withsome credit, but most importantly, gives them both responsibility for movingahead with the hard work of developing a sustainable health care system.

**********

As an aside, if you hear a politician talking about our need for a long range balanced budget, you should wonder about their health reform plan. If they don't have one, then they have no plan for how our country ever having a balanced budget again. If they have a plan, ask your self if it can get 60 votes in the Senate, 218 in the House and be signed by this or any President. If no, then they don't have a plan, they have a fantasy. The Affordable Care Act has the benefit of being law, and it is the only reform vehicle we have or are likely to have in the near future. It can be tweaked in small or large ways.

More on walking and chewing gum

2011-09-26T11:04:00.001-04:00

Christina Roemer in today's New York Times argues that we need much more in the short term to try and stimulate our economy, while beginning to take credible long run steps to address our budget deficit. In short, walking and chewing gum at the same time. From the prologue to my book Balancing the Budget is a Progressive Priority:

The decision byStandard and Poor’s to downgrade the long term U.S. debt to AA+ from AAA statusseems to have been triggered by the political theater we just witnessed, aswell as the policy “no man’s land” into which we have arrived. For all thebluster about the deficit, the debt ceiling deal did not address the primary driversof our long term problem: a tax code that cannot raise the revenue necessary topay for any plausible level of overall spending, and health care costs.

We have plenty of shortterm problems that are going unaddressed as well. A quick look at theemployment reports of the past year show that if we hadn’t lost government jobsthe unemployment rate would be a percentage point lower, there is growingevidence that some sort of mortgage relief will be required to unstick thehousing market, and unmet infrastructure needs to enable our economy to thrivein the 21^st Century abound. Any short term economic intervention andinvestment seems crowded out by the noise of the debt ceiling debate and thequietness of the action so far undertaken to address the nature of the longterm problem. We need to be able to walk and chew gum at the same time, but nowwe appear unable to do either.

The book provides a detailed outline of what the long run next steps in health care reform should look like, along with suggestions for tax reform and Social Security. It does not have to be either/or....

The President's Plan

2011-09-19T20:12:00.000-04:00

President Obama released an economic growth and deficit reduction plan that he says would reduce the deficit by around $3 Trillion over 10 years. The plan is notable for its call to increase taxes on higher income persons (making over $1 million), reduction of war spending, and a variety of other spending reductions including changes in Medicare payments to certain providers as well as increasing Part B premiums on higher income beneficiaries and increased co-pays for things like home health.

The President's rhetoric today that raising taxes is not class warfare but math is correct. Taxes received as a percent of GDP will have to rise and spending will have to fall if we are ever to have a balanced budget again. I give the President credit for laying out a credible plan with about twice as much deficit reduction as what the Super Committee must identify, while also providing a plan to attempt to increase economic growth. We need to spur the economy in the short run while charting a path to a longer range balanced budget.

I have long preferred to have a Social Security fix sooner rather than later, mainly becasue it must be done some day, there is no guarantee progressives will be in a better position politically later, and most importantly because if we managed to agree to a fix it would work as planned, allowing us to focus on health reform and addressing health care costs which will have many mid-course corrections. My book lays out these arguments in great detail.

However, given the debt limit talks, it is not clear that the House Republicans would vote for any grand compromise in any event. This plan won't pass, but by drawing clear distinctions with Republicans, it may paradoxically make such a compromise more likely down the road. Here's hoping, but I am not holding my breath.

Why I Would End the Corporate Income Tax

2011-09-12T11:45:00.000-04:00

There seems to be a consensus that tax reform is the only plausible way that the Super Committee could pass something that increased the revenue collected by the federal government as a percentage of GDP. The table below demonstrates the essence of tax reform: the trade off between eliminating tax expenditures (deductions, credits, exclusions) and declining marginal rates to raise the same amount of revenue. The table also shows the proposed lowering of the corporate tax rate from the current 35% to 28% under the so-called illustrative plan of the Fiscal Commission (that maintained some tax expenditures; p. 29).

The idea in dropping corporate tax rates is to incentivize business activity. In my book, Balancing the Budget is a Progressive Priority, I mostly adopt the tax reform laid out by the Fiscal Commission and agree that 21% of GDP as the amount of tax revenue at which to seek balance is doable and a worthy target. However, I think we should end the corporate income tax (rate of 0%). This is obviously not the typical "progressive" policy suggestion, and it was not what I thought before I began writing the book. But, I changed my mind while considering the options. Here is my thinking:

It is a small part of total Federal Tax receipts.The proportion of the federal tax receipts raised by corporate taxes was 35% in 1945 and has been no more than 10% the past 30 years; it was 7.2% in 2010.
It is impossible to efficiently tax corporations. One reason corporate tax receipts are low is corporations have successfully lobbied for loopholes. This means the effective tax rate for most corporations is far below the nominal 35%.
Dropping the rate to 28% and ending loopholes would be an effective tax increase for many corporations. Many Corporations will have a powerful incentive to oppose such a reform because it would result in an effective tax increase. The most powerful corporations presumably have the lowest effective rate, making any change other than ending the tax very difficult.
This should increase the incentive to produce new jobs in the U.S. One reality is that job creation is slow now even though many corporations have lots of cash. It is true this policy will provide them with more. Some say that uncertainty is the culprit of slow job creation, and this would certainly end tax-based uncertainty. If this did not spur job growth then we would know that and could move on from there with different policy suggestions. Matt Yglesias suggests greatly lowering the corporate tax; his suggestion makes sense, but I think we might as well go all the way and end it.
Politically, if progressives would push for this it would end (maybe?) the meme that we hate business.

The current corporate tax system is just not worth it. It seems the best course of action to me is to get rid of it. To make up for the lost revenue of ending the corporate income tax I suggest the following:

make capital gains and dividends normal income (assumed in table above)
increase the top marginal personal income tax rate (I am unsure of how much it would have to rise)
bring back an inheritance tax (I suggest 45% over $3.5 million and index the amount)

Book Highlighted in Duke Today

2011-09-01T13:59:00.002-04:00

My book Balancing the Budget is a Progressive Priority is highlighted on the Duke Today site this afternoon. I will be blogging about some of the policy recommendations in the book after Labor Day, both here and where I blog daily The Incidental Economist.

This week I have blogging about lessons for health policy that can be learned from the National Flood Insurance Program.

Q and A-1

2011-08-23T12:43:00.005-04:00

I am going to answer some questions sent by readers about my book Balancing the Budget is a Progressive Priority.

The title of your book is "Balancing the Budget is a Progressive Priority". I consider myself a Conservative. Does this mean that there is not a message in the book for me?

No, of course not. In fact, I note that what the country most needs to respond to health care costs (ch. 7) is a political deal that allows people of all political stripes to both get some "credit" for health reform, but most importantly to have "some responsibility" for doing the hard work of addressing health care costs. Currently, health reform is a political football and there is no hope of moving ahead so long as every new study, finding, etc. is first and foremost the next "projectile" is a political war about health reform. It will take every "side" if we are going to truly address health care costs.

Why include Progressive in the title then? Basically, the book is written to Progressives who have traditionally focused on protection of key programs such as Medicare, Social Security, and Medicaid. In that sense, I am addressing my arguments to people with whom I generally agree politically and in policy terms. I think we have been slow to respond to the need to change our budget to achieve long term sustainability. It is true that I do not generally prefer the policy solutions often espoused by "Conservatives" but that is not always the case. And I fully realize that there is no way I would ever get I want in terms of the way forward. It will take compromise.

A word on labels. I would define a Progressive as believing that collective action (government) has an important and active role to play in improving the lives of people. However, resources are limited. In that sense, I would call myself a cautious Progressive. If people who call themselves different things identify or agree with some of the themes/ideas of the book then great! We will be on our way to practically solving some problems. I wouldn't expect anyone to agree with me about everything.

The Monkey Cage on My Book

2011-08-22T19:47:00.004-04:00

John Sides at The Monkey Cage has a post about Balancing the Budget is a Progressive Priority and my experiment with self publishing the book in order to get it out in the midst of the debate this Fall around what the deficit reduction plans of the Super Committee will look like.

The past few days have brought about some interesting conversations with my colleagues in the Sanford School of Public Policy at Duke where I teach about the publishing avenue I have taken.

Kelleher--You Need a Third Law

2011-08-19T11:21:00.003-04:00

Paul Kelleher, a great blogger at Something Not Unlike Research, has provided some thoughtful comments about the second of the "two laws" that I say govern all health care systems at the beginning of Chapter 3 in my book Balancing the Budget is a Progressive Priority:

Everyone dies
Before that, the healthy subsidize the sick

Paul is a philosopher by training and says:

I am interested in the moral and conceptual issues connected to Taylor's Second Law and its corollary that health policy is fundamentally about how the healthy will subsidize the sick.

Go and read Paul's post as it is a very thoughtful explication of what underlies what I call the second law. He is correct that I mostly think of the second law as a statement of fact, but reading his post lets me know I need to think a bit more about this, especially since it is stated as a "law." The challenge of stating a third law strikes me as important, especially given that our country needs to learn to talk more explicitly about the difficult public policy decisions and trade-offs inherent with health care reform.

My Book is Available on Amazon

2011-08-16T15:44:00.007-04:00

My adventure in self-publishing has gone live, and Balancing the Budget is a Progressive Priority is available on Amazon. There are some formatting issues with the book that are being addressed and the revised version (hopefully within 24 hours or so) will be delivered to anyone buying it when you sync in the future. It turns out that the technical details of self-publishing a book are more difficult than I thought....but the text that is out now is the text. UPDATE: These are fixed as of ~7pm 8/17/11.

I started writing this book about 14 months ago thinking that the goal would be to try and put discussion of the balanced budget onto the national agenda. I had planned to start seeking a traditional publisher now, but the timing of such a book (next Summer at best) would likely have come much too late for the coming policy discussions this Fall and Winter, especially with the creation of the super committee. Hence, I decided to put out a pared-down version of my argument in a self-published e book.

Many say that we need to be supporting the economy now, instead of focusing on the budget deficit. I think we need to do both, and that the lack of a long range plan for a balanced budget actually crowds out the ability to undertake short term policies that might support our sluggish economy.

From the prologue of the book:

The decision by Standard and Poor’s to downgrade the long term U.S. debt to AA+ from AAA status seems to have been triggered by the political theater we just witnessed, as well as the policy “no man’s land” into which we have arrived. For all the bluster about the deficit, the debt ceiling deal did not address the primary drivers of our long term problem: a tax code that cannot raise the revenue necessary to pay for any plausible level of overall spending, and health care costs.

We have plenty of short term problems that are going unaddressed as well. A quick look at the employment reports of the past year show that if we hadn’t lost government jobs the unemployment rate would be a percentage point lower, there is growing evidence that some sort of mortgage relief will be required to unstick the housing market, and unmet infrastructure needs to enable our economy to thrive in the 21^st Century abound. Any short term economic intervention and investment seems crowded out by the noise of the debt ceiling debate and the quietness of the action so far undertaken to address the nature of the long term problem. We need to be able to walk and chew gum at the same time, but now we appear unable to do either.

As the super committee gets underway, this book is really my version of what the "grand bargain" should look like. Perhaps movement toward one will enable short term policies to support the economy.

Book Out Next Week

2011-08-12T14:34:00.002-04:00

My book, Balancing the Budget is a Progressive Priority will be out next week via Amazon Kindle. At the heart of the book are my suggested next steps for health care reform, because there is no hope of a balanced budget without a means of dealing with health care costs. The 10 year deficit reduction needs as far as the work of the super committee goes is only a part of the story. In the "out years" the impact of health care costs absent more reform are unimaginable. So, if you want a balanced budget ever again, you need a health reform plan.

Everyone is buzzing today about the 11th Circuit Court of Appeals ruling that the individual mandate in the ACA is unconstitutional, but severable, meaning the remainder of the law could remain even if the mandate is invalidated. There are a variety of policy remedies that could be used to try and reduce adverse selection in the absence of an individual mandate. In policy terms, all would not be lost, and the mandate is quite weak in any event. Politically, I think it is a different story.

The Supreme Court will now almost certainly hear the case, and perhaps rule next Summer just as the Presidential campaign hits full boil. The "losing side" be it President Obama and the Democratss or the Republican party will receive quite a political blow.

I don't believe there is any perfect health system and certainly no perfect health reform plan. What our country most needs is a way forward in health reform that provides both "sides" with some credit, and most importantly, which makes both sides responsible for the next, harder steps in addressing health care costs. Currently, every health policy study, finding or news items is first and foremost the next salvo in a political war that is being waged over the ACA. We have no hope of doing the hardest things in health reform as long as it remains politically toxic.

Democrats do not want to see their major policy achievement lose a key aspect, and Republicans, if they are smart will realize they do not have a coherent health reform plan and that they need one if they are serious about achieving a balanced budget some day.

Both sides have an incentive to remove the uncertainty that a Presidential-year court ruling on the mandate might bring and strike a deal. The book suggests the outlines of such a deal that would have at its heart guaranteed, catastrophic insurance that would render the individual mandate unneeded, and render the court cases moving toward the Supreme Court, irrelevant.

More next week.

Balancing the Budget is a Progressive Priority

2011-07-24T14:15:00.001-04:00

I am publishing an e book entitled Balancing the Budget is a Progressive Priority via Kindle Direct Publishing August, 2011. I started working on this book a year ago, and had planned to seek publication via a traditional route, but given the current discussion of these issues in Washington, I decided I wanted to go ahead and get my ideas out there.

For readers of my blogging, many of the themes will be familiar, but the book is my attempt at a comprehensive though brief treatment of our nation's long term fiscal problems framed in the context of the next steps that we need to take after the passage and impending implementation of the Affordable Care Act (ACA). Slowing the rate at which health care costs are growing is a necessary, but not a sufficient condition to developing a long range balanced budget.

It is a premise of the book that we will deal with the deficit and rapidly accumulating debt at some point because we will reach a crisis point in the future; the only question is whether we will do so in a reasoned, thoughtful manner, or whether we will be forced to act in the midst of a debt-driven crisis that limits our options. It is a claim of this book that Progressives need a balanced budget more than Conservatives do because we believe that government has an important role to play in modern life to make the lives of our people better.

Lack of a long term plan to move toward a sustainable budget crowds out short term Progressive priorities: infrastructure, green technology, more efforts to support the economy in our continued period of slow growth and so on.

The current debate regarding the debt limit in Washington, DC is insane and definitely not reasoned--we are at great risk of a self inflicted harm to our economy due to hesitancy to enable the executive branch to pay the bills to implement the budgets that Congress already passed. Short term cuts in discretionary spending is the last thing that we need in a weak economy. And it is not necessarily conducive to the best policy to be discussing such important changes in the context of impending default of our debts. However, discussion of the long term fiscal problems of our nation has definitely been put front and center on the national agenda and progressives have got to engage. My book makes the case that developing such a long range plan should be a priority for progressives, both in policy as well as political terms.

I will be blogging a bit on the book here at my old blog instead of The Incidental Economist because we try and focus on research evidence at TIE. Though based on my reading of some research, this book is very much my personal version of the way the world should be. If you like the way I blog, you may be interested in knowing my thoughts.

I now blog at the Incidental Economist

2011-03-18T10:58:00.003-04:00

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

2011-03-17T12:45:00.002-04:00

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

2011-03-16T22:16:00.004-04:00

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?

2011-03-16T05:15:00.004-04:00

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

2011-03-16T05:00:00.002-04:00

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

Hospice Margin Projections

2011-03-15T12:01:00.007-04:00

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

2011-03-15T09:40:00.006-04:00

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

2011-03-14T14:45:00.001-04:00

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

2011-03-14T09:47:00.001-04:00

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

2011-03-14T06:58:00.003-04:00

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

2011-03-13T08:15:00.002-04:00

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

2011-03-12T08:48:00.006-05:00

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?

2011-03-11T16:05:00.003-05:00

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

2011-03-11T05:00:00.002-05:00

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

2011-03-10T08:23:00.011-05:00

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

2011-03-09T09:59:00.008-05:00

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

2011-03-09T05:00:00.002-05:00

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

2011-03-08T12:02:00.004-05:00

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

2011-03-08T05:00:00.007-05:00

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

2011-03-08T04:50:00.001-05:00

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

2011-03-07T15:47:00.005-05:00

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?

2011-03-07T07:05:00.003-05:00

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

2011-03-04T10:45:00.005-05:00

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

2011-03-04T05:00:00.003-05:00

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

2011-03-03T15:48:00.003-05:00

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

2011-03-03T13:00:00.001-05:00

These are good guidelines (via The Incidental Economist).

Broccoli Mandate

2011-03-03T09:00:00.001-05:00

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

NC Senate Passes S33

2011-03-03T08:00:00.003-05:00

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?

2011-03-03T07:00:00.004-05:00

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

2011-03-03T05:00:00.003-05:00

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

2011-03-02T10:36:00.003-05:00

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

2011-03-02T10:11:00.004-05:00

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

2011-03-02T06:50:00.003-05:00

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

2011-03-02T05:00:00.002-05:00

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

2011-03-01T16:48:00.004-05:00

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.

Hospice v. Palliative Care

2011-03-01T11:59:00.003-05:00

Interview with Diane Meier where she nicely defines hospice and palliative care and sets these both in the context of Medicare policy and health care reform (via @CAPCPalliative which you should follow on twitter if you are interested in these issues as well as @DianeEMeier).

kevinmd.com on medical malpractice

2011-03-01T06:46:00.003-05:00

kevinmd.com syndicated a column of mine last night that I wrote on medical malpractice reform that first appeared in the Raleigh, N.C. News and Observer in August, 2009. A few have emailed me and asked questions in relation to this, so here are a few recent posts that were triggered by the N.C. General Assembly discussing malpractice reform in the current session, all in one place:

Overview of my thoughts on S33
follow up with some more info about NC
wondering about what concerns about juries for medmal means about the criminal justice system
noting that we need to be clear about the goals of malpractice reform
post from August 2010 noting why malpractice reform wasn't a bigger part of the debate around the ACA

President Endorses Wyden-Brown

2011-03-01T05:00:00.003-05:00

President Obama yesterday announced his support for the Wyden-Brown modification of the ACA that would allow states to receive waivers to the law's provisions such as the individual mandate in 2014 (pushed earlier from the 2017 date for waivers now in the law), so long as the state showed that it could meet the following requirements:

expand insurance coverage rates to similar levels that would be achieved by implementing state-based insurance exchanges
provide similarly expansive benefits defined in the law
have insurance be as affordable as it would have been in exchanges
not increase the cost to the federal government compared to implementing the ACA

Basically, Wyden-Brown says that states can try an approach different from an individual mandate and a state-based insurance exchange so long as they can achieve similar coverage with the same amount of federal dollars.

This puts opponents of the ACA in a difficult position for two reasons. First, it would grant states more flexibility, earlier than is now available, which will be politically popular. Second, the IFs of Wyden-Brown are substantial, notably that a state can try different models so long as they can move from around 17-18% uninsured (national average) to 5-6% uninsured. This is a big if, that will be impossible to do without some form of mandate. The big picture mandate possibilities are:

government insurance (like Medicaid expansion)
an employer mandate (Hawaii has long had one, and has around 91% insurance coverage)
an individual mandate (Massachusetts has one, and has around 97% insurance coverage)

If you are opposed to all three of these, you have no credible way to expand insurance coverage while also trying to address health care costs and problems with quality. Opponents of the ACA have been quite clear about what they are against, but have not provided specificity about what they are for. In one sense, they are free riding on what they are against, and have so far harnessed this politically without having to get specific about what they would do. The passage of Wyden-Brown would essentially call the bluff of opponents of the ACA and say 'go ahead and do it your way.' This will help demonstrate that they do not have a way that can substantially expand coverage rates.

The types of waivers that are likely under Wyden-Brown would seem to fall into two main types:

more progressive or expansive reforms such as those desired by Vermont
opening up of exchanges as envisioned by the ACA to large employers

It is unclear how specific the definitions of 'benefits as expansive as those in the exchanges' will be interpreted. Further, what if a state seeks to go beyond what would happen under the ACA in terms of coverage would they get more discretion in other areas? For example, would a state be able to provide exchange-level coverage to 94-95% of their population, and attain universal coverage by providing much less expansive (catastrophic) coverage for the 5-6% who would otherwise have been uninsured after implementation of the ACA?

There are plenty of unanswered questions, but the announcement yesterday is a sign that we are likely to see continued movement toward increasing state flexibility in implementing the ACA.

Medicaid Costs

2011-02-28T22:25:00.002-05:00

Matt Yglesias with a nice chart showing the percent of total state spending consumed by Medicaid across the nation. Both the long term federal budget deficit problem, and the short term state budget problems are most fundamentally health care cost problems. Dealing with health care costs will be the most important domestic policy issue for the next 30 years.

Close to Home

2011-02-28T10:23:00.004-05:00

Austin Frakt asking what if colleges had to refund tuition if students didn't get a high paying job? Hmmm. It is true that just about the only thing going up as fast as health care inflation the past 30 years is the cost of college. The next bubble? Duke this weekend announced the cost of attendance for 2011-12: $53,905.

What is the goal of Malpractice Reform?

2011-02-28T06:59:00.008-05:00

Medical malpractice is an issue that seems to ebb and flow. During health reform, it went away, I think because it is not what Democrats naturally focus on in health policy discussions because trial lawyers are such a large constituency, and Republicans went silent on this traditional issue of theirs because pushing for more on medmal reform would have too obviously lead to a deal on the ACA.

Now that the ACA has been passed, opponents remain viscerally against its implementation, yet no clear vision for what they would replace it with has been offered, and we await court rulings on the constitutionality of the individual mandate. When Republicans drive the agenda as they do in the North Carolina legislature, medical malpractice reform is the first health policy issue to be brought up (Republicans control the House and Senate in NC), in the form of S33. Here are past posts I have written on S33: here and here and here.

In any public policy debate, it is important to take a deep breath and ask yourself what problem is being addressed? When discussing the area of malpractice reform the following problems tend to be brought up by advocates:

Frivolous lawsuits. This is seen as a self evidently misuse of the legal system.
Defensive medicine. This is the increase in the health care costs that result due to physicians ordering unneeded tests and the like in order to be able to defend themselves if need be at trial. This tends to be the main reason advocates claim to be for reform.
Reduction of malpractice insurance premiums. If premiums are lower, it reduces the cost of doing business for physicians. This is linked to the issue of supply of physicians, especially the notion that a state with a more litigious climate would lose doctors to another state. There are also intangible benefits of reducing suits for physicians in the form of less worry.

The main argument of advocates is that reform of medical malpractice will reduce health care costs as defensive medicine is reduced. How big of a reduction could be expected? The CBO estimated in Fall, 2009 that a national reform that adopted malpractice caps similar to what has been enacted in Texas would reduce the federal budget deficit by $54 Billion over 10 years ($41 Billion in reduced medical care, and $13 Billion in indirect deficit reduction). That is a substantial amount of money, but keep in mind the 10 year total health system spending projection for the same 10 years was around $35 Trillion. So, savings due to malpractice reform are no panacea for our cost problems.

A recent study linked by Avik Roy of Orthopedic physicians in Pennsylvania says that 35% of imaging costs are driven by defensive medicine. This study made me perk up because it is prospective, meaning you investigate something as it takes place, and don't ask people after the fact why they did something. Generally, a prospective study has less bias than does a retrospective study, in which you would be assigning motive after the fact. In this study physicians were noting which tests were medically unnecessary, but ordered simply to provide them with protection should they be sued (they could use the test to show they took care in treating patients).

I cannot find a full copy of the study to completely evaluate the methods, but it sounds like from the abstract that it was a voluntary sample, which might be expected to draw physician participants who are most worried about malpractice, therefore overstating the effect of defensive medicine. I think that in this case, the prospective nature of the study does not necessarily produce better results because they are asking physicians to identify the existence of something that most of them believe to self-evidently be the case. However, in this issue, behavior change by physicians will be necessary for defensive medicine costs to be reduced, so it is hard to disentangle perception, interest, motivation and action.

Putting questions about the methodology aside, lets say that the figure 35% is correct, and that 35% of all imaging ordered by Orthopedic Surgeons is due to defensive medicine AND they know this at the point of ordering the test(s).

This would mean that if we fixed the medical malpractice problem that imaging costs associated with orthopedic practice would be reduced by 35%. This would be a tremendous savings and if we ever slow health spending increases it will mean that some care that would have been provided under the status quo will no longer be provided. Further, if this 35% reduction in imaging costs took place, orthopods will no longer get Christmas cards from Radiologists, but I digress.

The evidence from states that have passed robust malpractice reform shows very little effect on overall costs, though such caps do reduce malpractice insurance premiums for physicians. This means that either the 35% figure is something that is highly specialty specific, or is a case of physicians assigning a particular motivation for doing a test when in fact a variety of motivations exist. [variety of links on the issue of malpractice caps not slowing health care costs a great deal]

We need a more balanced, comprehensive reform of patient safety and medical malpractice, along the lines suggested by the work of Michelle Mello and others. Now the debate is almost always one sided. In fact, here is a press release from the American Academy of Orthopedic Surgeons last week noting the release of the Pennsylvania study noted above, citing a study showing that 4 in 10 suits are filed in the absence of an error, much less negligence, to focus attention on too many suits. However, this same study group also found that 19 or 20 cases of true negligence did not result in a suit. Similarly, legal groups tend to focus only on one side of this story as well.

There is a patient safety and quality of care problem that is best addressed through a change in the medical malpractice system away from an adversarial system toward one that focuses on addressing errors, compensating those injured, seeking to reduce future errors, and stabilizing the malpractice insurance system. S33 in North Carolina does not do this.

update: earlier this morning a one line post was linked....a post fail.
Another update, 10:20am: via Brad Flansbaum, a good piece in The MD column in LA Times arguing reasonably for a more comprehensive reform.

update: 4:30pm: I revised the post to reflect that the CBO estimated that the malpractice policies they reviewed in 2009 would reduce the deficit, by $54 Billion; the post imprecisely said reduce 'costs' by $54 Billion. The $54 Billion would be $41 billion of reduced health care spending and $13 Billion of increased taxes paid as private health insurance premiums were reduced, leading to slightly higher wages that are taxable, whereas employer paid insurance premiums are not taxable.

Hospice Face-to-Face

2011-02-25T11:59:00.000-05:00

A first person account of a face-to-face re-certification of hospice eligibility following Medicare's new rules designed to prevent fraudulent use of hospice. This is a related link about the role of Nurse Practitioners in providing hospice care, and especially in serving as the bridge or gateway into such care. If the expansion of palliative care grows to meet the need and demand of patients, there will be workforce considerations on the near horizon, especially if palliative care is increasingly expected to be a part ACOs and the like . Who, what, where, when, how?

Senator Burr on Reform, Etc.

2011-02-25T05:00:00.010-05:00

Senator Richard Burr (R-NC) interviewed on NBC-17 on a variety of topics. He talks health from around 1:40-3:30.

Most notably, he says that he plans to introduce a replace bill along with Senator Tom Coburn, as well as with Paul Ryan and Devin Nunes from the House. This is the same group that co-sponsored the Patients' Choice Act in the last Congress. Some past things I have written about the Patients' Choice Act:

General overview.
Detailed discussion of the inclusion in the Patients' Choice Act of a Health Services Commission to apply cost effectiveness research. The Health Services Commission proposed by the Patients' Choice Act on May 20, 2009--a full month before the first House Committee reported HR3200--was a far more aggressive use of cost effectiveness research than what actually was included in the ACA (The Independent Payment Advisory Board). The IPAB is a classic example of a policy idea that was once bipartisan becoming politically toxic once in the ACA.
Here is a link to a discussion of some private scoring of the PCA from July, 2009 (it was never scored by CBO).

The big idea of the Patients' Choice Act was to end the tax exclusion of employer paid insurance, and instead give everyone a tax credit with which to purchase health insurance. Ending the tax preference of employer paid premiums is something I am in favor of (it is the simplest policy to address cost inflation that exists), and the PCA would end the upside down subsidy that now exists and equalize (give everyone the same amount) of federal subsidy with which to purchase private health insurance. The amount of the tax credit (<$6,000 for a family) was less than half of what a typical family policy cost, so it was really providing a subsidy on the order of a catastrophic policy. Nothing wrong with this approach necessarily, they just didn't communicate that policy reality.

The plan then envisioned setting up state based insurance markets (that should sound familiar), and envisioned auto-enroll procedures whereby people would be put into the lowest cost plan when they did things like renew a drivers license; they could opt out, but the plan would depend on soft mandates to work. The biggest flaw with the plan was that the tax credit could be used in the exchange or outside, but pre-existing condition exclusions would only apply inside the exchanges. I wrote in July, 2009:

"Because the tax credits can be used to buy plans both inside and outside of the state-based exchange, there is a danger that only the sickest patients will seek coverage via the exchange, since coverage cannot be denied. If this happened systematically, it could result in death spiral whereby only poor risks are included in exchange-based plans. However, the Plan notes that exchanges "shall develop mechanisms to protect enrollees from the imposition of excessive premiums, reduce adverse selection, and share risk."

The short sentence "shall develop mechanisms to protect enrollees from the imposition of excessive premiums, reduce adverse selection, and share risk" is quite a policy mouthful and I hope Senator Burr and co-sponsors will be clear on how this will be achieved this time around. They have certainly had enough time to think about it.

We of course don't know how different a new Patients' Choice Act may be from the original one. The original bill had a great deal in common in policy terms with the ACA, but the rhetoric used by Senator Burr (and others) to describe the ACA never matched the policy reality. I have written about what a compromise might look like. I would be happy to implement the ACA and move ahead, but I increasingly think that we need a compromise on how to expand coverage so that we can move ahead on getting serious about costs. The level of political turmoil around the law is going to make it hard for us to truly deal with costs, which will be very very hard. If the reintroduction of the Patients' Choice Act or a modified bill helps move us toward that then I am glad for it.

Update: I fixed some layout problems.

NC Atty General Says H2 Unenforceable

2011-02-24T20:05:00.003-05:00

North Carolina Attorney General Roy Cooper today said the bill passed by the NC General Assembly (H2) declaring that the individual mandate doesn't apply in North Carolina is unenforceable, saying states cannot pick and choose what laws to enforce. He further says that H2 could cause the state to lose Medicaid funding because the state will be able to comply with Medicaid anti-fraud portions of the ACA id H2 became law. Governor Perdue has been saying she would neither sign it, nor veto it, in which case it would become law. According to radio and television reports tonight, she is reconsidering whether to veto the law or not. Republican leaders disagree with the Attorney General's assessment.

I keep hoping the Republicans in the North Carolina House and Senate will say what their plan is to address the three biggest problems in our system:

cost
coverage
quality

Global Remittances

2011-02-24T18:33:00.003-05:00

Off topic for this blog, but interesting report from CBO on remittances from workers in the U.S. to their home countries that total $48 Billion in 2009; 70% more than official development expenditures of the U.S. government to foreign nations.

KHN Malpractice Column

2011-02-24T13:27:00.005-05:00

Kaiser Health News with a column that touts damage caps and a bill in Congress to bring about changes. Some interesting comments about needing to be careful that damage caps don't simply shift liability to non physician defendants and the relative role of federal v. state reform of medical malpractice reform.

I think a more comprehensive patient safety approach is needed, with malpractice and liability reforms being a part of the answer, not the full answer. My recent posts on the topic and consideration in the NC General Assembly here, and here and here.

Dual Eligibles and what NC could do

2011-02-24T08:06:00.005-05:00

Kaiser Health News with an interesting interview with Melanie Bella, director of the new Federal Coordinated Health Care Office (CHCO) aka "office of the duals." Dual Eligibles are persons who are eligible for Medicare (because they are 65+; or permanently disabled or have ESRD) and Medicaid (because they are poor). Such persons tend to be very ill and/or disabled. A good many live in nursing homes, but most live in the community. Some became eligible for Medicaid by paying for nursing home care (spending down) while others were poor and/or disabled prior to moving to a nursing home.

Medicare and Medicaid were not designed to work together. Medicare has standard benefits, while Medicaid differs state to state. Dual eligibles tend to use large amounts of health care (Medicare spends about 5x more on dual eligibles than other Medicare beneficiaries) because they are very sick. The CHCO office is designed to focus on both quality and cost concerns in providing care for such persons. In particular, this office is focusing on the over 3 Million persons who are dual eligibles and younger than age 65 (most are permanently disabled).

Bella sums up the main goals of the office as follows:

"It's really two main themes. Improve the beneficiaries' experience and make it easier for them to understand and navigate the system, so they can expect to get good care."

Another goal is to reduce the cost of caring for such persons, especially because many high cost events are signs of system failures and may not follow patient preferences. Along these lines, state demonstrations in which state Medicaid programs get increased money, flexibility and responsibility to care for patients have been tried and sound like priorities for this office. Some hear this as 'block granting' of Medicaid which sounds like more responsibility to states with less money. However, it seems clear to me that one payer should assume responsibility for providing care and being responsible for outcomes for the dual eligibles.

My intuition is that it would be better for the responsibility to pay for the care of dual eligibles be taken over by Medicare. This would mean Medicare would become responsible for the long term care portion of care for dual eligibles in addition to their other services. A particular barrier for dual eligibles is in access to hospice services paid for by Medicare. Most such care is provided in the home of patients, but if you live in a nursing home paid for by Medicaid, there are numerous barriers to accessing the Medicare hospice benefit. This likely leads to suboptimal care from a patient preference and quality standpoint, and probably results in more expensive care.

I would like to see North Carolina put together a Medicaid and a sec. 1332 Affordable Care Act Waiver along the following general lines:

Medicare become financially responsible for all the care of the dual eligibles, including long stay nursing home care, with expanded access to concurrent palliative care and hospice being readily available without the patient unelecting curative care (the current Medicare rule).
North Carolina move toward a goal of ending acute care Medicaid for non dual-eligible persons who are eligible for Medicaid, and instead provide premium support for the purchase of private health insurance in the exchanges to be set up under the ACA. Medicaid would identify and provide extra services needed by such groups, if any.
Evaluate this approach to addressing dual eligibles to determine the impact of concurrent expanded access to palliative/hospice care on quality and costs, along with one entity being financially responsible for everything. It would provide an important test of the model of concurrent care that has been shown to reduce costs and improve quality in one private insurance company (not a dual eligible population). A key aspect of palliative care is focus on the patient's goals of care which is key for improved quality.
Idea 1 (Medicare responsible for full cost of dual eligible) could be expected to reduce costs for the state, while idea 2 (buy-in non dual eligible Medicaid eligible persons into private health insurance) would be expected increase costs for the state, because premiums for private insurance cost more than does Medicaid. However, transitioning away from acute care Medicaid would remove from our state both the stigma of this insurance type and the lower payment rate (which is why it costs less to insure someone via Medicaid) that leads providers to not want to provide care to Medicaid beneficiaries.
Big unknown: the effect of competition in the exchanges on premiums is unproven. Having more consumers shopping in them would maximize the chances for consumers to benefit through insurers competing for their business. There are only 14 Million persons in the U.S. with individually purchase policies today (110 Million with Medicare or Medicaid; 160 Million with group purchase private insurance), so the most unproven part of the ACA is how well consumers will be as shoppers for their health insurance. But, if we are going to try it, lets try it.

Doing something like this means that you accept that the ACA is the current vehicle we have to move ahead. This type of state tweaking and experimentation is what is likely inevitable and needed. If states begin to develop ideas and models, I would anticipate increasing flexibility to allow states to experiment. If a Democratic Governor and a Republican Legislature went together and asked for the right to try a new model, I would expect our state would get maximal leeway. The political pressure to allow North Carolina to try a new model that had bipartisan support in our state would be enormous.

To all my friends in North Carolina who have been mostly saying what they are against....don't like this idea....what are yours?

Still more on S33/Med Mal

2011-02-23T06:29:00.004-05:00

Kevin Pho of kevimd.com with a brief post noting medical malpractice reform in return for less pay. The comments to his post are interesting (you should follow him on twitter if you are interested in medical malpractice @kevinmd). Kevin has written a lot about medical malpractice, and thinks it is a big problem but is not a big fan of damage caps (like those envisioned in S33 in North Carolina), instead preferring medical courts.

In the comments section of my post yesterday on medical malpractice, a comment says:

"We need to distinguish clearly between two kinds of reforms: a jury of experts rather than peers to determine guilt, and reforms on the awards permitted for malpractice verdicts. Perhaps the experts, following clear rules, should decide the size of the award but not guilt?"

You could imagine a variety of reforms, including ones that kept citizen juries in a portion of the process and others that were totally expert-driven. You could also imagine a system in which a lawsuit was not needed to obtain money for needed medical care, which would allow the malpractice system of whatever design to focus on remediation and attempts to prevent future injuries. There are a lot of interesting and plausible alternatives, but one gets the feeling that the writers of S33 haven't thought far afield on the issue of medical malpractice, and especially haven't thought of how this issue is related to the overall health care system and need to improve quality and reduce errors. That is disappointing.

Latest Ruling: ACA Constitutional

2011-02-22T22:26:00.002-05:00

Another judge has ruled the individual mandate constitutional. That makes it 3 constitutional, 2 unconstitutional (and a fair number who didn't rule for a variety of reasons, like plaintiffs didn't have standing or the mandate didn't kick in until 2014). All 3 judges who have ruled it constitutional were appointed by Democratic President's, and both who have ruled in unconstitutional were appointed by Republican ones. It is interesting that both times a judge has ruled it unconstitutional, there was an immediate national hyperventilation about it....when judges rule it constitutional, nothing.

More on S33/MedMal

2011-02-22T14:28:00.005-05:00

From the comments of earlier post on S33 is the following report on medical malpractice cases that went to trial in NC over the past decade, from Chris Nichols who blogs at nctriallawblog.com. It is very interesting to look down the list of cases and see that many are won by the defendant, quite a few by the plaintiff, with tremendous variation in the amount of the award in won by plaintiff. I believe this report is only those cases that are tried and doesn't capture those that are settled.

Again, the big picture facts of medical malpractice from the best national studies are:

4 in 10 suits filed are done so when there is no medical error (many of these are dismissed or are lost by the plaintiff at trial)
only 1 in 20 cases of actual negligence result in a lawsuit being brought.
These two factoids and many other links are backed up here.

While I suspect I think the overall medical malpractice system is more in need of reform (I don't think it does anything well) than does Mr. Nichols, I think the evidence is on his side in claiming the situation in North Carolina is 'not a crisis.'

One random aside about this issue. When I teach undergrads at Duke in a health policy class with many pre-meds, they worry a great deal about someday being judged by a jury filled with ordinary people, who will not be experts on evidence, medical care and the like. When I ask them if they are bothered by the fact that the same jury pool--again, not likely to have expertise in serology, forensics and the like--on which many criminal felony trials turn, they are not bothered that such persons deprive others of their liberty. I think that just means that Duke undergrads can imagine being a defendant in a medical malpractice case, but cannot imagine being one in a violent felony, for example. The bed rock of our judicial system is that normal people decide. I could be in favor of medical courts for malpractice, but shouldn't all the worries that lead there, also lead me to worry about juries deciding criminal cases?

Public Pensions

2011-02-22T08:09:00.002-05:00

Austin Frakt links to an NBER working paper on public pensions....I don't have anything evidence-based to say about Wisconsin. The paper linked by Austin is on my reading list. I can say based on field reporting during my only visit to Madison that State Street Brats is one of the greatest places to each lunch ever; Brats, free Pop Corn and Spotted Cow beer!

Showdown on CLASS

2011-02-22T06:50:00.003-05:00

Kathleen Sebelius with the most direct acknowledgment of actuarial problems with the CLASS provisions. She says she has the discretion to make the changes needed to make it sustainable, while others are saying she doesn't. People often criticize legislation for being too vague and granting too much discretion in implementation; CLASS is the opposite, the legislation may have been too specific in some cases. I don't think it is sustainable as it was written, but it could easily be changed to make it so. Basically, it needs a more expansive definition of work and/or an initial underwriting step. The biggest danger with CLASS is self fulfilling prophecy: if various actuary groups say it won't work, then good risks won't sign up and it won't work.

CLASS is an attempt to set up a self sustaining long term care insurance plan, that if successful would make planning for long term care a normal part of being a young adult. Today it is not and that is a large policy problem.

Here are some links to what I have written about CLASS in the past, with lots of background:

background during health reform debate in the Raleigh News and Observer in Dec 2009.
More on CLASS in January 2011.
A January 2010 paper I wrote in Health Affairs on the use of genetic markers as potential underwriting variables for private LTC insurance; has detailed discussion of the reasons people don't now purchase LTC insurance.

NC S33--Medical Malpractice

2011-02-21T15:00:00.006-05:00

I have been wanting the Republican leaders in the North Carolina General Assembly to make clear their health policy priorities now that they control both Houses in the Legislature. They have now shown us that part of what they are for is medical malpractice reform.

A successful malpractice system would protect patients from harm via a deterrent effect of lawsuits, compensate patients for harm and exact justice. In addition, a good system would protect physicians from frivolous suits, identify substandard physicians so that medical licensure boards could remediate them or remove their licenses and provide a clear signal to insurers regarding the risk of insuring a physician.

Our malpractice system does none of these well.

I always thought that medical malpractice reform was the key to a health reform deal, and the fact that such a deal wasn't struck is the most compelling evidence for me that Republicans in Congress punted on policy in favor of politics in the entire debate on health care reform from 2009-10. They thought they could kill the Affordable Care Act (ACA), and given that it passed, they missed an opportunity to advance a longstanding interest of theirs. Now the issue has moved to the states. If the Republicans in North Carolina said that the ACA didn't do enough to address medical malpractice, I would agree, but would also say that the problem is broad and multi-faceted and cannot be addressed by damage caps alone. A comprehensive patient safety/medical malpractice reform is needed. S33 is not that and is not a good bill as written.

Most people focus on only one part of broader patient safety problem: the effect of frivolous lawsuits OR the fact that patients who are harmed via true negligence are rarely compensated and there are large problems with medical errors in our nation. [a variety of related links]. In fact, which ever problem worries you the most, the opposite is also a big problem that is best addressed in a comprehensive manner. North Carolina could be an innovative state and try and produce a comprehensive approach to the patient safety/medical malpractice problem, but S33 does not do that.

S33 would bring about caps on non-economic damages in lawsuits, which are fairly common across states. They are usually sold as a way to slow health care cost inflation by reducing defensive medicine, but the evidence shows the effects of such policies on costs are not strong. In short, this likely won't do much, if anything, to address costs in North Carolina. More controversially, S33 would make it hard if not impossible to sue an ER doctor or a hospital in North Carolina for negligent care provided in an emergency setting, as I read the bill. This strikes me as a bizarre policy.

I get that talking about medical malpractice is politically popular, but in my personal experience, while everyone hates lawyers in the abstract, when they or a family member is harmed they want justice.

A reform of the current malpractice laws by capping non economic damages could have a place in a comprehensive patient safety reform that sought to reduce the adversarial nature of the malpractice system, and instead transform it into one that compensates harm and tries to reduce the future occurrence of errors through openly discussing what caused the error. In such a system, physicians would have to do a better job of policing their own than they currently do, but the acknowledgment of and compensation for harm would be separated from the adjudication of negligence.

Advocates of S33 should also remember that one of the motivations for filing a malpractice lawsuit based on patient harm in the absence of negligence is the fact that an injury can produce both large medical bills and render the harmed individual uninsurable. Medical malpractice reform makes sense in the context of an overall strategy to expand insurance coverage, address costs comprehensively, and create a patient safety approach to dealing with medical errors and improve quality.

The Republicans in the General Assembly have said they are opposed to the ACA, so they desire to remove the route to expanding insurance coverage that is provided by the ACA. Do they have a plan that would expand coverage and thus remove a key motivation for filling a lawsuit? If so, I haven't heard it, but would like to do so. This is necessary for a meaningful reform of ALL the problems with medical malpractice in North Carolina.

update 9pm, 2/21: Brad Flansbaum writing at Hospitalist Leader with usual good sense and a balanced take. Also, from hanging out around universities and teaching universities for a long time, the psychic burden of med mal worry among docs is very real. This column I wrote in Aug 2009 in the News and Observer touched on this and that is a side benefit of 'dealing' with med mal in some way. This policy answer is just typically oversold for what it can actually do, especially to change the cost of medical care. It is part of a solution. NC can do a lot better than S33. Another thought that Brad notes is that federal notions of med mal such as what was offered in the substitute motion in the House in Nov. 2009 with national med mal is a somewhat odd policy for persons to take who are worried about over-reach of the federal government. The NC General Assembly focusing on this issue could thus be seen as the correct level of government to address these issues, though the bill S33 is a bit wanting.

Also, Brad Flansbaum asking in the comments for a cite that notes how much of the 'frivolous lawsuit' action is due to people suing to pay for current and/or future care for uninsurable persons. The logic of the motivation seems straightforward, but I don't have a cite for this assertion. This paper notes that 37% of the suits filed are in cases in which no error was judged to have been made, presumably just a bad outcome. The question is what prportion of these would go away if everyone had access to guaranteed health insurance?

State of the Science in Palliative Care

2011-02-20T20:43:00.002-05:00

The American Academy of Hospice and Palliative Medicine just completed its annual meeting in Vancouver over the weekend and here is the list of the 8 most important papers of the year as presented in the state of the science plenary session. Here is a new op-ed on the role of palliative care in health reform/the transformation of the health care system by Diane Meier, one of the top palliative medicine leaders.

Also, this year I enjoyed following the conference from afar (I could not attend) via twitter. Here is a list of #hpm tweets from the conference. Each Wed at 9pm EST, there is hospice and palliative medicine tweetchat, where 2 to 3 questions are discussed via twitter. You should check this out if you are interested in hospice and palliative care.

Of particular note in the 8 best papers is the paper by my Duke colleague Amy Abernethy and others that reported on a RCT of oxygen v. forced room air to treat breathlessness, a common (distressing) symptom for persons who have advanced life-limiting illness. They found that oxygen did not produce better symptom relief than forced room air, meaning less intensive therapy could produce the same results.

Amy and I recently got a palliative care/hospice focused grant but I can't talk about it publicly until March 1....more later on that.

CBO on HR2 (RJKHCRLA)

2011-02-19T08:53:00.005-05:00

The full CBO report on the result if HR2 becomes law (Repealing the Job Killing Health Care Reform Law Act, I guess RJKHCRLA; you've got to have an acronym) is here.

It is not hard to figure out that since CBO said the passage of the ACA would reduce the deficit from current law at the time of its passage, they say unpassing it will increase the deficit from current law, which is the ACA. Various groups saying that CBO said that passage of RJKHCRLA would decrease the deficit simply took part of the CBO report (getting rid of the subsidies for private insurance and Medicaid spending). The other side of the equation is increases in taxes and cuts to other spending, namely Medicare. You really either have to take CBO as a source of information or say they are not, you really cannot with a straight face only take part of their report.

In 2021 with RJKHCRLA, there will be about 33 Million fewer people with health insurance than there will be in the ACA is implemented. With ACA, about 95% of the population would be insured in 2021, with RJKHCRLA it will be 82% (today is about 83%).

Given that the Republican party seems to be opposed to expansions of government insurance, an employer mandate, and now an individual mandate, I don't think they have a credible health reform strategy that includes addressing coverage and cost. If they do, I would love to see it/hear about it.

Economic Crisis and Health Reform

2011-02-19T08:48:00.003-05:00

I was sharing a cab to the airport in DC yesterday with two colleagues. One said, "If it weren't for the economic collapse, health reform wouldn't be so controversial and the country would have moved on." The other disagreed and thought it was the opposite. "The economic collapse was the impetus for passage, because it made average folks feel vulnerable; it wouldn't have passed without the economic crisis."

I am unsure.

Interesting

2011-02-18T11:44:00.002-05:00

take on political spectrum from Andrew Sullivan.

Negotiated rulemaking, Day 3

2011-02-18T09:38:00.008-05:00

Day 1 and Day 2. The Negotiated Rulemaking committe has split into two workgroups this morning who are each addressing the same task: how to put together the supply of primary care in an area with the population of a service area. The key question is whether to simply count the population which is now what is done, or whether to adjust the population for need in some way. Possibilities:

age and gender adjustment
use of visits to primary care (actual - needed). Of course you have to set the need standard
need of population that doesn't use actual use of visits

10:25am: in my workgroup, quick consensus that at least an age and gender adjustment based on visit rates is the minimum adjustment. Some interest in doing more complicated and comprehensive adjustments. Merging groups. Our groups bottom line was:

age and gender adjustment
with evidence of high need, the threshold for a HPSA designation would be reduced (similar to current policy)

11:05am: The two groups have merged and is there is consensus on the the weighting of the population by age and gender using the use rates from MEPS of persons with good access to care and average health status.

An issue that has been pushed for later is whether/how the HPSA designation approach will have a health status/high need adjustment. Currently there is an adjustment that works as follows: typical population-to-provider ratio ratio for HPSA is 3500:1; in presence of high need, the designation ratio is reduced to 3,000:1. Whether and if yes, how to have such a second step in HPSA.

11:30am: Discussing how to set the threshold for the population-to-provider ratio for HPSA designation. Talking in terms of where to draw the line conceptually, meaning 25th percentile, median, etc. Discussing how the 3500:1 was the 25th percentile in mid-1970s, but 3500:1 written into the rules and not the 25th percentile. Lots of discussion about tradeoff between focusing resources. CMS particularly interested in HPSA because at this point all physicians practicing in a HPSA get a Medicare bonus payment (10% bump of part B)....a large drop in HPSA designation ratio that increased HPSA designations would have automatic impact on Medicare part B. For most other programs, designations are the first step to allowing communities to apply for funding, but doesn't guarantee it will flow to communities.

In the background is a general awareness of the community that the rules the committee writes should try and be flexible in a way that allows for updating as things change over time.

Noon: We set subcommittees to work between now and the next meeting. I had to leave early. This was a productive meeting and we made a good deal of progress on all parts of the MUA and on provider availability which is relevant for both the HPSA and MUA.

Detail on CLASS Implementation

2011-02-18T06:48:00.002-05:00

Great, detailed post from HealthReformGPS on CLASS Act background and implementation. Here are a few things I have written about CLASS. The bottom line on CLASS goes like this:

The big idea is to make planning for long term care a normal part of being a young adult. That would be a good policy outcome if successful.
The big question is whether CLASS can be implemented with a mixture of benefits, premiums and uptake rate to be self sustaining given what was passed in the ACA. The key issue is what is the definition of work that will be implemented (you must be working to sign up).
There is a big danger of self-fulfilling prophecy related to point 2, because uncertainty on whether the pool can be set up to be self sustaining could lead some to not sign up.

h/t Austin Frakt.

Money and Cognitive Impairment

2011-02-18T05:00:00.000-05:00

Eric Widera and colleagues have an interesting paper in JAMA this week on the role of the primary care physician in assessing and addressing financial competence among older patients with cognitive impairment. Older persons with dementia eventually lose their ability to comprehend and weigh the impact of financial decisions, and physicians may be uniquely situated to identify when such patients can no longer make such decisions, and they are increasingly looked to by patients and families for help in such cases. This has not historically been seen as the role of the physician, and most physicians are not be trained to address these issues.

Widera and colleagues note several roles of the primary care physician in assessing and addressing the degree to which cognitively impaired patients need assistance in dealing with money and the making of similar important decisions. 3 key roles noted for primary care physician in the patient with dementia stand out to me:

educating patients about the need to plan ahead for such eventualities
recognizing signs of financial incapacity
knowing where and when to refer patients for other services, be they medical or legal

The key point seems to be the need of primary care physicians to plan ahead and anticipate the eventual loss of financial decisionmaking at the first signs of cognitive decline and dementia. These issues are best dealt with earlier in the disease process than later. In an accompanying editorial, Charles Sabatino, JD says,

"In an aging society, all professionals serving older adults have an obligation to understand diminished decisional capacity, especially with respect to financial issues, and to acquire the basic skills to identify it and respond constructively to it. Failure to meet the challenge will only increase the potential for financial abuse and exploitation."

Negotiated Rulemaking, Day 2

2011-02-17T09:37:00.010-05:00

Day 1.
Trying to divide into two workgroups this morning to try and focus on clarifying how we will measure health status and accessibility/ability to pay in the MUA measure.

I am in the health status workgroup and we are having an excellent discussion about how to measure health status. We are considering Social Deprivation Indices that use secondary measures that proxy health status and direct measures of health status. Key question is whether to use one approach to measure health status (which is required for an MUA designation) or both.

There is some broad interest in the SDI approach we have used, but one tricky issue is that poverty is a key component, and ability to pay is another portion of the MUA. Other key issues to work through include whether to include racial, ethnic and linguistic isolation type variables in the SDI. Issues here include the hispanic mortality paradox.

1:30 pm: The two workgroups (one addressing how we mesaure health status and the other how we measure access and ability to pay). The workgroup looking at how we measure access and ability to pay have provided a useful framework to categorize different types of access barriers and ways to measure ability to pay.

For the health status workgroup, there are two areas of uncertainty that needs to get worked out:

does the use of poverty in the Social Deprivation Index that could be used to proxy poor health status create either a real and/or a perceived double counting issue with measures that can be used to measure ability to pay?
where will race, ethnicity and linguistic isolation variables go? For example, race has been suggested as both a proxy of health status, a proxy of access barriers, and a proxy for ability to pay.

These are big issues and represent that there is a bit of conceptual muddle about different measures that could be seen as ways to measure different concepts: health status, access and ability to pay.

2:30pm: Trying to see if we can work through toward some sort of consensus that the social deprivation index approach to proxying health status exists, and then figuring out how we put such an index together with a direct measure of health status like standarized mortality ratio.

3:40: back in two workgroups trying to get to a proposal for measuring health status, accessibility and ability to pay to allow for some initial attempts to put together a draft MUA index.

4:50pm: the health status workgroup has developed a recommendation for testing out a draft health status portion of the MUA index. The workgroup focusing on access and ability to pay is still working.

5:50pm: both workgroups reached a tentative consensus to go ahead and test out a proposal to measure health status, access and ability to pay for the purpose of developing an MUA. Tomorrow we will try and develop a plan to move toward measuring provider availability.

The best thing about Bowles/Simpson

2011-02-16T14:50:00.005-05:00

was that it set a percent of GDP at which to balance the budget in 2035 (21% of GDP; taxes up and spending down from today) and provided a path to get there. Most everyone wants lower taxes, and even though they want lower spending in the abstract, they oppose cuts that would be meaningful. Only with a target percent of GDP at which to balance the budget can you have (any hope of) a meaningful discussion of relative priorities as we move toward a balanced budget.

Update: movement in the Senate toward a deal?

Negotiated Rulemaking, Fifth Meeting, Day 1

2011-02-16T08:03:00.006-05:00

The fifth meeting of the HRSA Negotiated Rulemaking Committee to reconsider how the federal government designates Health Professional Shortage Areas (HPSA) and Medically Underserved Areas (MUA) begins this morning in Rockville, MD. Here are links to the last meeting in January: day 1, day 2, day 3.

This morning the technical subcommittees will meet and the full meeting begins at 1pm and runs through Friday. First step today will be receiving the reports and recommendations from subcommittees that are organized around the parts of the statutorily-determined components of the MUA designation:

health status
ability to pay
accessibility
provider availability

Basically, we are getting to the point of deciding how we will operationalize these concepts and put them together in useable manner.

On the HPSA side, we will also begin making decisions about what providers to count toward primary care, how to weight them, and eventually have to set standards for designation. The work of the provider availability subcommittee informs the HPSA designation as well.

There are myriad issues to be considered and decided upon for both MUA and HPSA. I will blog about the meeting and do so by updating this post.

2:30pm. Productive subgroup meetings in the morning and now the full committee is receiving subgroup committee reports.

The subgroup working on provider availability (how to measure the supply of primary care) has made the most progress and is probably closest to having a recommendation about what types of providers to count. Key issues will remain the weighting of certain groups that provide primary care, and the relationship between secondary data and local areas completing surveys of local supply to produce the most accurate FTE primary care available in a local area.

For all of the presentations, the issue of what is the rational service area comes quickly. We are working on that tomorrow. For the early testing of the health status component of the MUA measure we have used the county and PCSAs.

5:00pm: good progress made. There has been convergence among several of the subgroups in terms of questions and issues. There are some inevitable muddles with variables potentially 'showing up' in different parts of an MUA designation that will have to be worked through.

We are currently discussing the draft recommendations of the provider subgroup to tentatively adopt a definition of primary provider for the purpose of identifying HPSA shortage areas and capturing provider availability in a MUA designation.

5:25pm: trying to get to a vote on the list of providers to count as primary care providers for the purposes of designation. Biggest change as compared to what is currently done is the adding of some non-physician primary care providers (e.g., Nurse Practitioners, Physician Assistants). Many issues still to determine in terms of how counts will be finalized for designation, but this is a big (tentative) step so that we can begin to see the distribution of providers using these definitions. Entirely new thresholds will have to be developed given the addition of non-physician primary care providers.

5:37pm: consensus obtained on primary care providers to count. woot woot!

Do You Ever Change Your Mind?

2011-02-16T05:52:00.005-05:00

Harold Pollack asks a good question, which I saw via Austin Frakt:

"Have your own views changed on any basic issues of domestic policy the past 3 years?"

On health policy, I think I have gotten to the point where I reject the existence of the 'best way to reform the system' because of the primacy of both political (between the parties) warfare in health policy, and the degree of cultural disconnect between what people say they want in health care (save money) and how they react to any policy with a chance of achieving such an outcome (hate it). However, we need to deal with costs, and coverage and quality problems in the system so we need a general acceptance of an approach to coverage so that we can get serious about cost and quality. This has lead me to think we need something like this: a next step in modifying and then implementing an ACA compromise between the parties that is based on policy preferences that have tended to hold over the past 20 years or so. It is not what I think is necessarily the best, but what I think is the best way forward, and has the best chance to get coverage decided so we can deal with cost and quality.

On the economy/jobs/tax policy. In the big change department, I believe that we should abolish the corporate income tax. Note, I believe if we are going to make a change, we should go all the way because if we lower them, even to 1% and the results aren't good, people will say they are still too high. Ending this tax would give the maximal incentive to create jobs that we can provide. If it greatly boosts employment, that is good for everyone. If it doesn't work, then at least we know the claim of high tax rates is not why jobs aren't being created, and we can move ahead knowing this. My thinking has gone like this. From 1990-1999 the US created about 23 Million or so net new jobs. From 2000-2009, we created around 0 net new jobs. The last year or so, the economy has started to grow, Wall Street has done well, and 401 k accounts have rebounded. But unemployment remains high and job growth is very weak. If we reset normal unemployment to be 9-10% instead of 4-5% that implies a great deal of pain for our nation. This is a big problem, and what has lead me to think we should abolish the corporate income tax, a huge change in my view. Further, in reading and thinking about tax reform, I have come to realize that corporate income taxes have only collected between 9-13% of the total federal tax receipts since 1980 (in the 1950s corporate taxes collected were between 5-6% of GDP, and in 2008-2010 ~2% of GDP). Further, there are huge disparities in the actual marginal rate paid across firms and industries which seems unfair and inefficient. Finally, my intuition is that the complexity of the corporate tax code (and deductions) probably over time leads to more such personal deductions (though I don't have proof of this). Such deductions and tax expenditures are a big part of why we have such a large deficit.

Arizona Doesn't Need Waiver

2011-02-16T05:00:00.002-05:00

to drop around 250,000 persons from its state Medicaid roles according to Sec. of HHS Kathleen Sebelius. The letter to Gov. Brewer says that because these persons were covered by Arizona under a Medicaid waiver that ends on Sept. 30, 2011, the state can simply not renew the waiver and such persons could then be dropped from coverage without running afoul of the Affordable Care Act Maintenance of Effort (MOE) provisions. However, according to the article linked, Arizona will have to cover these persons in 2014 when the ACA goes into full effect. The MOE provisions in the ACA were designed to hold state Medicaid coverage levels in place as the law expanded coverage via Medicaid. About half of the 32 Million persons who will be insured in 2020 who would be uninsured without the ACA, will be covered by Medicaid.

There will be questions about why it took so long for HHS to let Arizona know this information, as they have been discussing this move for some time. I don't know enough to say whether this is an obvious interpretation of the ACA and the existing waiver, but Arizona must have thought they needed a waiver or they wouldn't have gone to the trouble to request one.

I have a hunch that going forward, HHS is going to try to be as flexible as possible with states, and any state with a plausible plan for their Medicaid program will likely have a decent chance of getting it approved, especially if they are expanding coverage. States certainly won't get a waiver approved if they don't ask, and states who have plans they would like to undertake shouldn't be shy. The political reality suggests more flexibility for states and not less is likely to come about in the years ahead.

At this point, Arizona and Vermont seem to be at the two ends of the spectrum in regards to seeking of waivers and implementing the ACA: Arizona desiring to cut coverage, and Vermont trying to cobble together a 'single payer' approach that is really not a single (meaning one) payer, but a universal coverage scheme. Interestingly, both states say they must take their proposed steps because they cannot afford to not do so.

h/t @sarahkliff initially and @HEALTH_NOTES for the link

Deficit Redux

2011-02-15T22:27:00.004-05:00

I have written a lot lately about deficit reduction and I am tired so won't re-spill too much ink right now. This link from Ezra Klein is interesting. Andrew Sullivan has been writing with a mix of outrage and hope all day. I am not sure what will happen, and can talk myself into both the most pessimistic and optimistic scenarios.

The most pessimistic interpretation is that no long range reduction agreement will happen before 2012, we will have short terms cuts that are harmful, the election will be fought out by both sides saying they are not as bad as the other, and we will be closer to dealing with the real issues only through a debt driven crisis at some point in the future.
The more optimistic interpretation is that if President Obama proposed anything out in the open that would kill it, he knows this, and that there are grown ups in both parties who are or will be negotiating in private and the deal pops out later, probably starting in the Senate. I hope the latter, more optimistic scenario is true.

Thoughtful Comments on Reform

2011-02-15T12:32:00.002-05:00

Bill Roper, CEO of UNC Health Care, and health policy adviser to President's Reagan and Bush 41 with some thoughtful comments on health care, health policy and the need for health reform. The remarks were given a speech last week at N.C. State University's Emerging Issues forum.

I Can't Hear You

2011-02-15T07:13:00.009-05:00

Alexander Hart writing that the states are in trouble and could use some help from the feds in dealing with their budget crisis or else many workers will be laid off. He makes a good case, but this is the type of plausible policy that has no chance of even being heard without a serious long range plan to address the budget deficit along the lines of what the Debt Commission proposed.

You could credibly say, we are doing the hard part on addressing the true nature of the long run deficit (health care costs, tax reform, and to a lesser extent Social Security and Defense) and in the interim we must help the states. On the path to a balanced budget you could say we must invest in (education, energy, infrastructure, etc) and people could hear you out, but without a credible plan to address the long range deficit people will just stick their fingers in the ears and sing loudly like you did when you were a kid and you thought the noise under your bed might be a monster.

This is why progressives have more at stake than conservatives in developing a balanced budget; because we believe government has an important role to play in society.
It looks like we are headed for the worst possible policy outcome regarding the deficit, cuts in the short run and inaction on the real problem.
It is a really bad idea to wait for a crisis to address the hardest issue, there will be fewer options left and progressive priorities will be at more risk under that type of scenario.
I have been saying only the President could lead with his budget on the hardest stuff, I hope I am wrong and the Senate picks up the ball and then the President jumps in.
Bubbles of a secret deal, but that seem far fetched.

That said, if we ever develop a reasonable (taxes up, spending down) long range plan to address the deficit and develop a sustainable federal budget, the last political step will include members of both parties passing a bill that is akin to their holding hands (and both sides holding their noses) and jumping off a cliff together. Seems like the most likely outcome is no deal on the long range problems (and short term cuts; the worst possible outcome). But, a big deal on the long range problems seems more likely than a small one.

update: interesting take on grand bargains from Matt Yglesias. Andrew Sullivan saying you can be pissed but still support the President.

Heart Failure and Palliative Care

2011-02-14T08:23:00.005-05:00

NIH has a RFA out on Palliative Care and Heart Failure. The August 2010 publication of a randomized control trial of early palliative care for stage 4 lung cancer showed that those receiving early care had longer survival, improved quality of life and reduced costs got a great deal of attention and helped increase the policy attention paid to expanding access to palliative care. Palliative care addresses symptoms and quality of life regardless of prognosis.

Hospice is a multi-disciplinary approach to providing palliative care to persons who are believed to be in the last 6 months of their life. Hospice is a subset of palliative care, but is not synonymous with palliative care.

The RCT of palliative care described above was particularly notable because patients did not unelect curative treatments as they must if they choose hospice in the Medicare program, but instead, patients in the treatment group were simply referred to the palliative medicine service within 1 week of diagnosis of their lung cancer as being stage 4. They were eligible to receive any treatments, be it chemotherapy, radiation or otherwise. They could also decide to stop receiving such treatments. In policy terms, this is known as concurrent palliative care, or the treatment of symptoms and focus on patient goals alongside treatments designed to forestall the Cancer.

One of the calls after the publication of the Temel et al. study was for replication of this study in other diseases. This is particularly important because Cancer generally has a more predictable time course to death than do other diseases, such as congestive heart failure, or dementia. This has an impact on how palliative care could best be offered, and it likely differs across diseases. In policy terms, at least some of the discussion and debate over long stays in hospice and whether this represents inappropriate or even fraudulent care is related to the increasing use of hospice by persons with congestive heart failure (CHF) and dementia (diseases with a more ambiguous prognosis).

If Cancer is the most predictable disease (and that doesn't mean it is predictable, just comparatively so), then CHF may be the least predictable, with a series of crisis events, one of which eventually ends in death. At the same time, CHF results in a great deal of suffering for patients, and palliative care has lots to offer patients. So, this RFA is timely and important.

I am hopefully working with colleagues at Duke to put together a RCT of early palliative care with CHF patients. I see two huge issues/problems with this type of study, one related to CHF and the other related to palliative care.

When do you randomize CHF patients? There is not a diagnostic point as 'clean' as the identification of a stage 4 lung cancer at which to randomize patients to early palliative care or the control group of normal care. There are many clinical possibilities (not my area so won't wade into the details) but this will be a tricky part of doing such a study well with CHF patients.
What are patients being randomized to? I sat in on a broad ranging discussion of some stakeholders of the Duke Cancer Care Research Program about two months ago talking about research priorities and protocols. One point that came up (it wasn't the main point of the discussion, but this RFA triggers it for me) was how specific RCT of pharmaceuticals or chemotherapy agents must be. Exactly how much is given, when, how, by whom, etc. But a randomization to a palliative care service is less clear. In the context of pharmaceutical RCTs, often a control group is access to 'best supportive care' which may mean access to a palliative care service. In the context of this RFA, palliative care is the treatment, so needs to be nailed down and replicable. One of the points of palliative care is to listen to patient goals and to even help patients identify their goals given the reality of the disease process. The choices or outcomes won't be the same across patients, but of course that is also true with RCTs of pharmaceuticals, that is why you do them. But, there doesn't seem to be as much experience is nailing down what is meant by palliative care or best supportive care in the control arm of other studies. Getting straight what patients are randomized to will be a big part of doing this well.

President's Budget

2011-02-14T07:52:00.005-05:00

Here I repost Friday's post about he harm of short term deficit reduction in the absence of longer term policy attempts to address these issues.

The President's budget does not contain broad tax reform or long range entitlement reform proposals that were recommended by the Debt Commission, and his OMB director says that those are separate discussions. It does reduce the deficit by $1.1 Trillion over the next decade, it just doesn't address the long range drivers of our structural deficit (and neither do Republicans appear ready). This is disappointing. Here is a round up of comments on the budget from Kaiser Health News. Update: Ezra Klein with lots of links. Update 2: here is the actual budget.

The budget does offer a 2 year doc fix, meaning it identifies cuts to Medicare and Medicaid to forestall planned payment cuts to physician fees over the same time, basically arguing that not cutting physician payments is a higher priority. The cuts come mostly from reduced subsidies by Medicare to teaching hospitals ($60 Billion) for Graduate Medical Education, reduced payments to hospitals to compensate for when patients don't pay co-pays and deductibles ($23 Billion), and slow of the growth of home health updates ($9 Billion. This is the most responsible dealing with the so-called 'Doc Fix debacle' since 1997. A completely redone payment approach is needed. Also, if such cuts are followed through on next year year, it will give credence to the ability to see through reductions in planned Medicare spending. Even though these acts are politically hard, they are nothing compared to what it will take for a long range balanced budget.

Hopefully, the bipartisan discussions in the Senate on tax reform and a broader consideration of the debt commission proposals will take root, but I had hoped the President would wade in more clearly on what he wants in the way of long range entitlement and tax reform. If we don't get around to this fundamental discussion, we are headed for our fourth straight election in which one side is looking for a large victory by simply arguing I am not as bad as the other guy.

Update, 9:00pm: word of a secret deal in the works....a grand deal is what it will take but it seems far fetched. I hope I am wrong.

House CR FY 2011

2011-02-11T21:18:00.003-05:00

Text of the House CR bill that proposes cutting $100 Billion from the President's FY 2011 request. Current continuing resolution to fund the government runs out on March 4, 2011. (h/t @HEALTH_NOTES)

CBO did not say ACA will kill 800,000 jobs

2011-02-11T17:45:00.003-05:00

Was going to do a post on this, but Jon Chait did it. They say that access to health insurance will reduce job lock (those working mainly or only because of the need for health insurance) and some folks after the ACA will decide to work less. For example, a parent might decide to stay home with their kids instead of work since they could obtain health insurance without a job after the ACA.

I won't even get into the irony of Republicans touting minor points out of the CBO's analyses given how they have spent the past few months trying to discredit them.

NC and Tort Reform

2011-02-11T11:09:00.007-05:00

I have been wanting Republican leaders in the NC General Assembly to make clear what they are for in the realm of health policy, and it looks like tort reform may be their first step. They appear interested in torts generally, but both Speaker Tillis and Sen. Berger have noted medical malpractice as areas of focus for this NC General Assembly Session. The John Locke Foundation, a Libertarian think tank has this proposal out today.

The medical malpractice system we have now does nothing well. It leads to frivolous suits, and misses most cases of true negligence, and that is just getting started with the problems. If you want a book length treatment of the (many) problems and realities of medical malpractice, this book by my Duke colleague Frank Sloan, and Lindsay Chepke (a lawyer) is excellent.

A few thoughts on tort reform and medical errors (this post has links to multiple primary sources on these and related topics; new one from AMA).

Medical errors are a huge problem, and tort reform would best be coupled with a patient safety approach that moved medical errors out of an adversarial system toward one that seeks to learn from mistakes.
One motivation of bringing a lawsuit on the basis of harm in the absence of negligence is the cost of medical care and the possibility that an injury could render someone uninsurable. Tort changes in the context of a guaranteed access to insurance for those injured is quite different from tort reform and nothing on the insurance side. In this way, tort is linked to the larger health reform discussion.
The Republicans in the General Assembly seem clearly opposed to the Affordable Care Act. It is easy to be opposed to something, but now they need to say what they are for in the way of expanding insurance coverage. I have noticed more persons willing to say privately (and some publicly) that they reject the notion that universal coverage is a worthy goal. I have no idea if this is the position of few/some/many Republicans in NC, but if it is their position it would be good to make that clear. If it is not their position, and universal coverage is something they want to work toward, they should say how they plan to do that.

Different Options on the Deficit

2011-02-11T09:31:00.004-05:00

To simplify, lets assume there are two possible ways to address our budget deficit, a short term solution and a long term one. Further, lets say the short term approach is budget cuts that are being discussed by the Republicans in the House to cut money from the current year's budget. The long term approach could be seen as addressing entitlement reform (Medicare and Social Security), Military spending, and a comprehensive tax reform that lowers marginal rates, reduces exclusions and increases taxes collected.

For the sake of simplicity, lets define the short term approach as cutting $100 Billion from the current budget, and no is a continuing resolution through September 30, 2011.

For long term, lets say a yes is adopting something similar to the President's Debt Commission (Simpson/Bowles Commsion), which would balance the budget in 2035 at 21% of GDP in taxes and spending, and a no is doing nothing.

So, there are 4 budget deficit scenarios in the 112th Congress (yes/no short term) and (yes/no long term).

Short term yes/long term no. This is by far the most likely scenario. And this is probably the worst possible scenario in policy terms, because it would impose large cuts in the midst of a slow economic recovery. I am not saying domestic discretionary spending cannot be cut, and I am sure there is wasteful or non productive spending that could either be cut or be better used. This approach imposes a great deal of pain, and perhaps endangers our recovery, but worse than that, it is only symbolic in addressing the true cause of our long term budget problems. This does nothing to address the long term structural deficit. If you take this approach to its absurd conclusion and cut ALL non defense, non discretionary spending, then in 2020 we would still have a deficit if the current income tax rates are extended until 2020 (and this assumes the Medicare cuts of the ACA take place [see figure]).

Short term no/long term yes is the best scenario in policy terms. The likelihood of this scenario seems virtually nil. It is a bad idea to have large cuts during the recovery, but the most important deficit policy need is to develop a plan for long range deficit reduction which by definition includes entitlement reform and tax reform. If we don't slow health care cost inflation over the next 30 years, we have no chance for a sustainable budget in the future in any event, and our current tax code has no chance of bringing in the revenue necessary for even reduced spending levels of spending on Medicare, Social Security and current levels of defense spending. Spending must come down, and taxes received must increase, though preferably in the context of a tax reform that does all we can to try and make the job climate as attractive as possible.

Short term yes/long term yes could also be a pretty good outcome in policy terms. As noted, the cuts being discussed by House Republicans are nothing more than a symbolic gesture from the perspective of developing a long range sustainable budget. However, symbolism can be important, and if somehow passing such a current year budget cut spurred on negotiations that lead to a real addressing of the true cause of our long term budget deficit (Social Security, Defense, and most notably, health care costs) then so be it. Again, if you eradicate all non defense, non discretionary spending, then in 2020 we will still have a budget deficit given the tax code we have today, and that assumes there are ~$420 Billion in Medicare cuts over the next decade as specified by the ACA.

Short term no/long term no is also a possibility. House passes a budget cut, Senate gums it up and/or the President vetos the bill and all this is taken to the 2012 election. Probably a government shutdown of some length. I am torn on this one....part of me says that this is a better policy outcome than short term yes/long term no, but I don't want to give up on at least partly getting to a long term yes. Divided government likely means it is harder to get started on the grand deal, but may also paradoxically be the only way to finish it off. The problems with our budget are not like fine wine (getting better with age), they are getting worse, in the sense that the longer we wait to undertake large scale entitlement reform, discussion of Military spending and developing a tax code that pays for the spending we say we want, the fewer options we have. If we wait for a debt driven crisis to address all this, then both in policy and psychological terms, huge cuts in programs that are Progressive priorities may be inevitable.

House Republicans especially are talking a great deal about spending and dealing with the deficit. In policy action terms, they are attempting to legislate in only a symbolic manner that may well harm our fragile economic recovery. This may help them do well in the next election, but it is bad policy. If Progressives don't react boldly, they will get away with it.

Both in policy and political terms, the best step for Progressives is to lay down a serious long range deficit reduction proposal along the lines of the President's Debt Commission proposal. Something like this is what it will take to shore up Progressive priorities such as Social Security and Medicare. Something like this is the only way to reduce our very high levels of Military spending. And something like this is the only hope of developing a tax code that has a hope of leading to long range balanced budget. I also think this is also the only way politically to argue against short term budget cuts, because the public does want something to be done. If the argument against the Republican plan is 'that is only symbolic and doesn't address the real problem' then we have to introduce a proposal to address the real problem.

I don't see how this way forward is possible without the President leading on it, and reframing the agenda away from large discretionary budget cuts to the real issues of our long range budget problem. Perhaps a bipartisan group in the Senate could get this going and the President could support it. Without some change, it appears that we are headed for the worst possible deficit policy outcome: large cuts in non defense discretionary spending in the current year's budget, and no action on the actual long range problem.

State Flexibility

2011-02-10T09:24:00.005-05:00

Kathleen Sebelius with an op-ed noting flexibility for states in implementing the Affordable Care Act. There seems to be a great deal of variation in what states are doing in the way of using the implementation of the ACA to develop new models. Some states are saying there is not much flexibility, while others, like Vermont are bringing forth grand plans. It seems to me that if a state has goals and a plan to get there that can expand insurance coverage, they should put them forth. Even if the ACA were struck down as unconstitutional, the problems of the default system will remain, and the options of what is feasible in response won't change that much.

There is both the reality of what is allowed in the way of state variation and there is also the political reality, and they aren't the same thing but are likely to converge over time. If a state like North Carolina, which has a Democratic Governor and a Republican General Assembly managed to agree to a plan that sought flexibility in implementing the ACA and seeking some sort of Medicaid waiver, politically it would be hard for the feds to deny a bipartisan state-based effort.

Does anyone have a list or ranking of ongoing or expected activity of what states are likely to do in the way of seek sec. 1332 waivers and/or Medicaid waivers to implement the ACA?

Update: Ezra Klein writing that Sebelius and Daniels need to talk. There is flexibility in the ACA, and I think any state with a concrete plan will get a strong hearing. Saying we can't act because of uncertainty I think is mostly saying we want to bring down the ACA. People are welcome to this position, but if the ACA goes away, the problems won't.

More update: Also via Ezra Klein interesting interview with Vermont Gov on his single payer plan.

And more update: with Aaron Carroll saying the crux of the matter is mandated benefits and there is not going to be agreement.

Galston on Deficit

2011-02-10T06:45:00.005-05:00

William Galston with a post with a useful summary of the different CBO long term budget projections, as well as a prediction that the President is unlikely to offer substantial deficit reduction proposals in his budget. At this point, it seems as though the ongoing bi-partisan discussions in the Senate on at least a tax reform if not more comprehensive deficit reduction proposals may be the best hope for any action before the 2012 election.

Update 10am: Matt Yglesias well makes the point that cuts from FY 2011 budget do not address the long range deficit problems we have. We don't need symbolic (in terms of the magnitude of the long range problem) cuts to this years budget, we need a long range plan. If symbolism lead to real solutions, then maybe....but that doesn't seem to be what is likely to happen.

Illness Trajectories

2011-02-10T05:30:00.004-05:00

Drew Rosielle has a post over on Pallimed blog about illness trajectories, and how they relate to end of life care. The paper that triggered this post is on End-Stage Renal Disease (ESRD) trajectories and published in the latest issue of the Journal of the American Geriatrics Society (JAGS). However, illness trajectories have become a mainstay in the field of palliative care and end of life care generally. This paper in the BMJ provides a useful overview of the concept.

The rise of the recognition and naming of 3 distinct trajectories (rapid steady decline, like in Cancer; slow steady decline, like in Dementia/Frailty; slow steady decline, with precipitous declines, like with organ failure) of the dying process is a basic attribute of the field of geriatrics and palliative medicine. It seems as though these trajectories have arisen as physicians have had to answer the following questions from patients:

how long do I have left?
what is going to happen to me? (what will my quality of life be like)

They have also arisen because of the availability of improved data, and the ability to describe patient symptoms prior to death.

I am not a provider, so don't face these questions on a daily basis, but I can observe them after the fact (of death) in various data sets using various measures of decline and quality of life. Identifying a pattern and categorizing a person after they are dead is not the same as meeting a living, breathing human being and trying to answer their questions, how long do I have left? and what will happen to me?

Rosielle, who is a provider, has some interesting doubts about the usefulness of these trajectories in actually caring for patients. Rosielle notes that in his clinical practical the trajectories are "useful for explaining, less so for predicting" and that he worries that an over-reliance on the trajectories misses persons who may be very near death but who are not offered the appropriate palliative care services. This means needless suffering may take place.

This is especially true in the Medicare hospice program since patients must un-elect curative treatments in order to begin receiving hospice care. A move to concurrent hospice or expanded palliative care in Medicare could help to alleviate some of these concerns by not forcing clinicians to be so certain that death was imminent, just certain that a patient was in in pain or suffering in a way that could be addressed. A recent study demonstrated that early palliative care improved quality of life and actually extended life in stage four lung cancer. This is only one disease process and the results need to be replicated, but it is a hopeful study that suggests that more needs to be done to make sure palliative care is provided to those who need it.

Worries about moving to concurrent palliative care in Medicare are mostly that it will increase costs and whether the extra cost is worth it. I think these sorts of questions should be asked, but not so selectively. If a new surgical procedure that was 3 times as expensive but only 3% better were identified and was an approved medical procedure, Medicare would cover it no questions asked. Hospice and palliative seem to be the only part of the Medicare program that has to answer these sorts of questions and that makes little sense.

What we need is the best information that we can get that will allow us to try and give patients an evidence based and straightforward answer about the care options they have. Will it extend how long they have left? Will it improve the quality of their lives while they are alive? The models we have to do all this prospectively are not great. There are numerous sources of uncertainty. But, we have to keep trying, and hopefully we can better match the needs of patients with what care options are available.

Individual Mandate Alternatives

2011-02-09T15:23:00.003-05:00

Paper from Jon Gruber, the MIT Economist who was an adviser to Mitt Romney in Massachusetts has a paper on the relative merits of risk pooling mechanisms that are replacements to an individual mandate via Austin Frakt.

Most interestingly to me is his estimate (which does have lots of assumptions, especially since lots of auto-enroll examples are not health insurance) that auto-enroll procedures such as those envisioned by the Patients' Choice Act cost about the same amount with only two-thirds as much coverage because they default people into the low cost government option. I have always wondered why the Patients' Choice Act was never scored by CBO, and this may be why. A staffer for one of the sponsors told me they couldn't get it scored because CBO was so busy, but the PCA was introduced in May 2009 before the flurry of bills began coming out of House Committeess. Here is an old post linking to some discussion of private scoring that was done by S. Parente at Univ. of Minnesota. Just for kicks, I wish someone would reintroduce the PCA and have it scored by CBO.

Gruber's conclusion about making projections of coverage options is worth highlighting:

"Modeling the impact of fundamental health reform is a balancing act between leaning on what is known and modeling what we need to know. In the case of the new health reform law, that balancing act was greatly assisted by the experience of Massachusetts, which provides a great case study of the world with reformed insurance markets and an individual mandate. Once we move away from the individual mandate, our estimates become considerably more uncertain."

We have better evidence on how an individual mandate works than we do for alternatives.

State Experimentation

2011-02-09T08:18:00.004-05:00

I have a hunch that the next decade will turn into a period in which States will be granted a great deal of discretion to implement the ACA and any modifications in the ways they think best. There are such opportunities in the ACA such as section 1332 waivers, but I suspect any state with a coherent plan will get a strong listen from Washington. Most people likely think this means pared-down proposals, with a goal of expanding coverage via catastrophic insurance, but the most aggressive early experimenter appears to be Vermont, who wants to create a single-payer system.

Some key factors across states that will determine the type of experimentation they may attempt include:

relative intensity of the current system, especially in Medicare. There is tremendous variation if per capita Medicare expenditures across the nation and high spender areas will have fewer options because providers are used to doing more and being paid more; it will be easier if you are in a 'low intensity practice pattern state'
relative economic vitality of the state
current rate of uninsurance. Massachusetts is around 2.5% uninsured, while Texas is around 25%
Health outcomes/population health
Medicaid share rate (what proportion of Medicaid costs are paid by the federal government; poorer states get more federal subsidy)
Politics of the state

Should be interesting to watch what happens in Vermont and whether other states will be emboldened to search for a grand solution. (h/t for links @ezraklein)

Update: Aaron Carrol also writing about Vermont.

Savings Reduces Someones Income

2011-02-09T07:59:00.002-05:00

Austin Frakt's latest Kaiser Health News column is here making the case that insurance reforms could achieve some savings, but will not be enough to create a sustainable health system. He notes that for the past half Century, the overall medical loss ratio (percent of premiums spent on care) has been at least 85%, so the codification of this standard is not going to have massive impacts on costs. Similarly, counter proposals that claim to increase competition for insurance won't revolutionize costs either unless there is also a reduction in the 'loss' portion of insurance, which means amount paid (providers get less income) times amount of care received (patients get less care).

Austin notes that payments to providers have got to be part of the solution, which reminds me of the way I ended my July 31, 2009 column in the News and Observer while the legislation that became the ACA was still being put together:

"We need to expect more value for money in health care while reducing costs. It will not be easy, as any savings realized will be a reduction in someone's income. For now, everyone is saying reform is needed, but no one has had to be opposed yet. As legislation moves toward a final House, Senate and ultimately conference committee vote, there is only one certainty. If opposition to a consensus bill does not become ferocious, it can mean only that the proposal does not seriously address health spending growth."

Slowing costs appreciably will take paying providers less and reducing the amount of care that people receive. The first will be hard, and there are limits to how much of that you can do. The second will be very hard, but should be lead by asking the questions 'does it extend life?' and 'does it improve quality of life?' and how much does it cost? And then providing evidence based answers, and figuring out how to provide this information to patients and providers in a prospective manner. That will be technically hard. In our current political climate, asking these questions reasonably seems culturally impossible.

Any replace option to the ACA has to work in the exact same climate.

IPAB and Ryan

2011-02-08T07:09:00.003-05:00

Austin Frakt with a post following up Ezra Klein's comments on similarities between the Affordable Care Act (ACA) and Paul Ryan's Roadmap in terms of addressing cost inflation in Medicare. Part of Klein's point was to ask why Ryan thinks Congresses of the future would do his preferred hard things, when he has been saying Congress will not do hard things to implement the ACA. I have also written about this.

Austin today notes that Ryan's Roadmap health policy plans empowers the Sec of HHS to enforce future Medicare growth rates, while Austin thinks an IPAB has a better chance of doing a better job and wonders why Ryan would prefer one political appointee for this important task as compared to a broad based board such as IPAB doing it. The answer I think is that an independent board such as the IPAB is a classic example of an idea that once had bipartisan policy support, but which become politically partisan once it appeared in the ACA.

On May 20, 2009, Rep. Ryan (along with co-sponors Nunes in the House and Coburn and Burr in the Senate) introduced the Patients' Choice Act. It contained two boards that would apply cost effectiveness research and the like in an effort to improve quality and reduce spending (Title VIII of the PCA). Thus, Rep. Ryan proposed a more robust version of the IPAB, about a month before the first House Committee reported out HR 3200.

This is just one of many examples of Republicans vehemently opposing ideas in the ACA that they once supported, and in this case, even proposed.

Progressives and the deficit

2011-02-08T06:10:00.003-05:00

Progressives have more at stake in developing a long range plan to balance the federal budget than do Conservatives, because we believe that government has an important role to play in modern life. Conservatives have long lamented 'tax and spend', while practicing 'don't tax but still spend' and then arguing that the inevitable deficits prove that government doesn't work.

If progressives would commit to leading on the hard and politically risky work of painting a progressive vision for how to get to a sustainable federal budget we would do two things.

First, directly engage a crucial problem facing our nation. The most important reason to do it is because it is the right thing to do. Our current budget is unsustainable, and waiting for a debt driven financial crisis to cause us to address these problems will give us fewer options that will put programs such as Medicare and Social Security at risk.
Second, politically we would call the bluff of Conservatives, who seem only to care about deficits when in opposition, and never when discussing tax cuts. Our rhetorical disinterest in the deficit has allowed Conservatives to get away with rank hypocrisy in this area because the public has, perhaps rightly, seen us as mostly interested in developing new programs in spite of the balanced budgets of 1998-2000. If Progressives provide leadership, Conservatives will be forced to respond (and some want to do so), and the reality of the situation is that both spending and taxes will have to be altered if we are to achieve a sustainable budget.

On a path to a sustainable budget there will be room for investments in education, the environment and infrastructure. Without such a plan, programs such as the Race to the Top Education initiative, which at a total cost of $4.35 Billion is small in relation to the total budget but still consequential, will seem out of reach. With no changes to our current tax code and projected spending, all federal tax receipts will be consumed by Medicare/Medicaid, Social Security, Defense and Interest on the Debt in 2020. Every other dime of federal spending will be debt financed even with a normal economy, a situation that is unsustainable.

The best way to preserve Medicare, Medicaid, Social Security and other Progressive priorities is to provide leadership in the difficult and inevitable work to develop a sustainable federal budget. It will take both political parties and compromise to get this done. Progressives should lead the way.

Is health care just another good?

2011-02-07T15:29:00.007-05:00

8,000 patients will no longer be able to receive care from UNC Hospitals and their affiliated physician practices because of a dispute between UNC and the insurance company Aetna. The bottom line is that Aetna does not want to pay as much for care provided by UNC as UNC wants to be paid for providing this care. No surprise there, as the interests of the two parties (health care provider and insurance company) are in opposition. However, UNC has taken the unusual step of no longer accepting Aetna's insurance, forcing 8,000 persons to receive care elsewhere (some can get exceptions). And Aetna hasn't backed down and increased the pay rates.

And patients are upset, because their preferred pattern of health care delivery has been upset.

There are numerous examples in everyday life in which one party wants to get paid more than the other would like to pay, and a business decision is made. I would rather Duke pay me more for being a professor than they do, but my desire is not such that I am looking for a new job. Likewise, I would rather not still drive a minivan because my kids are a bit older, but the van is paid for and I don't want to pay as much for a new Honda Accord as the local dealer wants for it. Similarly, I am a season ticket holder for the Carolina Hurricanes, but I have upper level seats instead of lower level ones, simply because I am not willing to pay the difference in ticket price between the levels. I would rather sit in the lower level, but not that much.

All of us make innumerable tradeoffs and choices in deciding how much we are willing to pay for goods and services, and we don't think much about it. Many people claim they want more competition and sensitivity to price of this type in health care. However, whenever you get a story like the dispute between UNC and Aetna, people get very upset because they no longer get to keep their doctor, or receive care from the hospital of their choice. I don't know any details about how far apart UNC and Aetna are, and there are many unstated reasons that one or both of the sides in this negotiation may not want to strike a deal. It doesn't really matter, because this is simply a story of two organizations seeking to do business in their best self interest.

If your reaction to this story is 'but health care is different from those other examples you gave' then you probably don't think that health care is just another good.

Increased competition and market forces brought to bear on health care and in health insurance would increase, not decrease disruptions such as this one. That might be good or bad depending upon your perspective. And of course health insurance is not the same as health care, but very few could hope to afford care if they got sick without insurance, so a third party being involved in the patient/provider relationship is virtually inevitable, and likely to increase if we are to address health care cost inflation.

full disclosure: my wife is a nurse at UNC hospitals.

Social Security and the Budget

2011-02-06T07:49:00.002-05:00

Andrew Dobelstein writing that the Social Security proposals of the National Commission on Fiscal Responsibility and Reform (Debt Commission) are both comprehensive and progressive. Dobelstein notes that the rhetoric that 'you either have to raise taxes or cut benefits' is obscuring the nuanced reform that he says at its heart would:

increase payable benefits for low income beneficiaries (+3.8% for the lowest income quintile)
reduce payable benefits for high income beneficiaries (-18.7% for the highest, both by 2050)
remove the cap on taxable wages, thus increasing taxes for higher income persons

Under the Debt Commission's proposal, Dobelstein says the program would be shored up in a progressive fashion (increase benefits to the poor, reduce them for higher income persons) that expands the safety net, while maintaining a basic retirement benefit for all Americans. [I should say that I have a reflexive negative reaction to raising the retirement age, in part because I grew up working on a tobacco farm in my summers and think I can write blog posts until I am 67 no problem, but manual labor is a different story. As I understand it, the Debt Commission policy could allow some sort of exemption along these lines.]

I had an email exchange this past week with someone who knows far more about Social Security than I do. I wrote to him that while Social Security was historically the 'third rail' of American politics, it was now the easy fix because of how big and hard the long term problem of Medicare and health care cost in general have become. He agreed that this is true, but told me that people like me saying that was one of his pet peeves. The reason, he said, was my sentiment allows/enables political delay to addressing the problems of Social Security. And options get worse the longer you wait to start. Further, there are a series of straightforward Social Security fixes that are available (here is a list of CBO options), while the long term fixes of Medicare and how to get started are much less clear, especially with the legal challenges for the ACA.

There is much to be said for a strategy of addressing Social Security, taking that off the table and then focusing our energies on addressing health care costs. It is true that we could pass a Social Security fix this year, and it will work as designed, whereas successfully addressing health care costs in Medicare and otherwise will take a focused 30 year effort, with many twists and turns. That is because Social Security faces a purely demographic financing problem while Medicare joins the same demographic problem with the rate of cost inflation in medical care.

In the end, I have decided I will be open to just about any compromise on Social Security that builds momentum in the Congress that would take it off the table and allow us to focus on health care costs.

I have written that we need to develop a long range plan now to address the debt before some sort of crisis forces us to do so in a context that provide us with fewer options. The main barrier to doing so is the politics of how hard it will be. The last 3 elections have provided both political parties with large electoral victories by essentially arguing that 'we are not as bad as they are.' Both parties may be able to win again in 2012 using this strategy, not by addressing the large problems facing our country, but by highlighting the foibles of the other party. It would take true leadership and courage to risk doing something consequential in the 112th Congress.

I think that a large deal on tax reform, and perhaps Social Security is more likely than a small deal, but neither is particularly likely. If such a deal came about, it would seem more likely to emerge from the Senate. Recall that 5 of the 6 members of the Senate voted for the Debt Commission recommendations (including Coburn and Durbin, quite an ideological spread), while 5 of the 6 members of the House voted against.

I wrote this a couple of weeks ago, and it is still my bottom line:

"If we ever adopt a serious, long term deficit reduction plan that moves us toward a sustainable federal budget, the last political step will include members of both parties passing a bill that is akin to their holding hands and jumping off a cliff together. The President is the only person who can take the first step toward the edge."

Reinhardt on Rivlin-Ryan

2011-02-04T20:42:00.002-05:00

Economix blog on the Rivlin-Ryan plan which is essentially the Medicare portion of Paul Ryan's roadmap plan. Uwe Reinhardt notes that the implementation of this plan is 'theoretical'. That made me chuckle. This is reminiscent of my post from last week asking whether Congress can do hard things.

h/t@IncidentalEcon

Getting the Incentives Straight

2011-02-03T07:00:00.005-05:00

Good policy is about getting the incentives straight. My post yesterday on the recent paper in JAMA looking at differences between For Profit and Non Profit hospice providers noted that adding quality of care to discussions of cost was needed to make the best policy.

I think the overall goal of health care is to extend people's lives and/or to improve the quality of their life (QOL). Since everyone dies, there are eventually diminishing returns on the productivity (here defined as extends life and/or improves QOL) on what we spend to forestall death and improve QOL. It is hard to determine when this takes place, and harder still to decide what to do when this point is reached. But, it is inevitable. Hospice is one option when patients begin to move into this murky territory when treatments may no longer be 'worth it' as defined by them and their doctor(s). However, by improving QOL, hospice is most certainly still productive care as I have defined the term.

QOL is hard to measure on a prospective basis, meaning as you move through time. Using retrospective quality assessment, especially family members saying hospice helped my loved one and me through a hard time, hospice passes the market test as around half of all Medicare beneficiaries who die do so while using hospice. We know that. However, we need better measurement of quality of hospice care if we are going to get the incentives right in Medicare hospice policy. How quality changes and improves by length of hospice use is very important if we are going to determine the optimal period of hospice use from a QOL perspective.

The worries about increasing length of hospice in the Medicare program are focused on the long periods of use, which is understandable because hospice has long held out hope (and some evidence) of an intervention that helps patients and reduces Medicare expenditures. I think that often groups such as MEDPAC and Congress focus so much on long hospice stays because it helps drive a narrative that one way to reduce costs is just to stop people from abusing the system. I am against abuse of the system, but we won't 'waste fraud and abuse' (WFA) our way out fo the overall cost problem our country faces, and too much focus here just lets us avoid harder issues.

Focus on WFA and long stays in hospice generally is inevitable, and correct, but we need to keep in mind that there is more than one problem (long stays) to be considered in trying to get the incentives correct in hospice. Short stays in hospice may also represent a problem.

A paper I did with colleagues found that hospice reduces Medicare expenditures by around $2,200 in the last year of their life; this means that after choosing hospice, Medicare paid about $2,200 less for their care until death than they would have had they not chosen hospice. Maximum cost savings to Medicare occurred with a length of hospice use of around:

60-100 days for Cancer
50-110 days for diseases other than Cancer

And cost savings at the maximum level were around $7,000 for Cancer, about double that for non-Cancer. Keep in mind the definition of saving here is what Medicare paid for care, not the profit margin of a hospice, which is a related, but not the same issue. And this paper, like most focused on cost didn't measure quality, which is a limitation and what we really need to know (cost and quality together).

The median length of hospice use in the study in JAMA this week was 20 days for those treated in a FP hospice and 16 days for those treated in a NP. The years and data sources are not the same as those that produced the cost savings data noted above, but to illustrate the incentives lets stick those numbers (they have changed some, but not that much).

If the median length of use (half the patients use less than amount, half more) is 20 days, then doubling the median length of use still doesn't produce a length of use that has achieved maximum savings for the Medicare program. For around 75% of the patients using hospice, we see that the profit motive incentive, and the incentive of the Medicare program from an overall cost perspective is the same: we need to find a way to increase length of hospice use. What we wish we knew was how quality of life/care improved for patients when moving from a length of hospice use from the median (20 days) toward the maximum cost savings for Medicare (2-3 months). The shape of this curve is needed to know how hard we should work to try and incentivize stays on the short end of the spectrum to be longer. If maximum quality of life improvement is obtained at 20 days, it might not be that important. However, if QOL and patient benefit is not achieved until 60 day length of use, then we should work very hard to increase shorter periods of hospice use.

We shouldn't focus policy only on the very long periods of hospice use, we must make sure that whatever we do there doesn't shorten the length of use for more common periods of usage. If the median fell from 20 days to 15 days, you would be reducing the cost savings to Medicare and probably harming patient QOL. Note that the publicly available data on Medicare hospice margin (profitability) shows that periods of hospice use less than 10 days or so are money losers for hospice providers, so the profit incentive at the lowest end of hospice use (shortest 30% of stays) is also aligned with both quality improvement and the finding that hospice reduces Medicare expenditures, with the biggest daily effects being closest to death. Thus, everyone has an incentive to transform 5 day lengths of hospice use into at least 15-20 day periods of use.

Both the long periods of hospice stay and the short ones may represent policy problems. We need to make sure that Medicare hospice policy pays attention to both ends of the distribution, and doesn't only seek to shorten very long periods of hospice use.

Updated: just added a bit in the last two paragraphs to further clarify aligning of incentives to extend length of short periods of hospice use.

Do For Profit Hospices Milk the System?

2011-02-02T09:06:00.008-05:00

Do For Profit Hospices Milk the System? That is essentially the background question asked by a paper out today in JAMA that looks at the association between the hospice agency type (for profit [FP], not for profit [NP]) and how they differ in terms of patients cared for and for how long. A related question that is framed by the paper is whether the payment policy used by Medicare to reimburse hospice care should be changed. Before discussing the paper, let me say that the paper by Wachterman et al., like most work in this area (including work I have done showing the hospice reduces Medicare expenditures) leaves out something very important: the quality of care that is provided for the money spent. The authors readily note this as a limitation.

The paper has two basic findings. FP hospices are more likely than are NP hospices to:

treat patients who do not have Cancer. [17.2% in FP, v. 8.4% in NP had a diagnosis of Dementia]. Patients with Cancer represented 34.2% of FP patients v. 48.4% in NP.
provide hospice for a longer period of time prior to death. The median length of use (half the patients stayed shorter, half longer) was 20 days for patients treated in FP v. 16 in NP. The 75% percentile showed even larger differences with 1 in 4 users staying longer than 88 days for FP v. 52 days for NP. And 6.9% of patients cared for by FP hospice providers used hospice for longer than 365 days v. 2.8% who were cared for by NP providers.

The paper further shows that patients with primary diagnoses other than Cancer received less intensive services while receiving hospice than did hospice patients with Cancer. This would make the FP hospice patient mix more profitable than the NP patient mix since the payment would be the same, while the amount spent providing care lower for FP providers (this is not inevitable, but was observed).

Hospice provides interdisciplinary care for persons who are dying and have decided to forego curative treatments in order to receive hospice based palliative care, which is care that focuses on treatment of physical symptoms, psycho-social concerns, planning and family concerns. A phyisican must certify that death in likely within 6 months for the initiation of the hospice benefit in Medicare (though patients can receive services for longer).

The Medicare program began covering hospice in 1983, which helped to legitimize the concept in the U.S. health care system. Currently, nearly half of the decedents in the Medicare program (which insured around 8 in 10 persons who died last year) choose to use hospice prior to death. Hospice was initially conceived of primarily to care for persons with Cancer, but has spread to other diseases, which have a less predictable time course to death. The spread of hospice beyond Cancer provides the opportunity to provide needed care to more patients, while also making more likely longer periods of hospice use prior to death. Most hospice care is provided in patient's homes, but can also be provided in institutional settings.

Hospice is one of the few remaining types of care that is reimbursed on a per diem basis, which means that a fixed amount of money is provided to a hospice provider for each day a patient is enrolled. The incentive with such a payment approach (for the provider) is to provide more care, since the costs of hospice are higher in the first few days (intake period) and last few days prior to death, when physical symptoms tend to be acute. So, a longer length of hospice use means providers have more days with lower costs, while receiving the same per diem payment, thus maximizing their payment. Long periods of hospice use raise concerns about inappropriate, wasteful or perhaps even fraudulent use (the current Medicare hospice benefits stipulates 6 months as the presumptive period of eligibility, though you can receive such care for longer).

It is worth noting that very short periods of hospice use raise quality concerns. In the study noted above, 28.1% of persons using a FP hospice died less than a week after initiating such care, as compared to 34.3% of those care for by a NP hospice. In fairness, that could be taken as evidence of FP hospices outperforming NPs. Very short periods of hospice use lead to worries that patients are not able to realize the full benefits of what hospice could provide in the way of symptom relief and other benefits, and may be a signal of poor quality care. Colleagues of mine who are hospice and palliative care providers tell me that 4-6 weeks of hospice is likely needed for a patient to achieve the maximum benefits.

There has been an ongoing discussion and recommendation from MEDPAC to change the Medicare hospice payment to a so-called U-shaped approach in which higher per diem rates are paid for the first several and last several days of hospice care, acknowledging that the care needs and therefore costs of patients during those days are higher. And dropping the per diem costs for the in between periods when patients are stable, and costs of care are lower.

This general change in payment policy seems reasonable to me, and could lessen the incentive to over-provide, but there is something missing from this calculus.

What about quality?

In one sense, hospice has passed the market test, and there is research that shows that patients and families are satisfied with the care they receive in hospice. However, a good deal of this work is based on retrospective reports of families who basically say that hospice was there when my family needed them, when we were in a difficult situation. But, the question remains, what is the length of hospice use that maximizes benefits? Can an empirical basis for the gut of my colleagues that 4-6 weeks of hospice use maximizes benefits be obtained? How steep is the slope of the curve? How much extra benefit would be gained from moving a person from a 5 day to a 15 day length of use prior to death? Likewise, if a payment policy reduces the extreme long outlier cases, how bad will it be in quality terms if the median drops from 20 days to 15 days?

These questions cannot be answered with any certainty given the current evidence.

The figure above shows that the Medicare margin for hospice providers (avg. margin in 2001-06, figure is an approximation of a MEDPAC figure) increases with length of use, meaning simply that it is more profitable for hospice providers the longer a patient uses in hospice. This shows hospices losing money on the lowest 3 deciles of length of hospice use (say, less than 10 day stays). Margin rises steadily beyond that, showing that longer lengths of hospice use are more profitable for hospice providers. What remains unknown is the quality curve, which is hypothetical in the graph above. Knowing the shape of the quality by length of use decile relationship is really needed in order to make Medicare hospice payment policy with full information.

I recently received a grant along with an oncologist colleague from Duke Amy Abernethy, to essentially estimate the quality by length of use relationship shown in the figure above for both hospice care but also for non-hospice palliative care in patients covered by Medicare and other insurers. This is possible because of painstaking work (not done by me) to develop a cohort of patients receiving such care in a variety of settings, with quality being prospectively measured in patients covered by different types of insurance.

Amy and I have written that end of life is the fools gold of health reform, meaning that focusing on time to death will likely disappoint as a cost savings strategy because of how difficult it can be to make an accurate prognosis. However, a focus on value of care (does this extend life? does this improve quality of life? how much does this cost?) can likely improve quality while reducing costs. And the Medicare program and end of life situations is an important place to focus such questions since diminishing returns to expenditures designed to forestall death eventually set in given that everyone eventually dies, and 8 in 10 decedents were insured by Medicare last year.

To engage this discussion in an evidence based manner means we have got to not only look at cost or quality, but consider both together. This is true for hospice policy, and for health policy generally.

More Florida

2011-02-01T09:06:00.004-05:00

Ezra Klein has aggregated a variety of takes on the ruling of the Federal Judge from Florida here. I don't have anything enlightening to add to the legal questions, but leave all this here:

If the ACA is repealed in its entirety, then the status quo health care system will bankrupt our country.
If the ACA is implemented in its entirety, we will still have to do more on costs to develop a sustainable health care system, which is a necessary but not sufficient condition for a sustainable federal budget.

Regardless of what the Honorables say, we need to work the policy problems and there is much to do. It will take both sides to achieve success.

Update: and a short history of the individual mandate for health insurance, here, via NPR from last February. Another update: Health Affairs blog on the judicial opinion.

Flordia ruling

2011-01-31T15:05:00.003-05:00

Judge rules parts of the the law unconstitutional and I think he is saying that the entire law falls because of lack of severability clause. Of course, what really matters is what Anthony Kennedy thinks....I guess that comes sometime in the next year or so.

A better idea would be to work to improve the bill, along these lines.