Will Arlen Specter Vote for Health Care Reform? Wrong Question.
The last couple of days have been filled with speculation about Arlen Specter’s party switch and the Democrat’s apparent success in getting to 60 seats in the Senate.
Will the Specter switch, and filibuster-proof majorities at hand once Al Franken arrives, mean the Democrats can now ram through a partisan health care reform bill?
The real question is just what will a health care reform bill cost and who is going to pay for it?
Until that question is answered, the Democrats might have 60 seats but they don’t have 60 votes.
Five committees in Congress—two in the Senate and three in the House—are hard at work putting a health care reform proposal together. All have promised to mark-up bills and have them approved in their chamber by the 4th of July.
All of these Democratic committee chairmen point to strong consensus in the Congress that our health care system must be reformed, its long-term costs brought under control, that everyone be covered, and that all the stakeholders have to give up their fair share to make it happen.
OK.
The other bit of consensus around town is that an Obama-campaign style health care plan will cost at least $1.2 trillion over ten years. (The mid-point estimate is $1.5 trillion and there are estimates as high as $1.7 trillion.)
But wait, the Congressional budget blueprints that just passed both houses have no money in them to fix the Medicare physician fee problem—starting with the 21% cut the docs are facing on January 1st.
In the CBOs December report on health care options, they said fixing the cuts by freezing physician payments where they are and then increasing them by inflation each subsequent year would cost $556 billion over ten years. It would likely cost about $250 billion to just freeze the Medicare doc fee schedule at current levels for ten years. [The recent House and Senate budget resolution has only $38 billion in it for a two-year doctor patch that would freeze payments at current levels.]
So, a universal access health bill would cost at least $1.2 trillion and unless the Medicare docs are going to get a series of fee cuts—starting with a 21% cut soon—we need to add the cost of a doc fix. That’s another $556 billion to keep them even with inflation—for a total of at least $1.75 trillion.
The other big excitement in town this week is that Senators Baucus and Grassley have reached agreement on how to begin to control these costs and perhaps find some of this money.
Well sort of.
Their 48-page document just repeats a number of proposals already part of the Obama budget like the Medicare HMO cuts ($175 billion in savings over ten years) and the bundling of hospital and post-acute care payments ($18 billion in savings over ten years).
Beyond the things already in President Obama’s budget the Senators are proposing vague programs that lack teeth and therefore won’t likely score any significant savings. For example, they call for efforts to, “foster innovation by allowing broad-scale Medicare pilot programs of patient-centered care.” Now there’s one that ought to raise a trillion or two.
The document also says the Congress might increase Medicare physician payments by 1% then freezes them until 2012. That would cost far less than the $566 billion that would give physicians an inflationary increase each year for ten years. It would also just sweep a whopping health care problem under the rug for two more years. Hardly reform that would blunt those long-term Medicare entitlement costs—unless you think the docs are going to accept a seven-year pay freeze.
Most of the rest of the proposals are the kinds of things the CBO is on record as saying would have only minor impact on reducing costs—more health information technology and comparative effectiveness research, for example.
I see no reason to believe the Baucus/Grassley payment reform document will develop any meaningful savings beyond the provider cuts the President has already proposed in his budget—which he estimated to be worth $316 billion over ten years.
Will Arlen Specter’s party switch give the Democrats the votes they need to easily move their health care reform bill through the Congress?
If the Democrats come up with a health care reform plan and a Medicare physician payment fix that costs $1.75 trillion, they have only $300 billion in offsetting savings and revenue, and Arlen Specter votes for it, his might be the only vote.
I’d ask fewer questions about Arlen Specter and a filibuster-proof majority and instead ask the optimistic health care reform committee chairmen these two questions:
1. How much will it cost—health care reform and a doc fix all in?
2. Whose hide are you going to take the money out of to pay for it?
Then ask Arlen Specter—and everyone else—if they will vote for it.
Recent post: Halfway to Paying for Health Care Reform? A Growing Consensus for Taxing Health Insurance Benefits Produces Lots of Money
6 comments:
excellent post
In an environment where it is easier to become and administrator than a provider, less liability involved in being an administrator as opposed to a provider and an administrator already on average earns more than a provider, does it not seem counterintuitive to pay for increasing coverage by cutting the provider's pay even more? Are the administrators going to begin to provide care?
Old rule of journalism: Follow the money, or as this great post points out, the lack of money.
Financing the plan will be the hardest part.
But if you read a few pages further in the CBO January report, you find that it says that comparative effectiveness reserach could reap significant savings--if given financial teeth.
It seems very likely that Medicare is going to begin using the comparative effectiveness research we already have to raise co-pays and lower fees for some less effective treatments.
On physician pay, the Obama budget does not contain the 21% across the board cut--it assumes that won't happen.
Instead it is very likely that Medicare will raise fees for primary care phyisicans, family practioners, etc-- in various ways--while cutting fees for some very lucrative minimally effective services provided by some sub-specialists.
The cuts will balance the pay hikes in a "budget neutral way" as
MedPac has suggested.
But net they will save money by discouraging over use of some of the most lucrative (over-priced) services.
A public-sector plan is likely to follow Medicare in all of these reforms, helping to make universal coverage affordable.
Keep in mind that Obama has said
tha he will roll out univesal covefage "by the end of my first term." So they don't need to find all of the savings next year.
Over the next 3 1/2 years, they are going to be reforming Medicare, looking for ways to reduce over-treatment and pay for value not volume.
They also are likely to raise additional taxes-- capital gains taxs are all but certain to be raised, there is likely to be a tax on some part of the employer-based insurance benefit, inheritance taxes mmay be hiked and I wouldnt' be surprised to see hikes in taxes for the top 1% or possibly the top 5%.
The administration understands that we need to redisttribbute income. Too much money concentrated at the top contributed to the seculation that led to bubbles over the past two decades.
Raising the money for universal coverage through a combination of taxes and changing what we cover and how we pay for it won't be easy, but it can be done.
As we all know, there is a tremendous amount of waste in the system.
It is an amazing, visiting the Land of Oz kind of thought to realize that fixing the most costly health care system in the universe will cost the US far more than a trillion dollars.
Fascinating thoughts. Many of the unnecessary costs in the system are related to dysfunctional processes and communication between parts of the system (e.g. physicians and pharmacy, hospitalists and PCP's, hand-offs between providers etc).
Innovative reimbursement methods can save money if they succesfully reduce ER use, hospitalization or re-hospitalization. Does anyone really think it is possible to achieve such goals with a 20% reduction of payments to providers? Probably not. In fact a significant up front investment may have to be made in expectation of an early return on investment and there is some evidence to suggest a possible return in the first year of some such programs.
Some (but definetly not all) MedAdv plans have translated their generous overpayments to significantly better health outcomes.
It's sometimes difficult to justify increased expenditure now to save money tomorrow.
Maggie:
Couple of things.
The Obama budget did assume the doc cuts would not happen. The House and Senate resolutions took that money back out. So, we have to figure out how to pay for fixing the doc problem. If you give the primary docs a raise the cuts to offset that raise and keep doc pay revenue neutral would be huge.
The Lewin review of the Obama plan said it would still leave 20 million uninsured. So, the $1 trillion plus estimate presumes we do not have everyone covered.
Trust me, health care reform requires finding a trillion bucks.
As one commenter here observed, spending a trillion more makes no sense--we need to get most of it from all the waste we have today.
I am disappointed to see you think lots of tax increases are the answer.
If taxes are a big part of the solution, and not reductions in spending, what we will be doing is tying taxes to the medical trend rate. You will not find enough rich people paying capital gains or inheritance taxes to keep up with medical trend!!!
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