Showing posts with label Baucus Health Plan. Show all posts
Showing posts with label Baucus Health Plan. Show all posts

Friday, September 11, 2009

Curb Your Enthusiasm! Health Care Will Still Be Very Hard to Do

I guess all of us in the health care debate are a bit bipolar. From lots of folks thinking health care reform was in critical condition a couple weeks ago we’ve now gone to lots of reports extolling a newfound optimism in the wake of the President’s impressive speech this week.

Don’t interpret this post as my thinking health care reform is something we should be putting off—it’s already 20 years overdue.

But, I will suggest, we can’t begin to presume anything will be easier after a speech.

I thought Ceci Connolly’s article in today’s Washington Post set the proper tone:
"One day after President Obama pitched his plan for comprehensive health-care reform to a joint session of Congress, administration officials struggled Thursday to detail how he would achieve his goal of extending coverage to tens of millions of uninsured Americans without increasing the deficit.

"The 10-year, $900 billion proposal Obama envisions borrows heavily from concepts circulating on Capitol Hill, but there was little evidence that the broad ideas are sufficient to break a congressional logjam."
The issues ahead are still daunting. In health care, lofty rhetoric and big concepts have always been a lot easier than the thousand pages of detail that follow.

Let me give you an example.

The President said in his speech that his goal was a bill costing about $900 billion. Obviously, he is trying to keep the cost down under a trillion dollars. But to do so, lots of trade-offs have to be made—the old health care push it in here and it pops out there problem.

The recent Baucus Senate Finance draft also aims at a cost of between $800 billion and $900 billion. But to hit that number the authors have had to slim down the subsidies the uninsured would get and the value of the policy.

The Baucus draft would extend insurance subsidies (on a sliding scale) up to 300% of poverty—that is $66,150 for a family of four. The draft also says a family at 300% of poverty would be required to pay up to 13% of their income toward the cost of a policy—that would be $8,600 a year.

If they either lost their current employer coverage or didn’t have any in the first place, this family would be mandated to buy health insurance. If they did not, the fine would be $3,800 if their income was over 300% of poverty and $1,500 if it were below.

So, a middleclass family heard the President say that his plan would provide them with health care security. Under the Baucus plan, that means they would be expected to spend $8,600 for a health insurance plan that would likely have a $2,000 deducible. If they didn't buy it, they would have to pay a fine of $3,800.

Do you know many families making $66,000 a year that have an extra $8,600 in their checking account--much less for a health policy with big deductibles and out-of-pocket costs?

Explain this one to Harry and Louise.

The House bill isn’t much better in this regard.

Under the House Energy bill, a family making 250% of poverty ($55,125) would be required to pay 8% of their income up to $4,416 a year for a policy that could have a deductible of $1,000 and a $7,450 out-of-pocket cap.

At 300% of poverty ($66,150), the House Energy bill would limit a family’s insurance costs to $6,612 a year with a deductible of up to $2,400 and an annual cap of $8,520 in our-of-pocket costs.

A family making 400% of poverty ($88,200) would be expected to pay as much $10,584 a year for their insurance that could have a $3,000 deductible and a $10,000 annual out-of-pocket cap.

These are the kinds of details that inevitably follow the elegant rhetoric in health care.

Would access to insurance be a big improvement over what we have today. You bet.

Is this health care "security?" Ask Harry and Louise.

The Kaiser Health News website has a comprehensive article reviewing expected premiums and out-of-pocket costs for the House bills here.

Thursday, April 30, 2009

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.


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

Monday, November 17, 2008

Medicare Advantage Payments to Insurers--Baucus Zeroing In!

Senate Finance Chair Max Baucus (D-MT) released his health plan white paper last week.

Buried in it was this regarding how private Medicare payments to HMOs should be changed:
“Congress must act to level the playing field between traditional Medicare and Medicare Advantage payments and the Baucus plan would do so. Enacted in July 2008, MIPPA [the July physician fee fix that will end PFFS] took modest steps to reduce overpayments to private plans beginning in 2010. There are a number of ways to complete this. One is to set MA payments on par with traditional Medicare in every county in the country. However, Medicare costs can be low in some areas of the country and extraordinarily high in others. Simply setting MA payments equal to traditional Medicare could maintain overpayments in some areas and create severe underpayments in other areas relative to insurers’ costs.

“The Baucus plan would seek to better understand how insurers’ costs differ by region of the country in designing new policies to eliminate the remaining excess spending in the Medicare Advantage program."
I have lost count of the number of different Democratic proposals there are out there to use these extra payments made to private Medicare Advantage plans above the levels paid for the same senior risk in traditional Medicare for new spending.

MedPAC estimates these extra Medicare Advantage payments are worth $62 billion over five years and $169 billion over ten years. That makes them about the only "free money" in an otherwise bleak deficit picture.

Most calls to eliminate these extra payments simply call for "equalization" between insurer payments and traditional Medicare costs for the same senior risk.

But Max Baucus is telling us here that he knows something that isn't commonly discussed in the private Medicare world--that even if you just equalize payments there is, and was before 2003, plenty of opportunity to game the county-by-county private Medicare payment system--"One is to set MA payments on par with traditional Medicare in every county in the country. However, Medicare costs can be low in some areas of the country and extraordinarily high in others."

Where the 98-page Baucus plan goes from here is debatable. That Senator Baucus is the most influential member of the Senate on the issue of Medicare Advantage payment reform is not.

I expect there are plenty of Medicare Advantage players, knowing that payment "equalization" is on the way, who are getting ready to just play the old county-by-county cherry pick game all over again and preserve a substantial block of profitable private Medicare business doing it.

Think again. Baucus literally has your number!

Friday, November 14, 2008

To the Congressional Budget Office: Please Keep Playing it Straight!

I guess this is an open letter to CBO Director Peter Orszag and his colleagues at the Congressional Budget Office (CBO).

I have great respect for the CBO and that has been the case under different majorities--Democratic and Republican. Never more than now.

The CBO is intended to be non-partisan and objective. They provide the information and estimates the Congress needs to complete the budget process.

When it comes to health reform legislation their job is to "score" the proposals. That means on proposed legislation--big and small--they are the official estimate on what it would cost or what its provisions are estimated to save.

How much will Barack Obama's health plan cost? Will it really save $2,500 per person?

The CBO calls it and their estimate is the official one the Congress would have to use. That is particularly important if the Democrats keep their word and follow PayGo rules that require either spending or tax offsets for any new programs.

If the Congress decides to "equalize" private Medicare payments with the traditional Medicare plan's costs, will the course taken in fact result in equalization?

Will any changes to the Medicare physician payment schedule in fact save the money its proponents claim? Will any new "pay-for-performance" initiatives actually save physician Medicare money?

Will any assumptions regarding savings from "waste, fraud, and abuse," like those made in the recent Baucus Health Plan, really materialize?

Will new information technology, wellness, disease management, and the like cost containment, initiatives really achieve the savings claimed?

My sense is that most of these health reform savings claims, like President-Elect Obama's claim he can save $2,500 a person with his health reform plan, are way too optimistic.

MedPAC has already said that eliminating past and future Sustainable Growth Rate Formula cuts to the Medicare physician payments would cost $200 billion over 10 years.

It looks to me like the nebulous "pay-for-performance" initiatives often proposed as part of Medicare physician payment reform are too often ways of avoiding the really heavy lifting that has to be done to fix that doc payment system. Since no one seems to agree on what quality is and a way to measure it I don't have a lot of faith there are big fixes here. If all of the docs are enthusiastic about pay-for-performance proposals in exchange for avoiding fee cuts you know it isn't accomplishing a lot!

Wellness programs very similar to the ones we see today were around in the late 1980s and never accomplished a lot.

Health information technology progress and patient medical records are very important--particularly for improving quality--but have a lot of upfront costs and take years to payoff. Ask any doctor now struggling with them.

The disease management and coordinated care programs now being proposed are, like most cost containment "lite" proposals we are seeing today, helpful but only incremental extensions for what is going on in the market anyway. No silver bullets.

I hope the CBO doesn't cave to political pressure and keeps doing its non-partisan down-the-middle job.

If I hear the politicians whining and the special interests squealing about CBO's conclusions about how these cost containment "lite" proposals and policy rationalizations, like nebulous "pay-for-performance" that give policymakers a free pass on the tough decsions, don't save much money I know the CBO pros are doing their job.

Thursday, November 13, 2008

The Baucus Health Plan Proposal--Evidence There Is No Consensus on the Key Health Reform Issues

Max Baucus will be a key player in the health care debate the next two years. As chairman of the Senate Finance Committee he has jurisdiction on many of the key issues including Medicare and provider payment reform.

He is also a leader in the true bipartisan spirit--something crucial to actually getting reform done.

Yesterday, he released a 98-page white paper, "Call to Action--Health Reform 2009."

Reading the executive summary, which given the news stories I have read is about all the press has looked at, the Baucus outline is pretty much Barack Obama's health reform plan. Obama's campaign health plan is 18 pages long and Baucus has tried to take it a distance further with 80 more pages.

The Baucus Health Plan includes:
  • Basing the system on existing private and public health plans—employer-provided, Medicare, Medicaid, and SCHIP.
  • Insurance exchanges - Creating a system of one or more Insurance Exchanges for individuals and small business to buy their coverage from complete with a management board to run it—very similar to the Massachusetts Connector and the Connector Board.
  • Premium subsidies - His subsidy proposal is vague. The Insurance Exchange Board would determine a schedule of coverage affordability based on available health plans, their costs, and income levels. A tax credit would be available to subsidize those deemed not to be able to afford part or all of the cost. This is identical to the process the Massachusetts Connector Board follows.
  • Medicare buy-in - Before the Insurance Exchange is up and running and its plans available to consumers, Baucus would allow those age 55-64 to buy-into Medicare.
  • Insurance regulation - Insurers could offer health plans through the exchange but would have to comply with benefit and plan option requirements and would be subject to guarantee issue requirements. The health plans could rate around restricted age, sex, and lifestyle issues.
  • A government-run plan for the under-65 market - After the Insurance Exchange is running Baucus would create a government-run option for consumers to choose. It would not look like Medicare but would have benefit options like the private plans offered in the Exchange.
  • Traditional insurance distribution - Insurers could also market outside the exchange using the traditional direct and intermediary distribution systems.
  • Medicaid expansion - Medicaid would be expanded to cover all of those below 100% of poverty who were uninsured.
  • SCHIP expansion - SCHIP would be expanded to cover all of those below 250% of poverty who were uninsured.
  • An individual mandate - Baucus’ plan does differ with the Obama Health Plan in that his plan has an individual mandate to buy health insurance - “Once affordable, high quality, and meaningful health insurance options are available to all Americans, through their employers or through the Exchange, would have a responsibility to have health coverage.”
  • An employer mandate - All but the smallest employers would be required to offer and pay for coverage or pay into a government pool—“pay or play.”
  • Incremental cost containment "lite" - The plan’s cost containment features are vague and embrace many of the same incremental items both Republicans and Democrats have listed—all “cost containment lite” features. Baucus’ list includes the elimination of fraud waste and abuse, increased price and cost transparency, wellness initiatives, and health information technology.
  • Medical malpractice reform - He explores a number of medical malpractice reform ideas around the theme of no fault health courts but makes no specific proposal.
  • Physician payment reform - He spends a great deal of time on the issue of physician payment reform calling for better payments for primary care, reforming the Sustainable Growth Rate formula, and pay-for-performance and quality. However, he never deals directly with the issue of specialist payments and never draws a specific conclusion on how he would proceed.
  • But no cost estimates or plan to pay for it - What is remarkable about he Baucus Health Plan is that he offers no cost estimates or mentions how he would pay for it! The Obama Health Plan would cost at least $100 billion a year and the Baucus plan is very similar—almost identical at the outline level.
I read one press report that suggested the similarity to the Obama health plan and the Massachusetts health law must mean that the Congress is coming close to a consensus on how to proceed with health care reform.

My advice to the reporter is to spend some time reading the document. It is not so much a plan for specific action as a recounting of the many broad possibilities we could take on key issues such as physician payment reform and medical malpractice reform. There is no detail for just what the most expensive and important element--individual subsidies--would be. It is notable that physician payment reform is an unavoidable issue for the Finance Committee given the pending 21% physician fee cut and he clearly has no specific plan there. There is no cost estimate or plan to pay for it.

Baucus is so vague on key elements because there is no consensus, particularly from the key relevant stakeholders to any of these issues, on just how to proceed. There is no cost estimate because the plan is so vague in structure and timetable. There is no source for funding because there isn't a source for the likely $100 billion this would cost in the first year.

If you read just the executive summary you might see proof of consensus on what health reform might look like.

If you read all 98 pages it is clear there is no consensus on many of the key details, what health reform would cost, the timetable for implementation, or the source for paying for it.
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