Health Care Reform a "Longer Term Goal" For the Obama Administration?

Under the headline in today's Washington Post, "Kennedy Announces Plan to Submit Bill For Universal Care" was this:

"Some Democrats, including members of President-elect Barack Obama's circle, have begun to view expanded [health care] coverage as a longer-term goal."

Is the new administration trying to send a message to its health care eager constituencies that given the economy and all of the challenges we face it would be best to settle expectations down a bit?

If it is, I would suggest, that would be a smart thing for the incoming administration to do.

As I have recently posted, it is not apparent to me that we have either the consensus on what a mega health plan would look like, the solid voter support for real health care change, or the money to do it.

Many longtime health care reform advocates are calling for the Obama administration to move quickly on comprehensive health care reform while their political capital is strong--do it now or lose the opportunity goes the argument.

Actually, I would argue that if Democrats do go for the whole deal they are likely to run into a political buzz saw and possibly squander the ability to do a more modest bipartisan list of health reform accomplishments that could be the first important steps in a longer-term strategy.

Do you know how many pages were in the 1993 Clinton Health Plan?

1,462.

That number will be with me forever!

An Obama campaign-like comprehensive health care reform proposal converted to legislative language would easily exceed 1,000 pages. You think we have a consensus on what health care reform would look like? Put 1,000 pages of health care policy minutia on the table and watch the vultures attack.

Without a strong consensus going in, I've always said that a 1,000 + page health care bill will afford the opportunity for every man, woman, and child in America to find at least 300 pages each they disagree with--and they won't be the same 300 pages!

There is a heck of a lot more work for President-Elect Obama and health care reform advocates to build the kind of consensus necessary to lift something so big as health care reform across the line.

What can be done is to look to the places we do have bipartisan agreement and take some very important steps that begin the ultimate health care reform structure we will need. Maybe we can build the foundation over the next couple of years and we should try.

In these problematic fiscal times, it will be just as important to pick some steps that either cost little or can be funded under PayGo rules that require upfront money.

That foundation of bipartisan steps might include:

1. Expansion of the State Children's Health Insurance Plan from 6 to 10 million kids and paying for it with a cigarette tax.
2. A Medicare bill. We desperately need physician payment reform. Something we are nowhere near getting agreement over. But everyone does agree we need to try. It is also generally agreed that primary care physicians need to be better paid. It is also agreed that there is $62 billion in five-year private Medicare HMO payments that can be used to grease the skids toward a Medicare provider payment system that is more sustainable.
3. Cost and quality initiatives. A cost and quality board to arbitrate and set the standards for a whole host of items to improve cost and quality outcomes that were in both the Obama and McCain health plans--health information technology standards and requirements, transparency in provider pricing, and health outcomes research, and many others.
4. Assistance for small businesses and individuals in getting health insurance. Conservatives and liberals alike think insurance exchanges make a great deal of sense as a means to help individuals and small business be able to access coverage. If there is money to be found, there is also bipartisan support for modest premium assistance, likely in the form of tax credits to help small businesses--the place our employer-based system is in the most distress--to be able to pay for coverage for their workers.
5. Federal budget assistance for state Medicaid programs as part of a stimulus bill. The Congress is likely to do this one anyway and it might as well be part of a package the Democrats and Republicans can take credit for.

When the year is done, the new President, Democrats, and the Republicans could point to bipartisan progress in covering more people (SCHIP), getting Medicare's house in order, and beginning to build the structure (an insurance exchange and cost and quality board) that will be important to the next stage reforms.

No doubt that even these things will be controversial. But I do expect they are the kind of things that could be passed with strong bipartisan support.

Or, Democrats could go for the 1,000-page bill and risk starting a food fight that would set health care reform back once again.

What will they do?

My guess is that no one is going to tell Ted Kennedy he can't try. Presuming Senator Kennedy can't get traction with the big bill, I look for Plan B. In the meantime, look for President Obama to call for comprehensive health reform but be cautious waiting to see how things develop.

"The Changes We Need"

The Changes We Need
by Brian Klepper

These are, as the Chinese curse reputedly called them, interesting times.

If the burst of new Democratic health care reform proposals is any indication, the fresh breeze of the Obama campaign's "Yes We Can" optimism is blowing across the nation. Mr. Obama’s team is expected to make health care one of its priorities. First out, though, was Senate Finance Committee Chair Baucus (D-MT), who introduced an aggressive health care reform package that builds on Mr. Obama’s campaign platform of cost controls and extended coverage. Senator Kennedy (D-MA) and Representatives Dingell (D-MI) and Stark (D-CA) are expected to offer proposals soon, and undoubtedly there will be others.

The rub is that Congress’ old-guard lobbying system remains in place. Congress is awash in special interest contributions - $2.8 billion from 15,500 lobbyists in 2007 - that exchange money for influence over policy. When the Democrats retook Congress two years ago, they did not substantively change the lobbying rules.

So it is reasonable to ask whether a new day of governance in the common interest is possible. Can we make progress on health care or on any significant problem - climate change, education, energy policy, finance, the social safety net - without addressing the underlying problem of Congress’ receptiveness to special interest influence?

As the new health care proposals unfold, it is worth remembering that, early in the Clintons’ health care reform effort, things looked promising. There was general approval in the business and health care sectors. True, when industry practitioner input wasn’t welcomed, the process began to go south. But the real trouble came when the draft product appeared and some health care segments believed it threatened their interests. They acted, while the business sector was indifferent. With no counterbalance, the health care industry’s public relations machine demonized and killed the plan.

There is little reason to think that today’s corporations will be less action-oriented if they believe their interests are threatened. So what strategies are available to minimize resistance to changes America needs?

In an ideal world, the new Congress would emphasize that it is a new day by forcefully rejecting the institution of lobbying. That would effectively dispatch the problem of achieving health care reform and many other solutions as well. But that seems a stretch.

Alternatively, the leaders of America’s non-health care firms - who represent six-sevenths of the US economy - could overwhelm the health care industry's resistance by galvanizing, mobilizing and championing reforms.

This is also a stretch, but it is not impossible. The relationships between health care costs, productivity and competitiveness weigh on every American business executive. There are Fortune CEOs - Lee Scott of Wal-Mart, Craig Barrett of Intel, Jim Sinegal of Costco, Howard Schultz of Starbucks, Steve Burd of Safeway - who have campaigned tirelessly on the issues central to serious reforms. Keynoting last week's National Business Coalition on Health annual conference, Barrett told those assembled that "The only way health care is going to change is if people who pay the bill tell the industry to change."

It is impossible to overstate the profound importance of business leaders acting together in the common interest. This group currently exerts more influence over policy than any other. That said, businesses typically are mostly focused on their own niche issues. Information technology companies focus their lobbying on IT. Hospitality companies, insurance companies, energy companies all focus on what matters most to them.

But they could unite on the common interest. Especially as they gain increasing awareness that re-enforcing America's social and market fabric strengthens the stability that has made it possible to successfully pursue the special interest in this country over the last 60 years.

At a time when America so sorely needs real change, when many signs point to the rapid erosion of the health system's stability and sustainability, will America’s Congressional and business leaders stand together for changes that can strengthen the nation's foundation? Will they stand against those who, in continuing pursuit of their own interests, undermine our institutions and our ability to advance?

If they will, then real change is upon us. If they will not, then we are destined to remain where we are now.

Brian Klepper is a highly respected analyst, consultant, columnist and speaker who is focused on the policy and market dynamics of US health care’s deepest problems, and the increasing traction of new approaches that offer tremendous promise.

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!

Market Capitalism and Health Care--It Will Never Be the Same

Washington Post business page columnist Steven Pearlstein's Friday column, "Toward a New International Capitalism," caught my eye.

Here's a snippet:

"From the Latin American debt crisis of the 1980s to the Asian financial crisis of the 1990s to the Internet craze at the turn of the century to today's economic conflagration, the past 20 years have provided ample evidence that uncontrolled flows of private capital have created massive booms and busts that have overwhelmed the financial system and destabilized the global economy. The booms have misallocated capital, widened the gulf between rich and poor, and eroded the norms of behavior that had contributed to social and political harmony. The busts have brought financial hardship and ruin to innocent businesses and households and saddled governments with huge debts that will take generations to pay off."

Wherever you stand on the longstanding debate over the free market versus government regulation, I will suggest that the recent confluence of catastrophic financial events have pushed the pendulum hard over from the market side to the pro-government regulation side of the debate.

With a new Democratic White House and big Democratic Congressional majorities, all driven by the most recent burst bubble and the resulting financial meltdown, the notion that the market is the place to fix and manage our dysfunctional health care system is clearly out of vogue.

For the last eight years, the health care debate has been dominated by market ideas to deliver better quality and sustainable costs--private Medicare Advantage plans, Part D drug benefits for seniors, a reinvigorated health savings account (HSA) market, and proposals like those offered by President Bush and Senator McCain to restructure our private health insurance system from the traditional employer chassis to one of individual responsibility.

My sense is that the recent election outcome is more than a change in the political cycle. It was also a public verdict on their level of trust in capitalism. Market arguments as a solution for the health care challenges will not be able to avoid the public's overall loss of confidence in the relatively unfettered market.

Does that mean we are all about to become socialists in the European tradition? Does it mean the American people will have lost confidence in American business generally? No. I expect we will always have confidence in the ability of most business--particularly small business people--to build real value. But it does mean that it will be a long time before we put an almost blind confidence in the notion that the market by itself will always go up--the stock market, the housing market, the Internet driven "New Economy."

Read another part of Pearlstein's column but this time think of publicly traded health care industry managers instead of financial executives when you do:

"But there is also no denying that American-style capitalism has been undermined by its own success. In its present incarnation, it rewards manipulation over innovation and speculation over genuine value creation, resulting in massive misallocations of capital and the accumulation of unheard-of wealth in the hands of money managers and top corporate executives who are more lucky than they are skilled."

When the Clinton Health Plan failed in 1994 the consensus was that the health insurance market would have have a wide open shot at proving itself since no one would dare put a government health care plan back on the table in the wake of that failure--for at least 10 years.

Let me be clear that I have always believed in the market. But I also believe the past 15 years have amounted to an enormous squandered lost opportunity for the market to prove its value to our health care system.

Fifteen years later, the market has not brought health care costs under control because too much of the entrepreneurial energy in the health care market was used to simply manipulate the massive cash flow provided by a sector of our economy that made up 16% of our GDP. There was no reason to manage health care costs and quality to a better outcome if soaring costs just meant more cash flow to manipulate. Faced with longer-term business objectives--like a sustainable business model based on creating real value--or making shorter-term earnings objectives and stock options, the choice was easy.

Fifteen years later, the health care marketplace has little or nothing to point to in its defense in the face of Democratic control of our government and our capitalist system in a shambles.

At the wild west Wall Street alter everyone has been worshiping at, I suppose there was no alternative.

Will for-profit health care become extinct and replaced by a government-run health care system? As bad as things are, I doubt it. We aren't anywhere near the point where Americans are about to trade their general fear of big government for that.

But the days of the private market saving Medicare and Medicaid, or a reinvigorated private health insurance market, as part of our future? Just a few weeks after John McCain was preaching the virtues of the market as a solution for our health care problems all of that sounds pretty passé now.

For-profit health care players--particularly health insurers--will continue to have a big place in our system. We really have no alternative--that's what the system is built upon.

But trusted to save it? Trusted to operate less regulated? Looked upon as the means to improve cost and quality? An attractive growth stock in the face of the regulation that is coming?

In Pearlstein's words, here is how I will suggest health care capitalism will be seen for many years to come:

"...it rewards manipulation over innovation and speculation over genuine value creation, resulting in massive misallocations of capital and the accumulation of unheard-of wealth in the hands of money managers and top corporate executives who are more lucky than they are skilled."

And it will be so treated.

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.

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.

There is Now a Real Bipartisan Opportunity in Health Care

President-Elect Obama, and about every candidate for Congress, has said he wants to change the partisan tone in Washington. Obama, the Democratic Congressional leadership, and the Republicans have a terrific opportunity to do just that on health care when they all come to Washington early next year.

As I posted earlier, I do not believe there is any chance we can see the enactment of the comprehensive Obama health plan in the near term.

But there are a number of important steps that can be taken next year and each of them have enjoyed strong bipartisan support during the past year:

1. Reauthorizing the State Children's Health Insurance Plan (SCHIP) and increasing the number of kids covered from six million to ten million. The Congress passed exactly that kind of reauthorization twice by strong bipartisan margins only to come a few votes short of being able to override two Bush vetoes of the bill. Those attempts met pay-as-you-go requirements by boosting the cigarette tax to pay for it.
2. Rearranging Medicare spending by equalizing the payments private Medicare plans get with the payments the traditional Medicare plan receives for the same seniors. The Medicare physicians face a 21% fee cut on January 1, 2010 and there are other serious cost issues for Medicare. In July, the Congress took the first step toward payment equalization with a veto proof margin of 70-26 in the Senate and 383-41 in the House. The really hard part here is crafting a new Medicare physician payment system that is desperately needed but the first step, where to get the money, has strong bipartisan support.
3. John McCain and Barack Obama had a number of similar and relatively non-controversial cost containment ideas in their health plans which would cost the federal government little or nothing. These similar proposals included the expansion of health information technology and a patient medical record; improving transparency about health care quality and costs including prices, errors, staffing ratios, infection rates, and disparities in care and costs; wellness initiatives including an emphasis on healthy lifestyles; development of best practice standards, requirements for disease management programs; requiring effectiveness reviews for procedures, devices, and drugs; and requiring providers to collect and report data to ensure standards for health quality are followed.
4. There is bipartisan support for assisting small business in providing and paying for health insurance. In 1999, 56% of employers with 3-9 workers provided health insurance to their workers. By 2007, that had dropped to 45%. By contrast, employers with more than 200 workers provide health insurance 99% of the time. The one place employer-provided health insurance is melting away is in the small employer area. A modest bill to assist the small employer enjoys support among both Republicans and Democrats.
   

A big $100 billion comprehensive health care reform plan like the Obama health plan is not realistic in these times of financial crisis.

But, there is already bipartisan support for a children's health insurance (SCHIP) extension and the means to pay for it, reform of Medicare provider payments and the means to pay for that, a list of commonly agreed to cost containment initiatives that would cost the government little or nothing, and bipartisan support for help to the small employer to offer health insurance.

To be sure these steps would only make a dent in the number of those uninsured and these bipartisan cost containment items will only help our cost problem around the edges.

But all of these bipartisan steps would be progress, are doable, and are affordable.

President-Elect Obama and the Democratic leadership can do what the last two Presidents did--promise bipartisanship and then quickly employ the same old partisanship out of the mistaken belief they had the majorities in Congress that would enable them to steamroll the opposition. That mistake led to the 1994 Republican takeover of the Congress in the first case and two straight election defeats, in 2006 and 2008, in the second.

President-Elect Obama, the Democratic leadership, and the Republicans have the road map at hand to truly show a bipartisan commitment to health care change and progress. They could actually break the gridlock on health care and make some modest progress.

Will they take the road less traveled or just give us more of the same?

The Morning After: Obama and the Dems Win Big--What It Means For Health Care

258 House and 57 Senate Democrats make it almost certain that major health reform will be passed. Right?

Actually, that was the number of Democrats Bill Clinton started off with in 1993 and we know what happened to health care reform in that Congress.

With similar Democratic majorities, I do not expect a major health care reform bill like the one President-Elect Barack Obama called for during the campaign--in 2009 or 2010.

I do expect a number of important health bills including the renewal of the State Children's Health Insurance Plan (SCHIP) and a major Medicare bill.

Here are the reasons why we could have a big health care reform bill in 2009:

1. Obama and the Democrats called for health reform during the campaign and many voters expect them to follow through.
2. Senator Kennedy has already begun a significant bipartisan effort and many in the Congress want to see the Senator succeed in what could well be his last effort toward a career-long goal.
3. The health care system continues at unsustainable cost levels--the average family cost of employer-provided health insurance reached $12,800 this year.
4. There are 45 million uninsured.

Here are the reasons why, in spite of all of our health care problems, I don't believe we will have a big comprehensive health care reform bill in 2009 or 2010:

1. There is no consensus in the Congress or the country on what a comprehensive health care bill would look like.
2. Our people don't want health reform badly enough to force the Congress to stand up to the powerful stakeholders and make them do it.
3. We don't have the money.

There is no consensus.
Barack Obama did win a big victory. He did promise health care reform. But he won with slightly more than 50% of the vote and John McCain's voters gave him close to 50% of the vote. The country remains split over the degree to which government should be involved in our health care system and that is reflected in the Congress--even after the Democratic victory yesterday.

In the House, the Democrats will enjoy a big majority. However, last session we had 49 "Blue Dog" Democrats and will have at least that many this time. Without "Blue Dog" support, the Democrats will not have a majority on any health care bill. No big health care reform can pass without the support of these fiscally conservative Democrats who are pledged to a pay-as-you-go policy--you can't spend the money unless you either raise taxes or cut spending someplace else.

In the Senate, it appears the Democrats should have 57 or 58 seats in January. But Republicans can stop a big Democratic health care bill with only 41 votes and they will likely have 42 or 43. Forty-three is exactly the number of seats Bob Dole had when he stopped the Clinton Health Plan in 1994.

Any big health care bill will have lots of reasons for any number of powerful special interests to try to stop it. Or, a big bill's authors could do what they did in Massachusetts--pay everyone off. The problem is if you give insurers, doctors, hospitals, drug companies, and all the others what they want to get them onside, you will create an enormously expensive bill and create opposition on that front alone. That's why the California effort crashed earlier this year when that bill's total costs became clear.

We are simply not at a place where any of us can outline a health care bill that clearly has consensus support and you don't do something this big unless you have a clear consensus.

Our people don't want it badly enough.
We really do have a democracy. For all the things you hear about the "special interests controlling Washington," the fact is that if there is a huge outcry from voters the Congress will respond. But there is no huge outcry from voters over health care.

The big issue in this election leading to Obama's big victory was the financial meltdown and the economy--not health care.

Support for health care reform among voters is soft. Health care had consistently been the number three issue (behind Iraq and the economy) in the Kaiser Family Foundation tracking poll until gas prices spiked this summer. It then fell to fourth behind the price at the pump. In August, 22% of those polled thought paying for health care was a serious problem for them--but 36% said paying for gas was a serious problem. After the financial meltdown, in October only 12% thought paying for health care was a serious problem.

Health care costs $12,800 a year for a good family plan and when gas went to $4, the cost of gas was more important!

Health care is a chronic issue for the voter but support for big change is not deep-seated. It is not deep-seated because most people have very good health insurance that is largely paid for by someone else. Lake Research reports that 92% of those who voted last year had health insurance--82% had everyone covered in their household. For the vast majority, health insurance comes from the workplace where someone else pays for it.

For all the issues of the uninsured and health insurance costs, the vast majority of voters have really good health insurance and their employer still pays for the largest share of it. So, it's no surprise when $4 gas is a bigger issue than $12,800 health insurance. It should also be no surprise when next year voter pressure for the Congress to do anything big and controversial will be tepid.

As long as the employer community is willing to subsidize our incredibly high health care costs for those who vote don't look for anyone to be marching on Washington to fix our health care system.

We don't have the money.
Passing an Obama-like health care reform plan will easily cost $100 billion a year to implement.

Two years ago the budget deficit was $162 billion. Last year it was $455 billion. In this fiscal year, it will be at least $1 trillion! The deficit was going to be $550 billion before it became necessary to book $250 billion of the bailout this year. It is expected the economic deterioration will create an additional $100 billion in deficit, and the Congress is getting ready to pass another stimulus bill costing at least $100 billion. That totals $1 trillion. Add to that the cost of the Iraq war, a bigger stimulus bill, any more deterioration, and $1 trillion is going to look good.

Add to that Obama's preeminent campaign promise--he will cut taxes for all families making less than $200,000 a year. He can't avoid this one. He intends to raise taxes for those making over $250,000 but just keeping the Bush tax cuts (which expire in 2010) for those making less than $250,000 a year and then cutting taxes further for those under $200,000 will have a big cost. Keeping that promise at a time there are already huge deficits will trump other spending--like health care.

With 43 Senate Republicans and at least 49 "Blue Dog" fiscally conservative House Democrats and pay-as-you-go health care reform looks pretty unrealistic.

And watch Massachusetts. That health reform plan was passed by giving all the players what they wanted--hospitals, docs, insurers. It was passed with virtually no cost containment. Coming up on its third year this summer, just as any federal health care legislation would be on the table, those chickens are going to come home to roost.

What will happen in 2009?
I expect the new President and Congress to keep their health care promise by starting incrementally to insure more Americans. They can't afford, or would be able, to do it all so they will make a down payment.

There are a number of unavoidable health care issues for the next Congress:

• The reauthorization of SCHIP, which must be done by April. Last year the Congress approved a $35 billion expansion that would have increased the number of kids covered from 6 million to 10 million. President Bush vetoed the bipartisan expansion twice. Obama will sign it and it could well involve a big cigarette tax to meet pay-as-you-go demands.
• Physicians are scheduled to get an automatic 21% Medicare fee cut on January 1, 2010. The Congress has fixed this Sustainable Growth Rate problem seven times before. The last time was in July when they fixed it for just 18 months. While we desperately need physician payment reform, we won't likely have the votes to do more than another temporary fix because the doctors don't agree among themselves how to reform the payment system.
  
• With pay-as-you-go so important an issue there is one place, other than a cigarette tax, where the Congress can find the money for health care--private Medicare. Pit the kids health program and the big Medicare fee cut against the cigarette companies and Medicare HMOs and, in the new Congress and White House, there is no competition--tobacco gets taxed more and the HMOs get cut.
  
• But even the extra HMO payments and a cigarette tax aren't large enough to both expand SCHIP to 10 million kids, fix the doctor payment problem, and pay for Medicare as it is. There will have to be more Medicare cuts--hospitals, nursing homes, durable medical equipment...Look for a big provider food fight over who gets what.

There are also a number of things the Congress can do that won't cost the government much or any money--health information technology standards and requirements, transparency in provider pricing, health outcomes research, and others.

If there is any money left, there have been bipartisan efforts to help small business owners provide health insurance. This is the one area where we are seeing significant coverage erosion.

Expanding SCHIP, dealing with Medicare payments, adding on things like health information technology, and maybe doing something for small business would give the new President and the Democratic Congress bragging rights on health care if not comprehensive reform.

In the end, Obama and the Democrats can accomplish a fairly substantial health package without doing a big comprehensive Obama health plan and that is what I expect.

High Costs for the Massachusetts Health Law--Sustainability is Now the Question

The Center for Studying Health System Change has just released a study examining the state of the important health reform law in Massachusetts.

As one of the co-author's put it, "Improving access to heath care coverage has been a clear emphasis of the reform, but little has been done to address rapidly rising health care costs, raising questions about the longer-term viability of the reform."

I can tell you that from my experiences in Mass, employer health care trend is running in the 10% range--well above the national average and clearly something unsustainable in this or any other economic climate.

From the study's summary:

"Passage of health reform legislation in Massachusetts required significant bipartisan compromise and buy in among key stakeholders, including employers. However, findings from a recent follow-up study by the Center for Studying Health System Change (HSC) suggest two important developments may threaten employer support as the reform plays out. First, improved access to the nongroup—or individual—insurance market, the availability of state-subsidized coverage, and the costs of increased employee take up of employer-sponsored coverage and rising premiums potentially weaken employers’ motivation and ability to provide coverage. Second, employer frustration appears to be growing as the state increases employer responsibilities. While the number of uninsured people has declined significantly, the high cost of the reform has prompted the state to seek additional financial support from stakeholders, including employers. Improving access to health care coverage has been a clear emphasis of the reform, but little has been done to address escalating health care costs. Yet, both must be addressed, otherwise long-term viability of Massachusetts’ coverage initiative is questionable."

You can access the entire document here.

With the Massachusetts health care law looking so similar to the Obama health plan, just how Massachusetts is doing will be critical to the national health care debate.

My own conclusion has always been that the Massachusetts health care law will turn out to be an incomplete result for an unsustainable cost. Earlier post.

Can Health Plans Explain Why They Aren't Re-Empowering Primary Care?

Brian Klepper and David Kibbe offer a post today on the issue of primary care and the role they believe health plans should be taking to encourage greater involvement with PCPs. They ask why health plans are not being more proactive in partnering with PCPs to control costs.

Can Health Plans Explain Why They Aren't Re-Empowering Primary Care?
By Brian Klepper & David Kibbe



Sometimes a whisper is more powerful than a shout. Here's a cartoon from Modern Medicine that shows a Medical Home counseling session between a primary care physician (PCP), a specialist and the health plan. The PCP looks forlorn, while the specialist and the insurer have their backs turned, fuming. It is perfectly true.

Along with changing the way we pay for all health care and creating far greater pricing and performance transparency, we need to turn around the primary care crisis if we hope to substantively improve quality and cost.

Over decades we allowed the combined actions of the AMA, Medicare and the nation's commercial health plans to marginalize primary care, so that now the typical cardiologist makes up to 4 times more than a PCP, and only 7 percent of medical school graduates now enter office-based primary care - not nearly enough to care for the aging boomer population that's growing by leaps and bounds.

Worse, as the most recent Dartmouth Atlas report made clear, the greatest concentration of "unwarranted variation" - waste - is concentrated in the specialties and inpatient arenas. This explosion in services and cost has largely resulted from tying the hands of America's PCPs, preventing their involvement in downstream decision-making. Equally corrosive culprits have been a fee-for-service reimbursement system that financially incents specialists to conduct unnecessary procedures, and a lack of transparency that would allow us to more easily identify the excesses when they occur.

There's hardly any question whether empowering primary care would dramatically improve the system. As Sepulveda, Bodenheimer and Grundy pointed out in a March Health Affairs article, literally dozens of studies show that more primary care in a community is associated with lower costs and better outcomes. More specialists lead to higher costs. In the US, the ratio of PCPs to specialists runs about 30/70, while in other developed countries its typically around 70/30. Their costs are generally about half ours and their outcomes better. Can anyone really argue with a straight face that empowering primary care is an iffy proposition, and that it demands more study before acting?

The entire premise of the Medical Home movement, seen most vividly through the efforts of the Patient Centered Primary Care Collaborative (PCPCC), is based, first, on empowering PCPs to do the things they were trained to do, and second, giving them the tools, programs and authority to optimize their roles. The PCPCC has been built around the power of Fortune firms and business health coalitions, each with considerable stroke, as well as several primary care associations. The health plans are at the table too, busily showing their support through pilot projects that test what happens when PCPs are paid a pittance more.

Even that is critically important, though, because the commercial health plans are the linchpins of change for this aspect of American health care. Unlike public health plans, who must adhere to policy that is dictated by the health care industry's lobby, the commercials can respond to market forces. Health plans also are the only ones who can reach and transform the practices of the 250,000 or so community-based PCPs faltering under the lash of our current reimbursement paradigm. Their salvation is absolutely vital to re-establishing American health care's stability and sustainability.

But so far as I'm aware, not one national health plan has yet decided to move beyond a pilot and unilaterally improve their medical management performance by paying PCPs significantly more. So far, there are no broad-based efforts to empower PCPs to have a say in what happens to their patients once they're referred downstream to specialists. Nor are health plans systematically helping PCPs acquire the sophisticated patient management information technologies that can result in better outcomes at lower costs.

What are they waiting for? Why aren't health plans making this obvious and straightforward adjustment to their medical management models? Skeptics might argue that, despite their protests that they're in business to hold down costs, health plans make a percentage of total claims, so they certainly don't want total claims to be less.

The plans might respond that they don't want greater PCP involvement to antagonize the specialists, who they rely on. After all, it's clear that, interference notwithstanding, collaborative decision making at the specialist level drives down specialty utilization and, with it, specialist incomes.

Or they might argue that they run enormous, complex operations, and big course changes are difficult and take time. Whatever.

Hence the inherent truth of the cartoon.

Still, there's no question that we're at a tipping point and that the time for action has come. Health plans have reported weaker enrollment figures, with reductions in the sales of even their much skinnier High Deductible Health Plans (HDHPs), as more employers and families are priced out of insurance. The coverage market is eroding as health costs continue to spiral upward, exacerbated by a credit crisis that is freezing liquidity. These economic trends are abetted, of course, by a primary care structure that is unable to exert control over the unbridled provision of specialty and inpatient services.

All this would be academic if there weren't a very visible alternative model that performs MUCH more efficiently. Employers with strength and foresight are actively moving around the health plans by establishing worksite clinics, effectively staff model primary care practices that are fully realized medical homes. In general, these enterprises pay PCPs far better than they make in private practices, giving them access to excellent tools, and letting them loose to provide the care they know how is appropriate. The results are dramatic. Clinic companies routinely report significant savings, both on group health costs and occupational health and productivity costs, which are corroborated by their clients.

If the reports from the big benefits firms are right, more than half of all jumbo Fortune firms will have put up worksite clinics by 2010. Because these clinics are scalable, the trend is now catching like wildfire with large and even midsized (down to about 250 employees) firms as well. Several clinic firms are also working to bundle commercial insurance products with clinics in ways that allow smaller businesses and individuals to come together, collaboratively using the clinics to enhance access and drive down cost.

But the core problem remains. We won't have real change in the delivery of care until the health plans either voluntarily change their relationship with primary care, or are forced to do so. As the cartoon suggests, they're not inclined.

So here's a sincere request. If you're a reader of this blog associated with the health plan sector, how about providing us with a lucid explanation of your hesitancy to change. What EXACTLY are you waiting for? Tell us.

If you're a primary care physician and you agree with us on this, then please send this post to your regional health plans and pointedly ask why they're dragging their feet. Pass this along to business leaders you know as well, and ask them to contact their health plans too.

Brian Klepper PhD is a healthcare market analyst. David C. Kibbe MD MBA is a Family Physician and Senior Advisor to the American Academy of Family Physicians who consults on healthcare professional and consumer technologies.

Health Wonk Review is UP!

David Harlow hosts this week's edition of Health Wonk Review over at his, "HealthBlawg."

It is a very comprehensive sample of some of the best recent posts from the world of health blogs.

The McCain Health Plan's Good Idea for Health Care Reform--Likely Going Down With the Candidate

John McCain would reform the American health care system by providing big tax incentives for it to transition from being employer-based to one built on a system of individual responsibility. He would do this by eliminating the longtime personal tax exemption on employer-provided health insurance and replacing it with a $2,500 individual, and $5,000 family, tax credit for those who have health insurance.

It's too bad this idea will likely recede from the national health policy debate whether John McCain wins or loses the presidency. Even if he wins, the Democratic majorities in Congress will be so large there is little chance we will be able to move away from the traditional employer health insurance base in the next few years. All you have to do is look at the way Obama and all of the Democratic candidates for the Senate and House have railed against McCain's plans to "tax your health benefits" to see how Democrats have willingly painted themselves into a political corner that makes this idea a non-starter in the new Congress.

As I have said on this blog before, I have been largely disappointed in the McCain health plan. He started out with a bold new approach but never closed the loop on so many key elements in his plan. For example, he leaves those with pre-existing conditions to the fate of state-based risk pools--a place no one would ever vote themselves into. See: John McCain's Health Care Plan and the Uninsurable--There Are Better Fixes Than the Ones He's Proposed

It never made sense to me for McCain to ask voters to take a bold leap with him to reform the health care system but do little to make voters comfortable with the consequences of all that he was proposing. As a political proposal, the McCain health plan was a disaster. Who would ever vote themselves into such a system with less health care security than they have today?

It is no surprise that a big part of Obama's advertising budget has been spent zeroing in on the McCain health care plan's tax changes. I am surprised they didn't zero in on even more of it.

McCain's failure to make such a big leap away from our current system of third-party pay something voters could look forward to also makes it harder for more serious proposals to fundamentally redo our health care system on a platform of individual responsibility--the Wyden-Bennett plan for example.

The employer community themselves have amazingly added fuel to the arguments we need to stay with the employer-based system. The U.S. Chamber, the Business Roundtable, The National Business Group on Health, the American Benefits Council, and the NFIB have all had at least cool things to say about McCain's tax credit idea (New York Times, October 7th). The health insurers have gone along with this opposition--most certainly afraid to call for their benefit manager clients' layoffs!

Why are employers so against taking this big benefit cost off their books? They continue to see benefits as an effective way to compete for workers. They are also worried that they are going to get the bill anyway but won't have any control over what it costs in a new system.

As I have also said many times on this blog, I believe that either the employer-based or individual-based approach to health care reform could work. However, my guess is that if most health policy experts could create a clean sheet health care system in America, putting it on an individual platform would be one of the things most--liberal and conservative--would agree to do.

McCain has made such a mess of selling his health plan--and Obama has done such a good job of taking advantage of it--that I fear we have boxed ourselves into the third-party pay employer-based system, that has proven to be so expensive, for a longtime to come.

The only hope for this idea is that, in the face of daunting federal and state budget deficits, a restructuring of the system on an individual platform may be the only way we can achieve health care reform on a pay-as you-go basis--Wyden-Bennett for example, pays for itself in the third year.

But the well has been poisoned over an individual-based system in the face of big Democratic majorities that have so opposed the idea in this election.

The Democrats, in trashing the idea of a tax change for health benefits, and the Republicans in so fumbling the argument, may have taken the one way we could have done pay-as-you-go health care reform off the table.

Or, both sides can take a second look at it--this time complete with the appropriate arguments and policies that give voters the health care security they require.

Update: Speaking of fumbling the arguments for the conservative approach to health care reform, a few hours after I posted this, a leading McCain spokesman was quoted at CNN regarding the McCain health tax credit:

Younger, healthier workers likely wouldn't abandon their company-sponsored plans, said Douglas Holtz-Eakin, McCain's senior economic policy adviser.

"Why would they leave?" said Holtz-Eakin. "What they are getting from their employer is way better than what they could get with the credit."

So just why would Holtz-Eakin expect anyone to vote for the end to the employer tax exemption on health benefits in favor of the McCain tax credits?

Coventry Health Care Stock Down 48%--"Sort of" No Surprise

Readers of this blog will not be surprised to see Coventry Health Care's stock down 48% this afternoon after its earnings call this morning.

That is a 77% drop from their 52-week high.

Last July I commented on their earnings call where senior management used the precise financial term "sort of" 63 times to explain their then earnings and operations situation: Required Reading for Health Care Analysts and Coventry Health's "Sort of" Informative Conference Call

Well, three months later they're "sort of" in the crapper.

Joe Paduda, over at Managed Care Matters, has been following the Coventry problems more closely than I and has a number of recent posts on their problems.

What Impact Do Medical Costs Have on Home Mortgage Foreclosures?

That is the subject of a recent paper by Christopher T. Robertson, Richard Egelhof, & Michael Hoke.

The authors studied homeowners going through foreclosure in four states and found a big impact on their being able to stay in their house because of the health care cost issues these families had to deal with.

Here is an excerpt from their work:

"This preliminary study reveals that the standard account is, at best, an inadequate understanding of the causes of mortgage defaults. We found homeowners that tended to have significant equity in their homes and reasonable ratios between their income and their mortgage debt burdens. Few reported that their loans were unaffordable and only about a third said increasing mortgage payments were a factor in their defaults. From the surface, these respondents appear to be able to afford their homes and have no reason to walk away from them. So why are they in default?

"Our evidence suggests that medical disruptions are a major contributor to mortgage default, often striking in combination with other factors. Half of all respondents (49%) indicated that their foreclosure was caused in part by a medical problem, including illness or injuries (32%), unmanageable medical bills (23%), lost work due to a medical problem (27%), or caring for sick family members (14%). We also examined objective indicia of medical disruptions in the previous two years, including those respondents paying more than $2,000 of medical bills out of pocket (37%), those losing two or more weeks of work because of injury or illness (30%), those currently disabled and unable to work (8%), and those who used their home equity to pay medical bills (13%). Altogether, we found that about 7 in 10 of our respondents either self-reported a medical cause of foreclosure, or experienced one of these indicia of medical disruptions in the years before foreclosure. In many cases, homeowners were hit with a perfect storm of factors – a few thousand dollars of medical bills, a few weeks of missed work, and perhaps a divorce or rising interest rate – all combined to push them over the edge into foreclosure."

The survey studied homeowners going through the early part of the mortgage meltdown--focusing on families in the first stage of the foreclosure process in November 2006.

The full report: Christopher T. Robertson, Richard Egelhof, & Michael Hoke, "Get Sick, Get Out: The Medical Causes of Home Foreclosures" Health Matrix 18 (2008): 65-105. You can access the entire report here.

Demystifying U.S. Health Care Spending--Some Surprising Information

Paul Ginsburg, of the Center for Studying Health System Change, has just authored a new report, "High and Rising Health Care Costs: Demystifying U.S. Health Care Spending." The report is part of the Robert Wood Johnson Foundation's Synthesis Project.

This paper reviews existing literature in search of a more clear understanding of U.S. health care costs, the drivers, and the trends.

It is an encyclopedia of the research on U.S health care costs and required reading for any health policy wonk!

I found the following notable:

• Technology is the key driver in health care spending accounting for an estimated 38% to 65% of spending growth.
• "Obesity is a significant factor driving health spending, accounting for an estimated 12% of the growth in recent years." However, any gains from reducing obesity would be concentrated in the short and intermediate period "because some of the savings will be offset by increased longevity and the cost of disease that are most prevalent during old age." The irony is that obese people die sooner thereby avoiding the high medical costs associated with living longer.
• If we insure more people our health care system will cost more not less. "The increase in the percentage of people with health insurance accounted for approximately 10% to 13% of the historical growth in spending." The uninsured has not contributed to the recent growth in health spending in the aggregate and will not be a driver in the future unless we find a way to insure more people.
• Aging will not be a major factor in driving health care spending, and will not become one, despite aging baby boomers.
• Medical malpractice is not a major driver of spending trends. Medmal does contribute to health spending at any moment in time, but is not a large factor nor a significant factor in overall growth of health care spending.
  
• "Productivity gains in the health care sector have probably been lower than in other industries."
• U.S. health care cost increases continue to outstrip those in other industrialized nations by a large margin. Excess health care growth in the OECD nations was 0.6% between 1985 and 2002 compared to 2% in the U.S. for that period.
• When compared to the health systems of other industrialized nations, "prices, efficiency, and insurance administration are the most important differences."
• Drug prices are 70% higher in the U.S., physician compensation is 6.6 times per capita GDP for specialists and 4.2 times for primary care compared to 4 and 3.2 in OECD nations, the U.S spends 54% more for the top five inpatient medical devices, and the U.S. spends six times more for administration than the OECD nations.
  
• "Overall our understanding of high and rising costs is fairly solid. Our most pressing needs are not as much on the research side as on the development side, that is, all of the technical work needed to pursue many of the reforms..."

Aging and medical malpractice costs are not major contributors to the cost of health care in America? If we solve our obesity epidemic we will just increase longevity, more people will make it to old age, and we'll have all sorts of other high costs? Covering everyone will cost us more in the aggregate not less--getting them all in the system won't be a money saver?

Are these the "inconvenient truths" in health care reform?

The data would seem to say they are.

So does this mean we should back off on tackling obesity, forget medical malpractice reform, and scrap plans to reduce the uninsured?

No. I'd respond it's fair to say that is not what the author has in mind.

There is a moral imperative to deal with the uninsured. Being obese may save the system some money in the long-term because the person dies a lot earlier--hardly a desirable policy objective. That obese person still costs us a lot more in the near term and typically suffers from chronic disease in the meantime. Our medical liability system needs reform if only to reduce the rate of medial errors and the human toll those take.

But when it comes to health care costs, the real target needs to be productivity--or said another way cost containment.

One finding from this report really struck me: "If the efficiency of the delivery of services could by increased by 20% over 10 years, this would roughly close the gap between health care spending and GDP over that period." The bottom line is that if we want to contain our health care costs we need to find productivity improvement in things like technology use, treatment patterns, and administrative overhead.

Today, most health care reform plans focus on things like expanding the number of the insured and wellness initiatives. Those are good objectives.

But covering more people will cost more not less. Improvements in lifestyle--particularly obesity--can help.

But we cannot afford to stop there. Literally.

The big-ticket play is in productivity--the more discriminate use of medical technology, consistently practicing outcomes-based medicine, and reductions in system overhead particularly in the insurance system.

The problem with the health care productivity issues is that you have to step on some very powerful toes amongst the stakeholders to make any big gains--it's a lot easier to talk about insuring everyone and promoting wellness.

If we only increase access and don't hit the health care productivity issues head-on we will simply craft a system we will never be able to sustain.

HIGH AND RISING COSTS: DEMYSTIFYING U.S. HEALTH CARE SPENDING

I have seen an advance copy of this very comprehensive report on the growth in health care spending. If you are in DC next week, I highly recommend this event to you:

HIGH AND RISING COSTS: DEMYSTIFYING U.S. HEALTH CARE SPENDING

New Report Synthesizes the Literature on the Growth of Health Care Spending

Concern about high and rising health care costs in the United States has increased sharply in recent years. With the increase in costs and the lack of affordability of health insurance for many Americans, health policy experts are discussing whether steps can be taken to expand insurance coverage while keeping costs down.

A new report from the Robert Wood Johnson Foundation’s Synthesis Project sheds light on the driving forces behind health care spending and examines the reasons why health care costs continue to rise.

An October 15 briefing with the report’s author and other leading voices in health care will address:

• What are the historical data on health care spending?
• How does U.S. spending on health care compare with other developed nations?
• What are the primary drivers of the growth in health care spending?
• What options do policy-makers have for restraining health care spending?

SPEAKERS
• Paul B. Ginsburg, Ph.D., President – Center for Studying Health System Change (Synthesis Report Author)
• Robert Galvin, M.D., Director of Global Healthcare – General Electric
• Robert Laszewski, President – Health Policy and Strategy Associates, LLC
• John R. Lumpkin, M.D., M.P.H., Senior Vice President & Director of the Health Care Group – Robert Wood
Johnson Foundation
• David Nexon, Senior Executive Vice President – Advanced Medical Technology Association (AdvaMed)

WHEN/WHERE:
Wednesday, October 15, 2008
9:30 a.m. – 11:00 a.m. (Breakfast available at 9:00 a.m.)
National Press Club
First Amendment Lounge, 13th Floor
529 14th Street, N.W. – Washington, D.C. 20045

TO RESERVE A SEAT:
To reserve a seat, please R.S.V.P. to Erica Garland at egarland@gymr.com or 202-745-5119.

Time to Get Real--On the Economy and Health Care Reform

I just got a call from a reporter at one of the major news organizations to talk about the chances for health care reform.

We both commented on the almost surreal environment we are all in. I'm not sure if my friends and neighbors are in denial or just numbed by the recent cascade of events in the financial world. Up on the Hill and in the presidential campaigns it's business as usual when it comes to extending the Bush tax cuts, spending on alternative energy, or the imperative to do health care reform.

The reality is we are now headed down an unavoidable slope into a recession. The only question is how bad. Today, Dr. Phil told his audience to stop spending money, get their credit card debt paid off, and hold cash--"Cash is king." They are and they will.

General Motors' stock hit a price today not seen since the 1950s because no one is buying cars--and won't be for quite awhile.

A slowed economy means less tax revenue at a time we were already headed for a $500 billion budget deficit in 2009--and that was before we would spend as much as $200 billion to extend all (McCain) or most (Obama) of the Bush tax cuts. (Anybody want to give odds on that?)

The next Congress and the next President are facing unprecedented fiscal challenges presuming the credit crisis starts to work itself out.

Someone recently told me an economic crisis doesn't necessarily mean we won't have important social legislation. After all, Social Security came from the depths of the Great Depression. It did. But it was pay-as-you go--there was no big upfront cost as there is in health care.

This denial--or numbness--in the face of a harsh reality reminds me of the times I have called the airlines in the face of a blizzard looking to get them to rebook my flight without penalty. The usual answer is, "The computer says its on time so far." Of course you know it isn't going to take off in the midst of the terrible storm outside.

Health care reform isn't going to take off in the midst of this huge financial storm either and McCain, Obama, all those offices on the Hill saying it will aren't going to make it so.

The sooner we get real--on health care and everything else--the sooner we can start talking about what is really possible.

Recent post: What I'm Telling the Health Care Business About the Future

The Big Elephant in the Room During the Presidential Debate

Last night Tom Brokaw asked Barack Obama and John McCain to prioritize health care, Medicare/Social Security, and energy. Neither of them backed down from their promises to deal with all of them.

When Jim Lehrer tried to challenge them at the last debate on their ability to do all of the expensive things they want to do he got pretty much the same answer.

About the only two people in America that think we can do all of these things--or maybe any of them--would appear to be the two candidates.

So, why do we let them get away with the notion there isn't any reason why we can't have it all on top of their expensive plans for extending some or all of the Bush tax cuts and all of the bailout costs?

A couple of weeks ago I posted about, The Pretend Presidential Debate on Health Care--The Health Care Press Needs to Force the Presidential Candidates to Get Real on Health Care "Change".

Two debates later the press is still letting the candidates get away with their pretend campaign promises as if none of this were happening.

The real issue at hand is just what would each of the candidates be able to do on health care? What's the real health care strategy that each of them have in the face of the greatest financial crisis since the Great Depression.

In all likelihood the most we will see next year is a Medicare bill necessary to deal with the upcoming 21% Medicare physician fee cut. There is money for that in the extra private Medicare payments thereby satisfying the pay-go rules.

If there is any other money the Congress might try some modest expansion of SCHIP and maybe something to stem the enrollment bleeding in the small employer health insurance market. But even those things look like a long shot in the wake of the crisis.

Business as usual isn't an alternative.

Getting these guys to talk about the real world would be helpful!

Rrecent related posts:
What I'm Telling the Health Care Business About the Future

The Chance for Major Health Care Reform in Either 2009 or 2010 Is Now Zero