"Quit the RUC"

Brian Klepper and David Kibbe have a notable column at Kaiser Health News arguing that the American Medical Association's Relative Value Scale Update Committee (RUC) is specialist dominated and steers health care resources away from primary care:

Not surprisingly, the Committee’s payment recommendations have consistently favored specialists at the expense of primary care physicians. More striking, however, is CMS’ rubber stamping of about 90 percent of their suggestions, even though, in their last three service reviews, the RUC urged payment increases six times more often than decreases.

This arrangement has played out well for specialists, but the health system consequences have been catastrophic. One significant result has been a primary care shortage. Specialists now earn, on average, $135,000 a year and $3.5 million over the course of their careers more than their primary care colleagues. The income disparity has driven all but the most idealistic medical students away from primary care.

You can read the entire column here.

The House Health Care Repeal Vote, the National Debt, and the Imperative for Democrats and Republicans to Compromise

This week's House health care repeal vote is little more than a political stunt--everyone knows the effort will die in the Senate.

But, when the day is done the only way for the Republicans to do anything with the new health law will be to work out a compromise—repeal before the 2012 elections is impossible and it isn’t very likely after the 2012 elections. Even if the Republicans sweep the White House and both houses of Congress in 2012, it is highly unlikely they will have the 60 Senate votes needed for a full repeal.

So, in the end, a compromise will be needed.

During the past week, more than one Democrat has indicated an interest in at least looking at compromise amendments to the health care bill—particularly on the individual mandate. But so far, Republicans are showing no signs of being interested in fixing what they say is a bill so bad it should only be repealed.

The House vote will take place against a backdrop of increasing debt and enormous fiscal challenge. In recent days, the national debt passed the $14 trillion mark—that is $45,300 for every person in the country!

Half of our national debt was added in just the last six years. The debt was “only” $7.6 trillion in January 2005 and $10.6 trillion the day President Obama was inaugurated just two years ago.

Last year the deficit was $1.7 trillion and the estimate is for the deficit to be $1.3 trillion this fiscal year—40% of this year’s budget is unpaid for.

The estimate is that the federal government will hit the statutory debt ceiling by the end of March or early May. Lots of newly elected conservatives want to use the required vote to increase it as their first salvo against deficit spending. The problem is that we are going to need to raise the ceiling or face default on our debt.

This debate will be a thorny one for both sides: “The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance the government's reckless fiscal policies.” That was a statement on the Senate floor by Senator Obama on a prior debt-ceiling vote (to $9 trillion) in 2006.

It is not possible to have a conversation about getting America’s fiscal house in order without talking about health care—the single largest driver of federal spending. How both sides get around to talking about health care cost containment having punted on that issue for the last two years will be interesting to watch.

And, neither side can deal with the national debt until they are willing to get serious about working together on the health care entitlements.

In a recent post, I listed a number of places both sides could compromise on improving the Affordability Act:

1. Eliminating the individual mandate and replacing it with freedom of choice with responsibility – The existing mandate gives many families the choice of paying a fine they can't afford or paying even higher and more unaffordable insurance premiums. Because the penalty doesn't apply when family premiums reach 8 percent of income, which will be the case for many, it isn't even a very effective individual mandate.

Instead, a compromise could make guarantee issue health insurance entirely voluntary. If it is purchased when the consumer is first eligible -- such as when the exchanges are first available or at the time of a new job -- the consumer would not be subjected to underwriting or preexisting condition rules. The compromise, though, should let consumers purchase and use their health insurance at any other time. But if they didn't purchase coverage when they were first eligible, any preexisting condition would be subject to a two-year waiting period.

2. Eliminating the benefit mandates in the new law and creating a free market of health insurance choices, but with a standardized baseline for ease of comparison – Eliminate all of the benefit mandates in the new law requiring individual market and exchange consumers to purchase only plans that are yet to be outlined in what will be hundreds of pages of regulations. Instead, a compromise could have only two new benefit requirements. One could be a standard plan, which would take the law's existing "silver plan" and use it as a baseline. Every insurer would have to offer this coverage on the exchange or in the individual market. But insurers could also offer consumers any other plan design, so long as they told consumers the relative actuarial value the other plans had to the standard plan. The second would be a health savings account. Every insurer would have to offer an HSA-style program and state its value relative to the standard plan. Consumers who would be eligible for premium subsidies would have any premium savings deposited in a health savings account.

3. Eliminating the "Cadillac" tax on high cost health insurance plans and introducing elements of a conservative defined contribution approach to the existing liberal defined benefit legislation – With exchange premium subsidies already based upon the value of the new law's silver plan (and they should continue to be), the compromise could limit the employer deduction for health insurance, as well as the individual income tax exemption for employer-provided health insurance, to the cost of the standard plan (currently the silver plan) in any year. Phase this limit in over a period of seven-years -- to 2018, when the "Cadillac" tax was to take effect. As a result, tax policy would continue to support comprehensive coverage but also provide real incentives for consumers to buy wisely.

4. Using the budget gains from limiting the existing health insurance tax preference to pay for such things as improving the now inadequate insurance subsidies for the middle-class, permanently fixing the Medicare physician payment issue, or for reducing the deficit. In 2008, the CBO calculated a 10-year savings of $450 billion by limiting health plan tax preferences to the 75th percentile of premiums then paid by employers.

5. Letting states have the flexibility to experiment with alternatives by enacting the proposal by Sen. Ron Wyden, D-Ore., and Sen. Scott Brown, R-Mass., that would move up to 2014 the year in which states can submit proposals to the Secretary of the Department of Health and Human Services to implement their version of health care reform. The law already allows states to petition the federal government to use the overhaul's money to enact their own plans so long as they cover as many people as the new law would have -- but not until 2017.

Strong Evidence A Bipartisan Agreement on Health Care Was Possible in 2009

Readers of this blog have often heard me say that a bipartisan agreement on a health care bill was possible in 2009--driven from the Senate Finance Committee. I have continually made the point that the two sides were much closer than is commonly believed--or partisans are willing to concede.

Every time I post this, the overwhelming reaction is that I am wrong--with one side inevitably blaming the other for a lack of good faith in the discussions.

Bara Vaida had an interview in Friday's Kaiser Health News with Mark Hayes, who was the lead Republican health staffer on Senate Finance at the time and had a "clear view" of the negotiations.

Here are the key excerpts:

Q: [Vaida] Key Democrats, including Senate Majority Leader Harry Reid, D-Nev., recently said their biggest regret was allowing the Senate Finance Committee leaders, your former boss Sen. Grassley and committee chair Max Baucus, D-Mont., to spend so much time trying to forge a bipartisan compromise on health care. What do you think about that criticism?

A: [Hayes] We really devised much of the health care framework even before the Gang of Six Senate (Finance Committee) leaders started meeting. In the summer of 2008, Sens. Grassley and Baucus held a summit and we were chugging along with planning our roundtables and it is my understanding that the leadership was frustrated with us that we were moving too quickly and they wanted us to slow down. We got agreement on 80 percent of the framework even before the Gang of Six started meeting to take on the remaining 20 percent. People were naturally impatient but the complexity of the job, connecting the dots and making the model work is a huge challenge so those who pushed for it to be done quickly were watching the clock and likely didn't have a full appreciation for the issues we were attempting to resolve. The idea that the health care law could be done quickly and be done right is like saying you can go to the moon on the first try.

Q: [Vaida] What were the pieces that had been agreed to and what was the remaining 20 percent?

A: [Hayes] We agreed on the structure of the exchanges, state regulation, insurance reform, delivery system reform, the creation of the innovation center and financing mechanism. The last pieces that needed to be resolved and became problematic were the amount of funding, the offsets and the way the individual mandate would be implemented.

This was a huge missed opportunity. Partisanship--particularly from the Congressional leadership and the White House--overwhelmed what could have been a bipartisan agreement.

Even then, I doubt any of the players foresaw the degree of political and market uncertainty, as well the national division over the new law, that ramming this thing through has caused.

Why does anyone ever think partisanship is superior to bipartisanship? Yet, a year later the Congress is more polarized than ever with many of the more bipartisan members from 2009, like Bob Bennett of Utah, in forced retirement.

Karl Rove’s Criticism of AARP Was a Cheap Shot and Uninformed

Readers of this blog know that I am willing to call AARP out when I think they deserve it. Witness my recent post criticizing their reaction to the chairs of the Deficit Commission and their preliminary report when AARP acted more like a narrow minded advocate than an enlightened organization that understands the inevitability of fundamental reform to the entitlements.

And, I have never been comfortable with their advocacy for both the Republican Part D program as well as the Democratic health care bill when a big share of their revenue comes from health insurance commissions.

But Rove’s recent column in the Wall Street Journal claiming the Obama administration was giving AARP a pass from the new health law’s regulations because the organization is a political ally is just an uninformed cheap shot.

Rove cites recent Obama administration regulations that exempt Medigap plans, a big seller for AARP, from rate review and other mandates such as the minimum loss ratio rules. Medigap plans were exempted because the entire Medigap industry argued they should be—and for good reason. Medigap premiums are only a fraction of the premium of traditional health insurance or Medicare Advantage plans—the same loss ratio rules simply wouldn’t work there. The benefit structure of Medigap plans is already highly regulated and it wouldn’t make sense to try to stretch the new law’s insurance rules to that market segment.

AARP didn’t get anything the rest of the Medigap industry did not get and for good reason.

Rove also points out that AARP is exempt from the cap on insurance industry pay that can be deducted for tax purposes and argues this is another pay-off to an Obama political ally. But AARP is not an insurance company and therefore was never going to come under this provision. AARP is an insurance agency and no insurance agency is subject to this limit.

Rove also argues that AARP gets a break from the Obama regulations because it doesn’t have to pay the new insurance company premium tax—again it is not an insurance company. None of the nation’s insurance agencies will pay the tax.

AARP’s insurance company partner, the real insurance company in the AARP senior product offering, will have to comply with all of the insurance company requirements such as tax caps on its executive pay.

There simply aren’t any special AARP exceptions.

I find it more than ironic that the same Karl Rove that drove the Medicare Part D benefit during his time in the Bush White House, that added $8 trillion to the long-term Medicare unfunded liability—because none of the new program's cost was paid for—and had AARP issue a pivotal last minute endorsement of that Republican initiative, would now criticize the senior group.

In 2003, I thought it inappropriate that AARP, part of it a giant senior insurance agency that had a great deal to gain by selling the new drug benefit, provided an endorsement most observers felt at the time put the Republican legislation over the top.

There are lots of things to be critical about in this new health care law and how it was passed.

I am troubled by AARP’s recent unwillingness to use its influence to educate its members on the necessity of entitlement reform and the sacrifices everyone will have to ultimately make. AARP should be a leader on this front—not just another self-serving special interest.

But I will also suggest that Karl Rove, or any of us, could provide a better service by getting the facts straight and minimizing the self-serving hypocrisy.

Improving The Health Law In 2011: Realistic Ways To Reach Bipartisan Compromise

This post originally appeared at Kaiser Health News.

The new health care law can be changed in ways that would make it acceptable to a bipartisan majority in the new Congress -- and, therefore, to the American people. But to find this elusive middle ground requires consideration of the competing philosophies at the heart of the nation's political divisions regarding this sweeping measure.

For starters, liberals want a health insurance system in which everyone is covered in a more equitable health insurance pool, but conservatives argue the individual mandate used to accomplish this goal is an unconstitutional encroachment on individual freedom.

Liberals also want a standardized competitive marketplace for health insurance ensuring consumers get comprehensive benefits, but conservatives argue that this would destroy choice and the free market, and create hundreds of pages of rules about what people can and can't buy.

And liberals want every citizen to be entitled to a comprehensive health insurance plan -- a defined benefit. But conservatives want individuals to have incentives, including tax incentives, to purchase and use coverage responsibly -- defined contribution health insurance.

However, there are ways to modify the new health law so that it includes the key elements both sides see as central to moving toward covering everyone and doing it in a way we can better afford.

The key elements of such a compromise could include:

1. Eliminating the individual mandate and replacing it with freedom of choice with responsibility – The existing mandate gives many families the choice of paying a fine they can't afford or paying even higher and more unaffordable insurance premiums. Because the penalty doesn't apply when family premiums reach 8 percent of income, which will be the case for many, it isn't even a very effective individual mandate.

Instead, a compromise could make guarantee issue health insurance entirely voluntary. If it is purchased when the consumer is first eligible -- such as when the exchanges are first available or at the time of a new job -- the consumer would not be subjected to underwriting or preexisting condition rules. The compromise, though, should let consumers purchase and use their health insurance at any other time. But if they didn't purchase coverage when they were first eligible, any preexisting condition would be subject to a two-year waiting period.

2. Eliminating the benefit mandates in the new law and creating a free market of health insurance choices, but with a standardized baseline for ease of comparison – Eliminate all of the benefit mandates in the new law requiring individual market and exchange consumers to purchase only plans that are yet to be outlined in what will be hundreds of pages of regulations. Instead, a compromise could have only two new benefit requirements. One could be a standard plan, which would take the law's existing "silver plan" and use it as a baseline. Every insurer would have to offer this coverage on the exchange or in the individual market. But insurers could also offer consumers any other plan design, so long as they told consumers the relative actuarial value the other plans had to the standard plan. The second would be a health savings account. Every insurer would have to offer an HSA-style program and state its value relative to the standard plan. Consumers who would be eligible for premium subsidies would have any premium savings deposited in a health savings account.

3. Eliminating the "Cadillac" tax on high cost health insurance plans and introducing elements of a conservative defined contribution approach to the existing liberal defined benefit legislation – With exchange premium subsidies already based upon the value of the new law's silver plan (and they should continue to be), the compromise could limit the employer deduction for health insurance, as well as the individual income tax exemption for employer-provided health insurance, to the cost of the standard plan (currently the silver plan) in any year. Phase this limit in over a period of seven-years -- to 2018, when the "Cadillac" tax was to take effect. As a result, tax policy would continue to support comprehensive coverage but also provide real incentives for consumers to buy wisely.

4. Using the budget gains from limiting the existing health insurance tax preference to pay for such things as improving the now inadequate insurance subsidies for the middle-class, permanently fixing the Medicare physician payment issue, or for reducing the deficit. In 2008, the CBO calculated a 10-year savings of $450 billion by limiting health plan tax preferences to the 75th percentile of premiums then paid by employers.

5. Letting states have the flexibility to experiment with alternatives by enacting the proposal by Sen. Ron Wyden, D-Ore., and Sen. Scott Brown, R-Mass., that would move up to 2014 the year in which states can submit proposals to the Secretary of the Department of Health and Human Services to implement their version of health care reform. The law already allows states to petition the federal government to use the overhaul's money to enact their own plans so long as they cover as many people as the new law would have -- but not until 2017.

The Republican House of Representatives will almost certainly vote to repeal the new health care law early this year. But everyone knows that is for show -- the Democratic-controlled Senate will not go along, nor will President Barack Obama.

On the current partisan political track, we are destined to have a stand-off for two years with Democrats and Republicans blaming each other for gridlock while uncertainty over the new health law, and its 2014 deadlines, has consumers, employers, and health industry stakeholders unable to plan for the future -- only providing another burden of uncertainty in an economy trying to regain its footing.

If the Congress waits until after the 2012 elections before seriously considering changes to the law, it will be 2013 and less than a year before key elements of the legislation are due to take effect.

Or, we can recognize that both sides can get a lot of what they really want by agreeing to a few key and carefully placed changes to the existing law.

Liberals can improve even further the promise that consumers will have access to comprehensive health insurance while still bringing down the cost and underwriting barriers.

Conservatives can significantly move toward their goal of a free market for health care by expanding choices and crafting new incentives for people to make more efficient health care purchasing decisions.

And, these objectives can coexist, giving the American people the confidence we really have accomplished something.

Or, both sides can play a cynical game in the run up to 2012 and the people can be the losers.

The Democrats Had Better Hope the Supreme Court Overturns the Individual Mandate Before the Middle Class Understands How Bad It Is For Them

This post first appeared as a column at Kaiser Health News

Is The Individual Mandate Really A Lynchpin In The New Health Law?

If the Supreme Court does rule the individual mandate unconstitutional will it really bring down the whole law?

I don't see it.

First, the individual mandate isn't even close to what it has been made to be -- a provision that would protect the integrity of the health insurance market by forcing people to buy health insurance before they became sick. At best, it's a tepid attempt at that.

The individual mandate's fine for not buying coverage is 1 percent of family income or $95 for each family member not covered, whichever is greater in 2014; 2 percent of income or $325 per family member, whichever is greater in 2015; and $695 or 2.5 percent of income or whichever is greater in subsequent years (kids are half price!).

These are meaningful fines for not buying insurance, but only a fraction of what a consumer would pay for health insurance.

Here's how the individual mandate's fine for non-compliance actually works for a number of representative family income levels based upon 2010 incomes and poverty levels:









Alternatively, here is what families would be required to pay under the health law toward their health insurance premiums based upon their total family income -- net of the federal subsidy -- in 2010 dollars:









A family of four making $55,000 per year is at 250 percent of the federal poverty level this year. Based upon today's incomes, the maximum they would pay in the exchange for health insurance is 8.05 percent of their income, net of the federal subsidy -- $4,428 annually.

So, under the health law's individual mandate, this $55,000 family would likely pay no more than $1,100 ($550 for each adult) in fines the first year, $2,200 the second year and $2,750 in fines the third and subsequent years; or, alternatively, have to pay $4,428 for insurance net of the federal subsidy in the exchange.

A family making $85,000 a year (400 percent of poverty) would have to pay $8,075 for their share of the cost of health insurance in the exchange or likely pay a fine in the first year of $1,700 that would likely cap out at 2.5 percent of $88,000, or $4,250, in later years.

Families would also have to pay their share of deductibles and co-pays within the insurance policies they purchased.

The fine families would pay for ignoring the individual mandate to purchase health insurance is significant but only a fraction of what the insurance would cost.

If the individual mandate is eventually held unconstitutional by the Supreme Court there will be attempts to substitute an alternative means to protect the insurance market from the "anti-selection" that would occur as people held back on purchasing health insurance until they needed it.

One possible alternative to the individual mandate would be to allow consumers to purchase coverage only at limited open enrollment periods -- buy it now or you won't be able to get it when you get sick.

Given how tepid the current individual mandate penalties are--the penalties don't even apply if health insurance costs more than 8% of a families income--such an alternative scheme could be much more effective in protecting the insurance markets, as well as far more politically palatable for consumers faced with paying either an unaffordable insurance fine or an even more unaffordable insurance premium, than the current weak individual mandate before the courts.

All of the focus on the recent Richmond federal court ruling misses the big picture on health insurance affordability under the new law: Many middle class families will not be happy with or be able to afford the fines nor will they be able to afford the much higher cost of health insurance -- even after the federal subsidy.

Back to the Future—Biggest Health Plans Reported to be Building Their Own Political Coalition

I had a real sense of déjà vu this morning reading Bara Vaida’s story in Kaiser Health News:

Five of the nation's largest health insurance companies are taking a key step toward building their own inside-the-Beltway coalition to influence implementation of the new health law and congressional efforts to change it. The companies – Aetna, Cigna, Humana, UnitedHealthcare and Wellpoint – are shopping around Washington for a public relations firm to represent them…

Several industry observers said the companies want their own "subcommittee" within AHIP to influence the group's political and policy choices in 2011. "I think some of the companies felt the small and non-profit company interests were getting more attention within AHIP and they wanted to make sure their interests were considered too," said one health insurance executive whose company is a member of AHIP. "I think this is just about normal tensions within trade associations…"

Others speculated that the health insurers were seeking a way to reestablish ties with congressional Republicans, who were angered that the companies, via AHIP, worked with the Obama administration for much of 2009 on health care legislation.

This reminds me of the early 1990s. In the wake of the insurance industry being made to be the bad guys during the Clinton Health Plan debate, many of the largest members exited the historically dominant Health Insurance Association of America (HIAA) for the competing HMO dominated trade association.

At the time, many observers saw a cynical irony in the move; it was those dominant members that drove much of the policy that got the industry in trouble. Once the brand [HIAA] had been spoiled, many felt at the time, the big guys declared themselves the innocent ones and used the move to begin anew their Washington lobbying from a new platform.

Ironically, some years later HIAA and the HMO trade association merged to form AHIP.

Guess the largest health insurance companies once again were outflanked by a bunch of little guys and not-for-profits, this time on the AHIP board, and forced, once again, into a failed political strategy that was not of their doing.

What Would Happen If You Were To Pass a Big Health Care Bill Without Bipartisan Support?

During the recent health care debate I heard many people on both sides of the debate worry out loud about passing a heath care bill that did not enjoy broad support.

I guess this question is no longer a theoretical one.

December will be a big month when it comes to seeing some of the fallout accruing from the very partisan passage of the Patient Protection and Affordable Care Act.

First, the White House is worried big time about a Richmond federal judge who has said he will rule by year-end on a suit brought by the Virginia Attorney General, and a number of others, on the constitutionality of the individual mandate. This Republican appointee has already telegraphed a cynical view of the administration’s constitutional defense of the bill. More problematic, the Senate staff forgot to put a “severability clause” in the new health care law. That means the whole thing (2,800 pages) can get thrown out if a core element of the law is found unconstitutional. And, there are lots of people in this town worried this judge just might do that.

We all know this is going to be finally decided by the Supreme Court—make that by Justice Anthony Kennedy in what could well be a 5-4 decision—but getting the whole thing thrown out in even one of the many pending suits could send shockwaves of uncertainty into the health care industry trying to figure out just what it will finally have to implement, taxes it will have to pay, and which people it will have to cover. A bad decision for the new health law will also present lots of fodder for its conservative critics.

Second, we’ve got the infamous 1099 requirement in the new law that will have every business going crazy sending out tax forms to everyone it does business with beginning in 2011. I keep hearing this will be repealed but no one can tell me where the money is going to come from—$17 billion will be needed over ten years to do it.

Then there is the doc fix. Now the docs are scheduled to get their Medicare fees slashed on January 1, 2011. Again, everyone says the Congress is going to fix this one for the docs but no one knows where the money will come from—about $1 billion for each month they patch the problem and a total of $300 billion over ten years.

The Congress, both Republicans and Democrats, are intent, make that desperate, to find the money for both the small business and physician lobby. It also looks like Republicans are bent on blackmailing the Dems over where to get it by demanding billions come out of the new health care law—from places like preventive health care spending to insurance subsidies—in order to come up with the cash needed to get the small business and doc lobby off everyone’s backs.

I will suggest that while many of those eager to ram this new law through didn't see the need for bipartisan support a year ago they may understand its value now.

"Care and Cost"

Good friends David Kibbe and Brian Klepper have finally started their own blog--aimed at becoming a forum for many contributors to the health care debate.

I suggest you add, "Care and Cost"––"Health Care Conversations About Hard Choices and Emerging Solutions" to your bookmarks.

"Don't Litigate, Innovate." How To Implement A Fully Funded Alternative To The New Health Care Overhaul -- And It's Already In The Law

This post of mine first appeared at Kaiser Health News last week.

What if a Republican governor and a Republican legislature had the ability to implement their version of health insurance reform and the federal government would have to pay for it? It's a great idea. And I'm thrilled to say that a bi-partisan bill has already been introduced in the Senate by Ron Wyden, D-Ore., and Scott Brown, R-Mass., that would help facilitate exactly this end.

First, let's review section 1332 of The Patient Protection and Affordable Care Act to realize how states are already -- at least eventually -- given the ability to innovate in this manner. Here is a simplified summary:

• A state may apply to the Health and Human Services secretary for a waiver of all or any requirements with respect to the insurance exchanges, mandates, and subsidies with respect to health insurance coverage within that state for plan years beginning on or after January 1, 2017.
• The secretary has to provide for an alternative means by which the aggregate amount of the tax credits and subsidies, which would have been paid on behalf of participants in the exchanges, would instead be paid to the state for purposes of implementing their own version of the law.
• The secretary may grant a request for a waiver only if the secretary determines that the state plan will provide coverage that is at least as comprehensive as the coverage defined under the new law and offered through similar exchanges established by the states.

The bottom line is that the new law invites states to present HHS with an alternative to the insurance provisions of the new health law and gives the secretary the ability provide the state with the same funding it would have received under the overhaul so long as the state can get the same number of people covered under similar coverage.

Arguably, that waiver request could be absent the individual mandate, the employer mandate or any other key provision in the new law so long as the state made a credible argument that they could reach the same expansion target.

Is it a pipe dream that any state would take the same amount of federal money that would have been spent there anyway as a result of the health overhaul and instead build its own version of health reform? Maybe not. And the Republicans may be perfectly positioned to put such plans into action.

The 2010 mid-term elections were not only a big congressional victory for the Republicans but a big victory in the governors mansions and state legislatures as well. Republicans picked up 680 seats in state legislatures (by comparison Republicans won 472 seats in the last Republican landslide in 1994). They now control both houses of the state legislature in 26 states. And they control the entire state legislature and the governor's mansion in 16 states! In other words, Republicans have the electoral "trifecta" in 16 states -- they can pretty much pass whatever they want.

If Republicans really know how to implement the right kind of health care reform system they have a heck of an opportunity because the Democratic health care law says that, with a waiver, they can get their hands on all the health law’s federal money.

And it's not just Republicans that might want to innovate. I am hearing there are a number of Democratic governors taking a look at this provision in the law. The one catch is that neither Republicans nor Democrats can implement their state version of a health insurance system prior to January 1, 2017.

But then the Congressional Republicans say they want to fix the new health care law the Democrats just passed.

It would seem to me that House could pass a bill enabling the states to move much sooner than 2017 and, if it did, Democrats in the Senate, as well as the President, would be hard pressed to block them.

After all, a state wouldn't be entitled to the federal health insurance reform money unless a Democratic HHS Secretary (a certainty until at least January 2013) certified that the state's plan was going to cover at least as many people as well as the federal law was going to do it.

In fact, the bill introduced by Sen. Wyden and Sen. Brown would roll the date back to January 1, 2014.

Maybe some of these Republican state attorneys general ought to drop their lawsuits that call into question the constitutionality of the new health law and just suggest their governors get behind the Wyden-Brown bill and show us how to do it the right way!

Will it Be the Bond Market That Finally Forces Serious Health Care Financing Change?

When will the Congress and the White House finally make the hard decisions in order come to grips with the federal deficit problem?

When will we finally deal with real health care reform and get the entitlements, and with them the private health care cost issue, under control?

My focus on trying to answer those questions has always centered on what's going on in the health insurance market: When will costs simply become untenable and therefore force real change?

Watching "Meet the Press" on November 14th, it occurred to me I may have been missing the catalyst for real health care change.

Here is an exchange between moderator David Gregory and former Fed Chair Alan Greenspan:

MR. GREGORY: But don't we have to have an adult conversation with people about what the real [deficit] problem is?

DR. GREENSPAN: Look, I think something equivalent to what Erskine Bowles and Alan Simpson put out [Deficit Commission Chairs' report] is going to be passed by the Congress. The only question is, is it before or after a bond market crisis?

MR. GREGORY: Right.

DR. GREENSPAN: Because there's no alternative. Look, I...

MR. GREGORY: But you got to explain a little bit more what that means. You're talking about debt.

DR. GREENSPAN: Well, here, here's the issue. Right now we have very low bond prices, the markets are functioning in a reasonably good way. The big, serious problem is whether or not the outlook for the longer term deficit spooks the bond market to a point where long-term interest rates and mortgage rates move up very sharply. If that happens, that will cause the double dip. And I'm just basically hoping that we have enough sense to realize that we've got to resolve this issue before it gets forced upon us

"The only question is, is it [our finally dealing with the debt and entitlement problems] before or after a bond market crisis?"

The single biggest driver in our national debt problem is the cost of our health care entitlements.

It may in fact not be the health care system itself and its unaffordable costs that finally force real action for health care cost containment––it may be the global bond market and its lack of confidence in America's ability to finally deal with our debt, and its health care driver, that will cause a crisis that forces health care action.

But would such a crisis force meaningful and rational health care reform or just draconian fee schedule cuts across the board that puts the health care sector––particularly the providers––in a crisis of their own?

The 300 Page MLR Rules—About as Valuable as Taking Your Shoes Off at the Airport

This whole medical loss ratio (MLR) provision in the new health care law is a fool’s errand. When it comes to controlling health care costs it is about as productive as taking your shoes off at the airport is valuable at improving air travel security.

Without a doubt, the new health care law does far too little toward making health care costs affordable. And, marginal health insurance carriers have little hope of doing a lot to bring costs under control.

But for consumers what matters is cost--and that is measured by a health plan's monthly premium. The cost of an insurance policy is market driven. In any market on any day, that insurance company has to quote a competitive price no matter what their expense ratio in that market.

Which insurance policy is low cost health insurance is determined by its price—not some convoluted MLR formula developed by bureaucrats that runs about 300 pages.

Too often people inside the Beltway underestimate how price competitive the health insurance market is. Go to the Internet and you can almost instantly get a number of quotes comparing benefits and price. Go to your local insurance agent and you get the same thing.

Show me a health plan with a 78% MLR and one with an 81% MLR and I cannot tell you which one has the lowest price. The higher MLR plan may be doing more to manage costs and thereby producing a lower premium rate. Heck, Medicare has the lowest MLR in America and is under constant criticism that it does not manage costs.

And don't underestimate the value these little health insurers bring to the market. They are the ones who must quote low rates to survive and they do more than many can imagine to keep the big guys honest.

But the authors of the new health care law think consumers are dumb and need the federal government to draft thick incredibly complex MLR regulations so they can be saved from themselves.

The insurance exchanges make a whole lot more sense than these MLR regulations—side-by-side comparisons of plans by cost and benefits making the health insurance shopping experience clear will be enough without this huge addition to the federal bureaucracy.

By HHS’s own calculations over 20% of those in the individual market are in plans that spend more than 30% on administration—another 25% are in plans that spend 25% to 30% on administration.

HHS expects 9 million consumers to get premium rebates.

But that assumes that the insurance companies that would pay those rebates are going to stay in the market and lose money paying them. Of course many insurers with little hope of ever being able to comply are not going to do that.

The new guarantee issue and pre-existing condition reforms don’t go into effect until January 1, 2014.

How many of those 9 million consumers are going to see their insurance company exit the market instead of lose money paying rebates?

If these consumers lose their insurance because their carrier exits they have to buy it from a different insurance company—but they are going to be subject to underwriting and pre-existing condition rules that are still in effect. You can see the headlines: “Cancer patient loses coverage under the Obama health plan and can’t get new coverage.” And, yes they can go to the new high risk pools--in six months and maybe for less coverage and higher costs.

Afraid that many people will lose their coverage, HHS has said it will grant waivers to these rules when there is the potential for the market to be “destabilized” by the implementation of the MLR rules.

I presume that means Democrats are scared of headlines reporting about consumers who have lost the insurance they wanted to keep because of the new law.

So, when the day is done, HHS is getting ready to implement a huge and complex regulation complete with massive reporting requirements but won’t do it if it disrupts any of the high expense carriers with big state market share the law is intended to go after.

And to the extent HHS does implement these new MLR rules who do you think the winners are going to be? It won't be consumers, it will be the giants of the health insurance market who dominate the market today and have an expense ratio advantage driven by their size. This is the jumbo health insurance company full employment act!

HHS and the TSA—just take your shoes off and keep your mouth shut!

Health Care—Tell Us the Truth Before You Tell Us Why You Are Right

This is post of mine that appeared last week at Kaiser Health News.

Just after the election, I saw an exchange between CNN’s Anderson Cooper and the head of the Tea Party House Republican caucus, Michele Bachmann. Cooper tried to pin Bachmann down on just exactly what “specific spending cuts” she would make to get federal spending under control. When he suggested that Medicare was going to need big changes if the deficit was going to be reduced, Bachman wouldn’t be specific but responded that we “need to reform the system” but this “can’t be about scaring senior citizens.”

If the Republicans are serious about getting America’s fiscal house in order they are going to have to do a lot better than that.

During the election, I heard one Tea Party Republican candidate for the House say that we needed to get on top of all of the deficit spending and to do that we needed to reform the entitlement programs. But then he said hospitals and doctors are underpaid and we need to be sure they get better reimbursements.

Democrats aren’t much better at confronting the entitlement problems. President Obama has been telling the American people that the health care bill they passed in March -- the Patient Protection and Affordable Care Act -- will make health insurance affordable. Heck, it’s in the title of the bill. He’s also been saying that the new law actually reduces the deficit.

It is true the Congressional Budget Office (CBO) does estimate the new health care law will cover about 30 million more people and reduce the deficit by $138 billion over ten years. Of course to reach these numbers the bill uses plenty of budget gimmicks like front-end loading revenue and back-end loading benefits, ignoring the $300 billion physician fee crisis and raising taxes by $500 billion.

But, accepting the claim that the bill does reduce the deficit by $138 billion, we also need to remember that the same CBO report predicts we will add $12.7 trillion to the deficit over the next ten years -- a big chunk of it because of the health care entitlement costs that are out-of-control. To put this into perspective, without the $138 billion reduction in the deficit because of the health care bill, the CBO would have projected a $12.838 trillion increase in the deficit!

So both sides aren’t exactly facing our nation’s biggest fiscal problems in an honest way.

The Democrats refuse to admit their new health care law is not the kind of health care reform that would have at least begun to fix the entitlement problem.

Republicans haven’t done more than go negative on the new health care law and haven’t put up any real proposals for how they would deal with this conundrum. Their favorite campaign sound bite was to call for selling insurance across state lines. Just which state’s health insurance policies are affordable and would make health insurance affordable if they were sold in the rest of the states?

The health care entitlements, the old ones and the new one, simply swamp the federal budget. Take a look at the chart below. It comes from the same CBO report that affirms President Obama’s claim that the new health care law actually reduces the deficit by $138 billion.

There are a couple of thing to note about the CBO’s long-range federal budget projections:

• While Social Security is a challenge, it’s a pretty modest a challenge when compared to the health care entitlements.
• If the Democrats had really done health care reform this year, the trend line for the cost of the health care entitlements would not be continuing its startling upward trend.
• All of the rest of federal spending, including for defense, is a fairly small part of America’s deficit and debt challenges. Big cuts there hardly matter if you aren’t going to tackle the health care entitlements.

The full CBO Report

Don’t “scare” seniors? I’ve read the reports and I’m scared. What we just saw occur was “health care reform?” Hardly.

We need more proposals like those being made by the President’s deficit reduction commission, and the Medicare reform proposal authored by Republican House members Paul Ryan of Wisconsin, Eric Cantor of Virginia and Kevin McCarthy of California. Irrespective of whether they are the best proposals, their authors started from a place where they told the truth.

More than scaring seniors, or anyone else, both Democrats and Republicans need to treat the American people like adults and be honest about just how critical a problem we have with health care spending. If both sides could do that first, then it would make it a lot easier to have a real conversation about the trade-offs we will, someday, inevitably have no choice but to make.

Shame on AARP For Their Response to the Deficit Commission Co-Chairs' Report

The Co-Chairs of the President’s Deficit Reduction Commission are out with their preliminary recommendations.

They’ve done a great job—they’ve offended about everyone!

But we have a nearly impossible but unsustainable challenge in front of us if we are ever going to crawl out of this deep hole.

It is not so much what is on their list as what this list tells us about just how fundamental the changes are going to have to be for anyone who depends in any way on the federal government—which would be everyone in this country born or going to be born for decades to come.

In fact, the preliminary report calls for the Congress to revisit the Public Option if health care costs don’t meet a set of initial five-year targets. Nothing has been left off the table whether it is an unfettered discussion of how bad things are or the wide range of controversial options that now must be considered.

So how does AARP respond to the truth about the problem and an honest attempt to deal with it?

Some separate quotes from their press release yesterday in response to the report:

“With the release of the Co-Chairs’ proposal from the President’s Fiscal Commission today, AARP has responded with concern about how these recommendations would hurt the health and financial security of middle class Americans in particular, and believes that the proposal is contrary to the best interests of American families.”

“During these tough economic times, the last thing we should be considering is targeting the guaranteed, inflation-protected Social Security benefits that millions of Americans count on every day,’ said Nancy LeaMond, AARP Executive Vice President.”

“We're also deeply concerned that the Co-Chairs' Proposals would aim to reduce the deficit by shifting health care costs onto seniors in Medicare. Raising costs on the sick and the most economically vulnerable is both wrong and counter-productive policy. Instead, we should be focused on efforts to lower costs throughout the health care system.”

I liked Senate Budget Chair Kent Conrad’s response a whole lot more, "People can say we want to keep what is. What is is not affordable.”

Of course any report like this is going to be "dead on arrival" on Capitol Hill. But it's real value is that it can be the beginning of an honest discussion on what we will have to do.

AARP has lots of people at its Washington headquarters that understand these problems better than most and very much care about maintaining the integrity of our entitlement programs.

I expected a lot more from them.

AARP should be doing its part getting our people ready for change not pretending that it can somehow be painlessly avoided.

AARP should be taking the lead in explaining to seniors, and those on their way to becoming seniors, just what the problems are and just how fundamental the change is going to have to be if we are in fact going to hand our children and grandchildren a sustainable American Dream.

Shame on AARP! If anyone could be providing critically important leadership here it is them.

Download the Co-Chair's Report

Health Care and the 2010 Mid-Term Elections--the Only Thing Now Certain is the Uncertainty

The election has given us a Republican House and a still Democratic controlled Senate. But, instead of Democrats having the 60 Senators they had when health care was passed in December, they will have a slim majority in the new Congress of 53 seats when the two Independents who caucus with them are counted.

Exit polls clearly show an anti-health care law sentiment. Exit polls done for the AP found 48% of Tuesday's voters want the new health care law repealed, 31% want it expanded, and 16% want it left as is.

Remember those swing Democratic House votes that were on the fence over the health care bill last March? Most who voted for it are now out of work—and all but 11 of the 34 of them who voted against it also went down to defeat. Why did even those who voted against the new health care law lose their jobs? Because of one vote they all had in common--they voted for Pelosi as Speaker.

The two most prominent Democrats who touted their yes votes in their campaigns for reelection—Wisconsin Senator Russ Feingold and North Dakota House Democrat Earl Pomeroy—lost.

So, does this mean there is an overwhelming tide running toward repeal of the law?

The election results are likely a prescription for gridlock. With an Obama veto and the Democrats still controlling the Senate by a slim margin, it will be difficult, if not impossible, to get a health care repeal bill passed in the next Congress.

I do expect the Republican House to pass a bill repealing the health care bill very early next year. Then it goes to a Senate run by Democratic Majority Leader Harry Reid—good luck with that!

More likely, what we saw in the mid-terms was the opening act toward the 2012 elections. Republicans will be blocked from any major repeal action by the Obama veto and the lack of a majority in the Senate and will use that to call for voters to finish the job by giving Republicans control of everything in 2012.

The biggest problem the Republicans have is a lack of an alternative health plan. Repeal and replace the existing law with what?

Without a doubt there is a strong anti-health care law sentiment running. And, it might be possible to scare up a bare majority in the Senate for partial repeal legislation that comes under budget rules requiring only 51 votes. With the Republicans ending up with 47 Senate seats, they might also be able to get the new West Virginia Senator, Joe Manchin, to vote with them. Democrat Ben Nelson of Nebraska can’t seem to figure out if he is a Republican or a Democrat, and maybe Independent Joe Lieberman of Connecticut could be another pick-up. They would still need at least one more Democratic vote to get to 51.

And, Obama would have to go along with the changes for them to become law.

But it would take 60 votes to repeal all of the law. And, 67 to sustain an Obama veto of any outright repeal law.

Changing the health care law with 51 votes will require Republicans to put something up that dealt only with budget items and made a compelling argument that it was a prudent change. Just trying to repeal the individual mandate (a budget item) but leaving in place the underwriting reforms (which would require 60 votes to repeal) would create lots of unintended consequences that could well scare away not only these swing votes but even more Republicans as well.

It is possible that Republicans could try to amend the new law’s insurance subsidies to look more like their tax credit proposals, for example. But even there they risk looking like they want to repeal employer-based health insurance and that would be a very tough sale.

Republicans might also try to restore the Medicare Advantage cuts. But to do that they would have to come up with about $150 billion to offset that cost in order to avoid just adding to the budget deficit.

So, the viability of any repeal effort, or any effort to pass major amendments, will require Republicans to put a plan on the table that is compelling. I have no idea what that is based upon what I have heard the candidates and the Republican leadership say during the campaign.

The new House majority will enable Republican House committee chairmen to harass the Obama administration’s regulators at HHS. We should expect lots of testy hearings, which would have more political value as Republicans try to build momentum toward 2012 than accomplish a lot the Senate, would pass.

I would have to believe that the Obama regulators are at least a bit chastened in the wake of the election. The final MLR rules are due out in the next few weeks and a number of state insurance commissioners have called for more flexibility in implementing them. Based upon what happened last Tuesday, will Sebelius grant that flexibility? One would think so.

Just as interesting will be the need to fix the Medicare physician payments by the end of November. It will cost about $15 billion to patch that problem for just 13 months. With the voters saying, “no more debt” just what is the “lame duck” Congress going to do about that? Add to that the small business “1099” problem that would also cost about $17 billion to fix before it becomes effective on January 1, 2011.

The election results were also good news for Republicans in the states where they picked up at least 10 new governors’ seats. In separate races for insurance commissioner, two went to opponents of the law while California elected a supporter.

These state races will affect just how aggressive the states are in establishing the insurance exchanges due to become available in 2014.

We could see Democrats and Republicans simply to agree to disagree over the new health care law--maybe even seeing appropriations, like the money needed to build the 2014 insurance exchanges, held up until the 2012 elections finally decide who will be in control in the lead-up to 2014.

For now, the election results add more uncertainty as we immediately begin the 2012 election campaign and everyone gets ready for the 2014 implementation of the bulk of the new health care law.

You know, one of the things we talked about on this blog, on the way to seeing this bill passed, was the sense that you can't pass something as big as health care reform without a consensus of support for it. If you did, there would be a huge risk that it would not likely have the necessary support to be properly implemented or even sustained.

If a Republican "defunding" fight over appropriations leads to the two sides gridlocked and finally just agreeing to table implementation until after the 2012 elections, we might just see health care as the preeminent 2012 issue--a vote for Republicans meaning repeal it and a vote for Democrats meaning implement it.

So, what was it exactly that was accomplished last March?

Passing the Democratic Health Care Bill is Not the “Right Thing To Do”

Any big health care bill will be full of compromises—political or otherwise. But this bill doesn’t even come close to deserving to be called “health care reform.”

As the Democrats make their final push to pass their health care bill many of them, and most notably the President, are arguing that it should be passed because it is the “right thing to do whatever the polls say.”

Their argument is powerful: We will never get the perfect bill. If this fails who knows how long it will be before we have another big proposal up for a vote. There are millions of uninsured unable to get coverage because of preexisting conditions or the inability to pay the big premiums and this bill would help them.

But as an unavoidable moral imperative, enacting this bill would fall way short:

• It is unsustainable. Promises are being made that cannot be kept. As the President has said many times, we need fundamental health care system reform or the promises we have already made—the Medicare and Medicaid entitlements, for example—will bankrupt us. What few cost containment elements the Democrats seriously considered are now either gone from their final bill or hopelessly watered down—most notably the “Cadillac” tax on high cost benefits and the Medicare cost containment commission.

• It is paying off the people already profiting the most from the status quo. Many of the big special interests, that will have to change their ways if we are really going to improve the system, are simply being paid off for their support. The drug deal, the hospital deal, promises not to cut or change the way physicians are paid, all add up to more guaranteeing the status quo rather than doing anything that will bring about the systemic change everyone knows is needed.
  

• Nothing in these bills will fundamentally change our current fiscal course. As the CBO, and every other expert has said, if this bill becomes law we will continue on the same cost trajectory we are already on. Yes, the CBO says the Democratic plan will reduce costs during the next ten years by about $100 billion—but that only means they would be $100 billion less than the $35 trillion they would have been anyway! That is merely a rounding error on the track we are already on.
  

• There is nothing here that will stop unaffordable health insurance rate increases. Lately supporters have said this bill is the solution to the recent big individual health insurance rate increases we have been reading about in the press. But there is little in this bill that will mitigate or control any such increases because so little would be done to impact underlying health care costs.

We often hear the argument, “Let’s get this entitlement expansion bill passed and it will force us to deal with costs later.” If we don’t now have the political courage to face daunting health care costs in the face of exploding deficits how will we have that courage later?

I will suggest that adding 30 million more people to an unsustainable system expecting it will create an even bigger crisis and thereby force real reform is tantamount to reboarding the Titanic in the hopes it will sink faster. It is also hard to see how doing such a thing is the politically courageous thing to do.

Just where is the moral imperative in ramming a trillion dollar entitlement expansion through knowing full well it will make our long-term deficit nightmare even worse—for those now uninsured and for everyone else?

The Democratic health care bill makes little if any systemic changes to the health care system—certainly not at the level we need.

The Democratic health care bill makes promises we cannot keep.

Proponents of the Democratic health care bill make the claim that it will make health insurance affordable, improve our deficit outlook, and make our health insurance system sustainable. None of those claims are even close to being true and everyone who knows anything about this debate knows that.

Heck of a foundation for doing the “right thing.”

The Issue Has Become Arrogance Not Health Care

Away from Washington people I talk to are just amazed at what the Democrats are in the process of doing on health care.

What I think the Democratic leadership is missing is that this is no longer about passing a health care bill in the minds of lots of these voters—a majority of voters from what the polls say.

To these people, this is about Democratic arrogance. What the polls don't measure is the anger I hear from people who can't believe what is going on. After the last few recent state elections and all of the polls that overwhelmingly say, “stop” or “start over” they just keep plowing along anyway. To defend themselves, the Dems point to the many times the Republicans have used the legislative tactic of reconciliation before—the Bush tax cuts, Part D, welfare reform.

They are right. But those were popular bills.

The Dems may be scoring debating points but instead what the voters I talk to see is a demonstration of political arrogance—not a health care legislative process.

The Democratic logic is that they have already voted for it so they might as well put a finished product on the table for people to appreciate on Election Day.

But the problem with that logic is that the the bill’s real benefits—eliminating pre-existing conditions and medical underwriting as well as the subsidies to buy insurance—don’t start until 2014.

What voters, particularly the swing independent voters, now see is not a health care bill but political arrogance—and that is really the issue Democrats are going to have to deal with.

What I think this is finally going to come down to is a few House Democrats putting their finger in the air to see which direction the political wind is blowing from. It's pretty clear to me there will be a gale force wind blowing from the direction of "no."

Why Rush Vendor Certification of EHR Technologies?

Why Rush Vendor Certification of EHR Technologies?

by DAVID C. KIBBE and BRIAN KLEPPER

A surprise move by ONC/HHS indicates the wheels may be falling off health IT reform at about the same rate they've fallen off Democrats' broader health reforms.

David Blumenthal and his staff have unveiled two separate plans to test and certify EHR technology products and services. We don't think this is a good idea. We've supported the purpose and spirit of the ARRA/HITECH incentive programs, and believe ONC's/HHS' re-definition of EHR technology puts it on a trajectory to improve the quality and efficiency of health care in the U.S. But this recently-announced two-stage EHR technology certification plan bears all the marks of a hastily drawn up blueprint that, if rushed into production, could easily collapse of its own bureaucratic weight.

The new Proposed Rule puts vendors through the wringer, twice. As defined by ONC, vendors with "complete EHRs" and those with "EHR modules" will have to find an "ONC-approved testing and certification body" (ONC-ATCB) that will take them through a "temporary certification program" from now until end of 2011. Then in 2012, under a "permanent certification program," they'll have to switch over to a National Voluntary Laboratory Accreditation Program (NVLAP)-accredited testing body for testing, after which they must seek an "ONC-approved certification body" (ONC-ACB, not to be confused with ONC-ATCB) that can provide certification. The ONC-ATCB will be accredited by ONC, but the ONC-ACBs will be accredited by an "ONC-approved accreditor" (ONC-AA).

Confused? This is just the start. We can't imagine many federal agency Notices of Proposed Rule Making (NPRM) that have created, in a single document, more new acronyms. And the prose in the document can challenge even the most focused minds. For example, the drafters of the NPRM recognize that things could get a little complicated, saying:

"Should CMS finalize its proposed staggered approach for meaningful use stages, we recognize that some confusion within the HIT industry may arise during 2013 and 2014 because of this apparent inconsistency and the divergent use of the term “meaningful use.”

But, then they go on to clarify:

"We would anticipate, therefore, that ONC-ACBs would clearly indicate the certification criteria used when certifying Complete EHRs and/or EHR Modules, and identify certifications according to the calendar year and month rather than the meaningful use stage to reflect the currency of the certification criteria against which the Complete EHRs and/or EHR Modules have been certified. Consequently, if an eligible professional or eligible hospital were seeking to obtain a certified Complete EHR or certified EHR Module in 2014, for instance, that eligible professional or eligible hospital would look for Complete EHRs and EHR Modules certified in accordance with certification criteria current in 2014, rather than Complete EHRs and EHR Modules certified as meeting certification criteria intended to support meaningful use Stage 1, Stage 2, or Stage 3. We request comments on ways to ensure greater clarity in the certification of Complete EHRs and EHR Modules."

Got that? Glad they're requesting comments, though we're not sure where to start. The use of the word "staggered" to describe ONC's programs is apt: this new NPRM is going to leave a lot of people staggering, as in punch drunk.

We would like to see ONC and HHS abandon temporary certification in favor of a single, permanent certification process, even if it means delaying testing and certification until mid- or late 2011. The hurry appears to be related to the need to have at least some EHR technology tested and certified by the end of 2010, so at least some physicians and hospitals can meet the meaningful use criteria. That would require them to use "certified EHR technology" by the official start year for the incentive programs, 2011.

But we don't think this timetable makes sense any longer, and the rush may jeopardize the whole program. Between meaningful use, accreditation, testing, and certification, there are simply too many moving parts to implement and coordinate in too short a time.

Delays seem inevitable. For example, we know that the release of the meaningful use final rule will be postponed until early summer and perhaps longer due to the large number of comments received and their implications. A consortium of physician membership groups will soon recommend that the meaningful use criteria be simplified. It also predicts that many small and medium sized medical practices will sit on the sidelines during 2011 and 2012, rather than rush into risky attempts to meet the meaningful use requirements. In addition, CMS has said it won't be ready to accept EHR technology product and service data until 2012, at the earliest. That timeline could be ambitious by about a year.

The ONC/HHS interim final rule (IFR) may have inadvertently caused another kind of delay. It set initial standards and implementation specifications for EHR technology - we applauded this - endorsing a modular EHR technology approach that opens the door to industry innovation. But it will take time for market entrants to bring modules and components to their customers, and perhaps longer to integrate different EHR vendors' modules in plug-and-play fashion. In other words, by opening up the market, ONC/HHS created circumstances that will almost certainly delay the goals it seeks.

So what if, to get the certification process right, ONC were to postpone payments by one year? It would be worth it.

The "permanent certification" plan in this new NPRM is very reasonable. Under it, NIST would be involved in setting up the testing of EHR technology software under the auspices of the National Voluntary Laboratory Accreditation Program. A single accrediting body would be chosen by ONC/HHS to oversee, supervise, and accredit the certification entities, following established international standards, including the International Organization for Standardization's (ISO) standards 17011 and Guide 65, that have guided conformity assessment in numerous industries, and ISO 17025 that is used for assuring quality of testing and calibration laboratories.

So each vendor would follow an orderly progression: first, ensuring that the product meets the technical testing criteria and then, having passed those technical tests, moving on to certification. The stability of this process has much to commend it.

We're not alone in thinking that delaying the EHR incentives start date is a good idea. At a HIMSS session on Monday, March 1, Congressman Tom Price (R-Ga.), an orthopedic surgeon, said that ONC's delay in issuing guidance on the certification process has prompted him to organize Congressional members. They'll send a letter to federal officials asking to postpone the start date for for demonstrating meaningful use to qualify for incentive payments. Price said members of Congress are currently collecting signatures for the letter and could send it to HHS within a week.

David Blumenthal is smart, dedicated, and is hiring many talented, experienced people into ONC. But rushing ARRA/HITECH's policy and statute beyond what is humanly possible could ultimately be at cross-purposes with the very goals they're trying to achieve.

David C. Kibbe, MD, MBA and Brian Klepper, PhD write together about health care technology, innovation, market dynamics, and reform. Their collected writings can be found here.

"What a Disaster Looks Like"

In case you missed Peggy Noonan's column in the WSJ yesterday, let me suggest it is worth your time.

I think she hit the nail on the head:

It is now exactly a year since President Obama unveiled his health care push and his decision to devote his inaugural year to it—his branding year, his first, vivid year.

What a disaster it has been.

At best it was a waste of history's time, a struggle that will not in the end yield something big and helpful but will in fact make future progress more difficult. At worst it may prove to have fatally undermined a new presidency at a time when America desperately needs a successful one.

In terms of policy, his essential mistake was to choose health-care expansion over health-care reform. This at the exact moment voters were growing more anxious about the cost and reach of government. The practical mistake was that he did not include or envelop congressional Republicans from the outset, but handed the bill's creation over to a Democratic Congress that was becoming a runaway train. This at the exact moment Americans were coming to be concerned that Washington was broken, incapable of progress, frozen in partisanship.

You can read her full column here: "What a Disaster Looks Like--ObamaCare Will Have Been a Colossal Waste of Time If We Are Lucky."

After the Failure of Reform

After the Failure of Reform
by
Brian Klepper and David C. Kibbe

The stalemate in the bi-partisan health care summit was cast the moment it was announced. Republicans demanded that the reform process start anew, and Mr. Obama insisted on the Senate bill as the framework going forward. The President may now offer a more modest reform bill that can demonstrate some progress on the health care crisis, but that remains to be seen.

We hoped the White House would seize the opportunity presented by Massachusetts’ election of Scott Brown to begin again, huddling away from the lobbyists to develop a new set of provisions that would include reasonable Republican elements, like medical liability reform, as well as other meaningful cost reduction provisions excluded from the first round of bills: pricing/quality transparency, a move away from fee-for-service reimbursement, and the re-empowerment of primary care.

They took a different path. As Ezra Klein speculated in the Washington Post, Mr. Obama and his advisers may believe that, with the 2010 elections bearing down on Congress, there is too little time to begin again.

But this is a questionable political calculation. The reform process soured the American people and American business on the health care bills. A January 27 Towers Watson/National Business Group on Health (NBGH) survey found that 71% of employers believe the bills "will increase the overall cost of health care services in the United States." A February 11 Rasmussen survey found that 61% of voters think the bills should have been scrapped and the process started over.

And no wonder. Over the past year, the legalized bribery that is special interest lobbying was fully on display, with members of both parties (but led by the Democrats) taking contributors' money with a gusto unprecedented since the Republican feeding frenzy set off by Newt Gingrich's K-Street Project. A new report from the Center for Public Integrity shows that "more than 1,750 companies and organizations hired about 4,525 lobbyists — eight for each member of Congress — to influence health reform bills in 2009." Together, they spent $1.2 billion on health care, more than one-third of the $3.47 billion spent by special interests in 2009 to buy influence over policy.

And then there was the brazen political deal making. Mary Landrieu brought $300 million in federal aid home to Louisiana for voting with the Democratic Leadership, which the GOP promptly dubbed "the Louisiana Purchase." Ben Nelson got the Feds to pay for most of Nebraska's Medicaid expansion...in perpetuity. And, on the eve of the Massachusetts Senatorial election, the White House cut a deal that exempted unions from the tax on "Cadillac health plans" until 2018.

The resulting reform provisions - a cynical combination of expert advice, uncompromising ideology and donor quid pro quos - would have extended entitlements while rescuing the industry at the top of a financial bubble, exacerbating the cost growth problem during a recession by replacing dwindling private funding with public dollars. At the same time, the bills specifically avoided committing to approaches that could wring excessive cost from the system.

In truth, either passing or blocking such poor bills would have had little impact on the increasingly threatening crisis. Short of starting over, American health care will continue to face some very harsh realities. More individual and corporate purchasers, particularly small employers, will be priced out of coverage as health care costs explode. This erosion in mainstream coverage is translating to a reduction in total health plan premium - the engine of the health care economy - and to escalating uncompensated care cost loads throughout the system. A plummeting number of insured patients will find it harder and harder to pay for a rapidly growing number of uninsureds and under-insureds.

These are recipes for instability and disaster. And as health care - the nation's largest economic sector, representing one dollar in six and one job in eleven - becomes increasingly unstable, so does the larger US economy.

Americans are increasingly aware that a government in which both parties are compromised by political ideologies and special interests will likely leave them to their own devices in dealing with health care. American business had, to a great extent, put health care benefits decisions on hold until reform was complete. Now it is resigned to continuing to cope with that burden, but with a renewed commitment to innovation. A February 22nd Towers Watson/NBGH survey found that "83% of companies have already revamped or expect to revamp their health care strategy within the next two years, up from 59% in 2009," a clear sign that businesses now think they need to act on their own behalves. (Of course, most individual Americans don't have that latitude.)

One thing is clear. Without reform as it was constituted and the subsidies it promised, the industry faces an onslaught of actions from the marketplace that will focus on its excesses, drive down reimbursement, and hold it more accountable. A long list of innovations - re-empowered primary care; data collaboratives that identify and then create incentives for making the best choices; new technologies like minimally invasive surgeries, point-of-care testing, and clinical decision support tools; medical tourism; clinical groupware; check lists; Health 2.0 business-to-business ventures that streamline health care processes - are now proving they can improve the quality of care while reducing cost.

The result is inescapable. No system this far out of balance can remain unchanged indefinitely. So long as it was influencing the policy process, the health care industry would never course correct in ways that are in our national interest. But as the environment continues to intensify, the market will be driven to embrace and integrate these solutions. One way or another, the health industry is in for real change over the next few years.

Meanwhile, until America meaningfully addresses cost and access through policy, proper health care will continue to be out of reach to many and will threaten many more with personal financial ruin. It will continue to sap the nation's economic strength, and compromise our efforts to lead and compete internationally.

Which is why the President should begin again, and make achieving serious health care policy reform a dedicated goal. In the process, he could challenge special interest influence over policy, and work to refocus the political process on the common interest. We believe the American people can see how the current paradigm is corroding our nation, and would rally behind this approach. More to the point, this was the premise of Mr. Obama's election. The American mainstream is waiting for him to assert his leadership in this way.

Health care reform has stalled and possibly failed for the moment. But the stakes are so great for America that failure cannot be an option.

Brian Klepper and David C. Kibbe write together on health care reform, market dynamics, innovation and technologies.