Submitted by Henry Kahn, MD (Atlanta, GA)

I appeared live in a 5-minute segment of a Sunday morning TV public affairs program on WXIA (11-Alive, the local NBC affiliate). The producers called me 2 days earlier to ask me to come in for an on-air “discussion” with another local physician (unidentified) who had a “different point of view about the president’s HC reform plan.” I agreed, and attempted to explain to the producer that my view was critical of Mr Obama for not moving more boldly toward a single-payer solution. That was obviously too subtle for his attention.

After arrival at the station I learned that my opponent was the president of the Medical Association of GA (MAG). He and I were seated in separate, isolated cubicles. There was no pre-interview with the show’s hostess/moderator (in a 3rd studio) whom I never saw or met. Although I was well prepared with several pointed arguments, I was caught off guard when she began the on-air segment by introducing me as a supporter of the president’s plan.

“There IS a problem with HC,” I began, trying to develop a short argument to say that Mr Obama and congress were not doing enough. 2 or 3 sentences later I was cut off as the moderator turned to the MAG president. His presentation, far to the right of the larger AMA, was that there was no place for government intrusion in HC. Decisions should be left entirely to the patient and doctor. This allowed me to return with the obvious challenge that market-based commercial insurers were already extremely intrusive in medical relationships.

Then it was over !! I doubt I received more than 90 seconds of air time. I had no opportunity to mention PNHP although I had intended to do so. I was even prepared to wave a copy of the PNHP brochure that I had brought along in my back pocket. C’est la guerre!

The Cancer Generation: Baby Boomers Facing a Perfect Storm

by John Geyman
Common Courage Press

You can be sure that cancer will be a part of your life. You’ll either get it – nearly half of all men and more than a third of women will. Or you’ll have a close friend who gets it, or be the child of someone who gets it, or the spouse of someone who has it, or in the worst case scenario, be the parent of a child struggling with cancer. You cannot help but stand on the battlefield of the war against cancer. How America wages this war is leaving an indelible mark on your life.

Cancer is now on track to replace heart disease as America’s leading cause of death within the next few years. This is a fight we have to win. Are we winning? And if we are off target, what changes are imperative for victory? Everything we discuss here focuses on these two questions.

So What Will Happen?

Lives hang in the balance on the answer to this question. The future down our current path is crystal clear – and devastating. Deregulated markets and the corrosive effects of profits over service over many years have brought U.S. health care to a crisis point. Because of soaring costs, patients with cancer are finding effective care increasingly unaffordable. Health care has entered a perfect storm, and it is certain to get much worse without real reform. Our primary care infrastructure is collapsing. ERs are overwhelmed, the ranks of the unemployed are rising quickly, adding to the numbers of uninsured. The economy has tanked, the federal deficit is massive, many states are forced to cut Medicaid to the bone, and our presumed safety net is falling apart.

Meanwhile, market stakeholders increase their efforts to maintain the status quo. The private insurance industry calls for the government to change tax policy and keep the subsidies flowing so that insurers can continue to rake off their profits from the system while offloading sicker and lower-income patients onto public programs.

http://www.commoncouragepress.com/index.cfm?action=book&bookid=398

No topic could serve as a better proxy for the deficiencies in the financing and delivery of health care in the United States than the ever increasing prevalence and expense of cancer. In The Cancer Generation, John Geyman describes the tragic and costly impact of the cancer burden, but then provides us with hope by describing a plan that would reduce these burdens of cancer.

His eight-point plan for one-tier cancer care stresses not only the importance of single payer national health insurance, Medicare for all, but also describes the great power that our own public national health program would have to strengthen our health care system, enabling everyone to have affordable access to high-quality cancer care if and when needed.

The so-called public option has emerged as the single most divisive point in the health care reform proposals being shaped in various committees in Congress. Republicans have risen up to demonize it as a government takeover of health care on the slippery slope toward socialism. Within the powerful Senate Finance Committee, it is being called a deal-breaker for any bipartisan bill.

The public option refers to a new public plan that would compete with private health insurers in an effort “to keep them honest”. It is a concept trumpeted by Jacob Hacker, now a professor of political science at the University of California Berkeley. His original idea, as first envisioned in the 1990s, was that a large public program, operated along the lines of Medicare, could cover as much as one-half of the non-elderly population by shifting all or most of the uninsured, as well as all Medicaid and SCHIP enrollees, into the plan from the start.  Because of its size and efficiency, such a large plan would be able to keep its premiums much lower than private plans, thereby increasing its attractiveness to enrollees. In addition, all non-elderly Americans, whether privately insured or not, would be eligible to participate. Government subsidies would be extended to those unable to afford the plan. Private insurers would be required to offer the same minimum benefits as the public plan.

So the initial idea was premised on the idea that a public plan could bring needed competition into the financing of health care. Forget that dream.  Although the current House and Senate bills both include a “public option”, it is in name only. What might have roared like a lion is becoming, at most, a mouse that barely squeaks. The details change every day, but already these kinds of changes from Hacker’s original concept make it a policy non-starter:

•  Many people with private insurance who want to change will not be able to select the public option
•  The public plan may not kick in until 2013 or until such time as private plans have been demonstrated not to save money (a so-called “trigger”)
•  Whatever new regulations that are imposed by the reform bill will only apply to new private plans; existing plans will be grandfathered in as is
•  Private insurers worry that a public plan would crowd them out by undercutting their premium levels, so they lobby to keep the public program small
•  The current proposals in Congress do not impose caps on private insurance premiums; nor do they allow the public option to significantly lower its premium rates below private plans
•  The public plan will not be “pre-populated” with all Medicaid and SCHIP enrollees from the start, thereby keeping the plan small
•  Instead of initial coverage estimates in the range of 120 million enrollees by public plan advocates, the Congressional Budget Office (CBO) estimates that only 10 million would be enrolled because of the fine-print restrictions now being placed on the plan within Congressional committees. These restrictions are being heavily lobbied by the private insurance industry to ensure that they won’t have any real competition.

The transformation of the public option from a potentially useful policy to its present irrelevance is well described in the recent brilliant analysis by Kip Sullivan, attorney and member of the Minnesota chapter of Physicians for a National Health Program. (PNHP web site at www.pnhp.org)  This transformation is no accident.  Opponent of a public plan have so far successfully and deceptively argued that it would be a “government takeover”. The Lewin Group, a supposedly non-partisan health services consulting group now owned by UnitedHealth, the second largest private insurer in the country, serves its new masters in two ways — by making projections for a public plan in the range of 120 million (a scare tactic), and keeping its silence during Congressional testimony on the cost-saving advantages of single-payer financing (as it has demonstrated in many state studies in recent years).

The fight against real competition is a do-or-die battle for the private insurance industry. Over many years, it has demonstrated its inability to control health care costs, is in business to make money for its shareholders by covering healthier people and avoiding sick people, and has already failed to compete against Medicare in efficiency, reliability or value. The currency of the realm in this industry is the medical-loss ratio (MLR), or how much is paid out for actual medical care, its “losses”. Between 1993 and 2008, industry-average MLR’s dropped from about 95 percent to 80 percent, diverting more money away medical care to administration, profits and shareholder returns.

We are now being told by the Obama administration and many legislators that the public plan will bring competition into the system and will help to cut costs and make insurance more affordable. At the same time, they are trying to reassure the insurance industry that the public plan will not put them out of business. This is double-talk and snake oil of the worst kind.

As just another plan available to a small segment of the population, the public plan if ever enacted will further fragment the system, increase bureaucracy, and still not result in either cost containment or open choice of coverage. The playing field would remain tilted in favor of private insurers, and the public plan would likely become a dumping ground for poorer and sicker patients through adverse selection.

Though many may not yet realize that the public option is dead on arrival if it ever gets to a floor vote in Congress, it is high time to move the debate on to consider real policy alternatives in our quest for cost containment, universal access, and improved quality of care. Let’s check the closet. Where is that H. R. 676 when we need it?

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press

Buy John Geyman’s Books at: http://www.commoncouragepress.com

Research Firm Cited by GOP Is Owned by Health Insurer

By David S. Hilzenrath
The Washington Post
July 22, 2009

The political battle over health-care reform is waged largely with numbers, and few number-crunchers have shaped the debate as much as the Lewin Group, a consulting firm whose research has been widely cited by opponents of a public insurance option.

****

Lewin’s clients include the government and private groups with a variety of perspectives, including the Commonwealth Fund and the Heritage Foundation. A February report contained information that could be used to argue for a single-payer system, the approach most threatening to private insurers, Sheils noted.

But not all of the firm’s reports see the light of day. For example, a study for the Blue Cross Blue Shield Association was never released, Sheils said.

“Let’s just say, sometimes studies come out that don’t show exactly what the client wants to see. And in those instances, they have [the] option to bury the study — to not release it, rather,” Sheils said.

Asked to comment, Blue Cross Blue Shield Association spokesman Brett Lieberman said, “We’re still working with Lewin on a study, and, you know, we don’t talk about our studies until they’re done.”

In testimony last month to a House committee, Lewin disclosed its affiliation with UnitedHealth and Ingenix in its written submission, but in his oral testimony he did not bring it up until asked, according to a transcript.

****

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/22/AR2009072202216.html

And…

Insurer-Owned Consulting Firm Often Cited in Health Debate

By David S. Hilzenrath
The Washington Post
July 23, 2009

In a revised version of the same article published the next day, the section appearing between the rows of asterisks was rewritten as follows:

****

Lewin’s clients include the government and groups with a variety of perspectives, including the Commonwealth Fund and the Heritage Foundation. A February report by the firm contained information that could be used to argue for a national system known as single-payer, the approach most threatening to insurers, Sheils noted.

But not all of Lewin’s reports see the light of day. “Let’s just say, sometimes studies come out that don’t show exactly what the client wants to see. And in those instances, they have [the] option to bury the study,” Sheils said.

****

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/22/AR2009072203696.html

And…

A Sponsorship Scandal at The Post

By Andrew Alexander, Ombudsman
The Washington Post
July 12, 2009

The Washington Post’s ill-fated plan to sell sponsorships of off-the-record “salons” was an ethical lapse of monumental proportions.

Publisher Katharine Weymouth and Executive Editor Marcus Brauchli have now taken full responsibility for what was envisioned as a series of 11 intimate dinners to discuss public policy issues. For a fee of up to $25,000, underwriters were guaranteed a seat at the table with lawmakers, administration officials, think tank experts, business leaders and the heads of associations.

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/11/AR2009071100290.html

Just as the Blue Cross Blue Shield Association killed a study by The Lewin Group that had findings that they didn’t want people to see, The Washington Post killed the reporting of the decision of Blue Cross Blue Shield to bury that study.

The Washington Post is attempting to recover from one of the most serious ethical lapses in the history of mainstream journalism – the selling of access to the publisher, reporters, and others so participants could “build crucial relationships with Washington Post news executives in a neutral and informal setting.”

What has The Washington Post learned? In their decision to manipulate the news on behalf of the private insurance industry during the intensive effort in Washington to reform health care, it’s clear that The Washington Post didn’t learn squat about journalism ethics.

They would have been more honest if they simply sold The Washington Post Company to Fox News. At least we would know with no uncertainty where they stood. Maybe we already do.

Bait and switch: How the “public option” was sold

By Kip Sullivan
Physicians for a National Health Program
July 20, 2009

When the “public option” campaign began, its leaders promoted a huge “Medicare-like” program that would enroll about 130 million people. Such a program would dwarf even Medicare, which, with its 45 million enrollees, is the nation’s largest health insurer, public or private. But today “public option” advocates sing the praises of tiny “public options” contained in congressional legislation sponsored by leading Democrats that bear no resemblance to the original model.

According to the Congressional Budget Office, the “public options” described in the Democrats’ legislation might enroll 10 million people and will have virtually no effect on health care costs, which means the “public options” cannot, by themselves, have any effect on the number of uninsured. But the leaders of the “public option” movement haven’t told the public they have abandoned their original vision. It’s high time they did.

For reform advocates, the full article is a “must read”:
http://www.pnhp.org/blog/2009/07/20/bait-and-switch-how-the-“public-option”-was-sold/

What a mess.

The progressive community has really blown it. The decision was to make “choice” the rallying cry for comprehensive reform – choosing to keep the insurance you have if that’s what you want, or to choose a program like the members of Congress have. It seemed not to matter that the public didn’t understand that FEHBP was basically an exchange of private plans offered to government employees, much less how a Medicare-like program might play a role.

That decision secured a solid role for the private insurance industry in any comprehensive reform proposal. All the industry had to do was to be certain that any government option could not be an effective competitor to the private industry, and they have done just that. AHIP has already destroyed the original concept of the public option, although they continue to chisel away at what vestiges remain.

Although an effective public option is a dead issue, the opponents of social insurance are not finished. They have successfully blocked action before the August recess which will allow time to build opposition to some of the remaining elements of the reform proposals.

Perhaps the most important policy in the legislation is the provision of subsidies for the purchase of private plans. If health care is to be affordable, these must be very large subsidies for a very large number of people. But Congress is at an impasse on how to pay for them.

The principles of social insurance require a transfer from the wealthy since low- and moderate-income individuals can no longer pay their full actuarial share. Yet Republicans and conservative Democrats have blocked the tax surcharge on high-income individuals, pulling out one more plank from the platform of social insurance.

Another source would be to tax employer-sponsored plans, but that would threaten losing this important source of health care financing and coverage. Many in Congress recognize that this is a risk that cannot be taken under the current model proposed by the legislation. Unions are particularly concerned that employees would face unacceptably higher costs, so this tax source has been rejected.

Since the private insurers would gain the most by this legislation, some are suggesting that we should tax them. But those taxes would be passed back to us in the form of higher premiums, which would then require still higher subsidies.

Congress has selected the most expensive model of health care reform. When they go home on their break the anti-tax forces will be out in full strength to communicate loudly that we can’t pay for it.

In September, they will face the reality that the subsidies will have to be smaller and the eligibility thresholds lower than currently proposed, simply because they can’t find the revenues to pay for them. There is an easy fix for that, as President Obama stated. We’ll have to issue hardship waivers which will exempt us from the fines that would be assessed for not having the insurance that we can’t afford.

Even there, the number of hardship waivers that would have to be issued has been grossly underestimated. With a typical family income of $60,000 and average family health care costs of almost $17,000, the majority of Americans should qualify for a waiver.

You really should read Kip Sullivan’s article. He shows us that there still is hope. As he states in his article, “at this late date in the 2009 session, it is unlikely that a single-payer bill could be passed even if unity within the universal coverage movement could be achieved. But if the ‘public option’ wing and the single-payer wing join together to demand that Congress enact a single-payer system, December 2009 need not constitute a deadline.”

Submitted by Margaret Flowers, MD (Maryland PNHP)

On Saturday morning, July 11, 2009, advocates for a Single Payer Healthcare system hit the streets of northeast Baltimore looking to pick up support, via signed Petitions, for their cause. The canvassing area covered “Rodgers Forge,” which is an historic community located just north of the city line, and south of Towson.

Together with an individual mandate described in the last post, an employer mandate is an essential part of all legislative health care reform proposals now being considered in Congress. The House bill requires employers with payrolls larger than $250,000 to contribute 72.5 percent of health insurance premium costs for full-time employees and 65 percent for families. The current Senate proposal calls for employers to pay at least 60 percent of premium costs for their full-time employees. Employers with annual payrolls of more than $400,000 would be penalized for non-compliance by paying a payroll tax up to 8 percent of wages (House bill) or $750 for each full-time worker and $375 for each part-time worker (Senate bill).

Employer-sponsored health insurance (ESI) dates back to World War II when the nation rapidly mobilized to a wartime economy. Facing a severe labor shortage and needing a healthy work force, employers had to compete for workers by offering higher pay and health benefits. IRS rulings freed employers from taxes on the costs of health insurance, and these benefits were not taxable for their employees.

We now have an almost 70 year experience with ESI, and that method of financing U.S health care has been steadily unraveling. Employers today are spending an average of about $10,000 a year for health coverage for each employee with a family of four.  Premiums have gone up by 120 percent for ESI since 1999, nearly triple the rate of inflation and six times cumulative wage growth. Only three in five large employers now offer any kind of health care coverage, and many are cutting back or eliminating retiree health benefits.  Smaller employers are abandoning ESI at a rapid clip.  National surveys have found that the proportion of small businesses offering coverage dropped from 61 percent in 1993 to just 38 percent today.

So are employer mandates good health policy?  If we base that answer on history and their track record, instead of ideology and wishful thinking, we have to say no. Employer mandates will not give us an effective way to control health care costs, which will only become a bigger burden on employers and make them even less able to compete in a global economy. Taking General Motors as an example, it has had to spend about $1,500 per car for health care, hardly competitive with manufacturers across the border in Toronto that spend one-fifth of that amount on health care within the Canadian single-payer system.

Employer mandates have been tried for many years in a number of states, and have never resulted in universal coverage or cost containment. The longest experience has been in Hawaii – 30 years – where initial gains in coverage later reverted to growing numbers of uninsured and higher health care costs. Later experiments with employer mandates, often combined with individual mandates, have been carried out in California, Connecticut, Massachusetts, Maine, Minnesota, New Mexico, Oregon, Vermont, and Wisconsin.

Over the years, employer mandates have usually been opposed by the business community, including conservative market advocates and the Chamber of Commerce.  In the current debate over reform proposals, the business community is increasingly vocal in its opposition to the cost and burdens of an employer mandate.  Flash points in the debate now focus on whether ESI health benefits should be taxed and what exemptions ought to be extended to small business.

Forty percent of the private U.S. labor force works for employers with fewer than 100 employees, who are represented by the National Federation of Independent Business (NFIB). The small employer market is one of the most profitable markets for private insurers, but small employers find insurance premiums increasingly beyond their reach.  According to the Kaiser Family Foundation, premiums for single workers in small businesses climbed by 74 percent between 2001 and 2008. Not surprisingly, the NFIB is very concerned about the impacts of reform proposals in Congress. There is a basic economic truism that will come into play — make the purchase of something mandatory and its cost will rise, if only because the seller knows the buyer must but it.

What American business desperately needs is containment of its health care costs and a healthy work force in order to compete in the 21st Century.  It will not get that from “reforms” now being debated in Congress. If enacted after political compromises with the major corporate stakeholders, a bill will likely make the plight of American business, as well as the broader public, even worse.

Ironically, the goals of health care reform — cost containment, universal access, and improved quality of care — can be met by a paygo option, single-payer national health insurance, which would provide universal coverage and cost less than what employers and the public are paying now.  But since that option would reduce corporate profits in a runaway market system, it is still not being considered by most politicians, beholden as they are to corporate money.

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press

Buy John Geyman’s Books at: http://www.commoncouragepress.com

We’ve been here before. With much fanfare, health insurance mandates were enacted by Massachusetts in 2006 and touted by many as an effective model to reform health care. After three years’ experience, here is what the “Massachusetts Miracle” tells us about mandates and their costs.

• only about one-half of the previously uninsured now have some coverage.
• The public “Connector” established to implement the program has added another layer of 4 to 5 percent overhead without enough leverage to rein in costs of private insurers.
• As health insurance and out-of-pocket health care costs take up 15 percent or more of their family income, many people still forego needed care because of  costs.
• the State has had to exclude many people from the program, the cost of  subsidies (for those earning up to three times the federal poverty level) are much  higher than anticipated, and the costs of health care continue to soar out of control (Massachusetts pays one-third more per person than the national average).
• In its budget crisis since the Fall of 2008, in order to keep the program going, the State has had to cut safety net programs, including providers, emergency rooms, primary care, and chronic mental health services; and coverage of legal immigrants will soon be eliminated.
• In order to try to get a handle on soaring costs and overutilization of health care, the State is now considering a plan to radically change how providers and hospitals are paid, eliminating the customary fee-for-service system and replacing it with some kind of risk-adjusted global payments.

Mandates are not a new idea.  They have been tried in a number of other states, including California, Oregon, Pennsylvania and Maine. The results in Maine are no better than they are in Massachusetts.  As a state with a large rural, poor and elderly population and an economy based on small business, employer-based insurance coverage is limited.  The State enacted a law in 2003 with the goal of covering all 130,000 uninsured residents by this year.  It has also failed:
• the plan now covers only a small fraction of the target population.
• the State had to cap enrollment due to financing problems.
• Most private insurers have left the state, and the dominant insurer has priced coverage in the individual market beyond the reach of most uninsured.

So we already know that mandates don’t work as well as their supporters claim.  They have not resulted in universal coverage in any state.  They are complex, very expensive, not sustainable, and have unforeseen unintended consequences.

Yet an individual mandate that requires all, or nearly all, uninsured Americans to purchase health insurance is a basic part of all the proposals now being developed in Congress. Government subsidies will be provided for people below specified federal poverty levels, and those who still cannot afford insurance will be exempted. Under the House bill, a family of four earning less than about $88,000 a year won’t have to pay insurance premiums that take up more than 11 percent of their income.  Individuals will be penalized by fines if they do not have at least a minimal level of coverage. The current House and Senate bills vary a bit on the penalties (eg. 2.5 percent of adjusted gross income over $18,700 for a couple in the House version and up to $750 a year a person a year in the Senate version).  Many other details lurk in the fine print.

The basic goal of a 2009 health care reform package is to address the problem of 46 million Americans without health insurance through a combined mandate on individuals and employers. The current House bill will cost $1 trillion over 10 years, but will still leave 36 million Americans uninsured, according to the CBO.

Based upon the poor performance of mandates in all states in which they have been tried, why is it that policy makers, politicians, and most stakeholders still support the concept of mandates? The basic answer, of course, is money.  Insurers see nearly 50 million new enrollees, many subsidized by the government. The drug industry sees new profits for its products.  Hospitals and physicians foresee many previously uninsured patients becoming insured. And many legislators benefit from corporate money flowing into their future campaign war chests.

Based on substantial experience at the state level, we can anticipate that “reforms” based on mandates will be very expensive (for both patients and taxpayers), add even more bureaucracy and complexity than we now have, fail to control costs and still not provide much additional access to care. In sum, if enacted as these bills are shaping up, these “reforms” will be policy failures but another bonanza for the medical-industrial complex.  In the next post, we will look at the other mandate — the employer-based mandate — to ask whether that makes any sense.

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press

Buy John Geyman’s Books at: http://www.commoncouragepress.com

News Conference

President Barack Obama
The White House
July 22, 2009

Question: …is this bill going to cover all 47 million Americans that are uninsured…?

President Obama: I want to cover everybody. Now, the truth is that unless you have a what’s called a single-payer system in which everybody is automatically covered, then you’re probably not going to reach every single individual…

There might still be people left out there who, even though there’s an individual mandate, even though they are required to purchase health insurance, might still not get it, or despite a lot of subsidies are still in such dire straits that it’s still hard for them to afford it, and we may end up giving them some sort of hardship exemption.

http://www.whitehouse.gov/the_press_office/News-Conference-by-the-President-July-22-2009/

Yes, but… why would hardship exemptions ever be preferred to automatic coverage of everyone under single payer?

Centrists Win Backing on Medicare Cost Cuts

By Greg Hitt and Naftali Bendavid
The Wall Street Journal
July 22, 2009

Democratic centrists said they won a tentative commitment from the White House to back a proposal to curb the growth of Medicare costs, as party leaders braced for a vote next week on health-care legislation.

One proposal pushed both by President Barack Obama and some centrists is to give the executive branch the authority to implement cuts to Medicare spending that would be recommended by independent experts. Congress could stop the cuts, but only if it acted swiftly. Fiscal conservatives say that under the current system, which gives Congress more power, lawmakers shy away from politically tough votes to restrain Medicare costs.

After a more-than-two-hour meeting at the White House Tuesday, centrists said they secured a verbal commitment to add such a mechanism on Medicare cost-cutting to the House bill.

White House budget chief Peter Orszag was among those at the meeting, and said the mechanism was a big focus of discussion. He said adding it would alleviate the concerns of fiscally conservative “Blue Dog” Democrats. “I think it’s probably the most important piece that could be added to the House legislation,” he said.

http://online.wsj.com/article/SB124822098850870337.html?mod=googlenews_wsj

And…

IMAC, UBend

By Peter Orszag, Director
Office of Management and Budget (OMB)
July 17, 2009

… one of the most potent reforms is a change in the process of health care policymaking: empowering an independent, non-partisan body of doctors and other health experts to make recommendation about Medicare payment rates and other reforms.

Today, the Administration sent a letter to congressional leaders outlining our support for this approach, with a proposal for an Independent Medicare Advisory Commission (as well as Senator Rockefeller’s similar proposal to accomplish this through the existing MedPAC) to detail how one might accomplish this goal.

The Independent Medicare Advisory Council (IMAC) would be an independent, non-partisan body of doctors and other health experts, appointed by the President, confirmed by the Senate, and serving for five-year terms. The IMAC would issue recommendations as long as their implementation would not result in any increase in the aggregate level of net expenditures under the Medicare program; and either would improve the quality of medical care received by the program’s beneficiaries or improve Medicare’s efficiency.

http://www.whitehouse.gov/omb/blog/09/07/17/IMACUBend/

And…

OMB proposed legislation to create IMAC

Short Title
This Act may be cited as the “Independent Medicare Advisory Council Act of 2009.”

(The four pages of the proposed act describe the establishment of the Council, its authority to make annual Medicare payment updates, and its authority to recommend Medicare reforms.)

http://issuu.com/thenewrepublic/docs/section-by-section_analysis?mode=embed&viewMode=presentation&layout=http%3A%2F%2Fskin.issuu.com%2Fv%2Flight%2Flayout.xml&showFlipBtn=true

And…

Report to the Congress: Improving Incentives in the Medicare Program

Medicare Payment Advisory Commission (MedPAC)
June 2009

In this report, the Commission:

* describes Medicare’s role in graduate medical education and offers future directions;
* examines ways accountable care organizations could affect the growth in service volume;
* lays out principles for reporting resource use to physicians so they can actively and collaboratively participate in appropriately constraining service volume;
* provides new information on the role of self-referral in imaging use and the effect of imaging use on Medicare cost growth;
* explores ideas to ensure that pricing for follow-on biologics produces value for Medicare;
* examines restructuring Medicare’s benefit design to provide beneficiaries with better incentives and protections;
* analyzes various aspects of Medicare Advantage payment, fulfilling a requirement mandated by Section 169 of the Medicare Improvements for Patients and Providers Act of 2008; and
* discusses care management for beneficiaries with chronic conditions, as required by Section 150 of the Medicare Improvements for Patients and Providers Act of 2008.

Entire “Report to the Congress” (299 pages):
http://www.medpac.gov/documents/Jun09_EntireReport.pdf

And…

Providing Better Health Care For Less Money

By Julie Rovner
NPR
July 22, 2009

An even larger problem is that while there is relative consensus that Medicare’s current payment system encourages doctors and hospitals to provide too much of the wrong care, no one is quite sure how to revise it to encourage just the right amount of care.

“I guess the way I would put it is even if I was a benevolent dictator for a day, I wouldn’t feel comfortable at this point, given the state of knowledge, completely overhauling the Medicare payment system,” said White House Budget Director Peter Orszag, who has been studying the issue for several years.

That has led to a conundrum in lawmakers’ efforts to try to achieve long-term savings in the health care system. They know that overhauling Medicare payments is a key means to achieving that goal. They also know that if they do it wrong, they could leave the health care system — and the patients it serves — worse off than it is now.

http://www.npr.org/templates/story/story.php?storyId=106875583

There has been intense interest in providing the administration with greater control over Medicare spending in order to bend down the trajectory of projected increases in spending. Members of Congress and the administration have been considering an Independent Medical Advisory Council (IMAC) much like the Medicare Payment Advisory Commission (MedPAC), but with one very important difference.

Currently MedPAC serves only in an advisory capacity to Congress, and any recommendations must be specifically enacted by Congress. Under this proposal, IMAC would have the power to put into force these recommendations, with the approval of the President. Congress’s power would be limited to the ability to reject, by a joint resolution of Congress, the intact, full package of IMAC reforms and updates.

To get an idea of what IMAC might be able to accomplish in controlling spending through independent decisions, we might look at an example of a MedPAC function that was enacted by Congress. The Sustainable Growth Rate (SGR) was a sincere effort to slow the increases in aggregate physician payments by making adjustments based on 1) changes in physician fees, 2) changes in the number of Medicare beneficiaries, 3) change in GDP per capita, and 4) changes due to new laws or regulations. This seemed to be a very reasonable approach that was fair for physicians and fair for taxpayers.

What was not anticipated was the degree to which physicians would increase the frequency and intensity of services. Growth in imaging services was especially problematic. This resulted in a measured excess growth in aggregate physician payments, with calculations requiring a reduction in physician payments, now for several consecutive years. Each year, Congress has overridden the scheduled reductions, but the deficits have been carried forward. This is the source of the $245 billion excess deficit scored by the CBO but that the administration and Congress don’t count because they were going to give it back anyway.

This is not a criticism of the intent of the SGR adjustments. It merely demonstrates an example of how the MedPAC/Congress interaction has not been nearly as effective in slowing Medicare cost increases as had been hoped.

Imagine if MedPAC had already been converted to IMAC. Look at the report MedPAC released last month on the recommendations to improve incentives in the Medicare program. Now imagine that these recommendations were accepted by the President and placed into effect.

As only one example in this 299 page report, value-based insurance design is discussed as a method of motivating patients to consider value by varying the amount of patient cost-sharing based on the value of the service or product. Think about the difficulties they would have in attempting to accomplish that. Then imagine such a policy becoming the national standard merely on the action of one committee and the stamp of approval of the President. Scary.

An Independent Medical Advisory Council might have some legitimate role in our dysfunctional multi-payer system, but no matter how noble the recommendations, it cannot begin to correct the severe deficiencies in both our health care financing and our health care delivery system. To do that it would take the fundamental structural reform of a single payer national health program.

The Blue Dogs have demanded an IMAC or independent MedPAC, and the amendments are being prepared to include the concept in the tri-committee legislation. It will be yet another patch on a financing framework that is structurally unsound. Those still wanting to move the proverbial deck chairs around need to be reminded of the condition of the framework of the Titanic.