President Barack Obama is stepping forward to take ownership of healthcare reform. Today, in a speech to the American Medical Association, he pulled no punches, emphasizing that while we spend far more than other developed countries, the “quality of our care is often lower.”
In effect the president was telling the AMA: “The U.S. does not have the best healthcare in the world.”
But we do have the most expensive care. Spiraling healthcare bills are “a threat to our economy,” the president declared. “To say it as plainly as I can, health care reform is the single most important thing we can do for America’s long-term fiscal health. That is a fact.” If we don’t rein in runaway health care inflation, he warned, we will be looking at “lower take-home pay, shuttered businesses, and a lower standard of living for all Americans.”
Cutting to the heart of the matter, President Obama explained the problem: “what accounts for the bulk of our costs is the nature of our health care system itself – a system where we spend vast amounts of money on things that aren’t making our people any healthier; a system that automatically equates more expensive care with better care. There are two main reasons for this. The first is a system of incentives where the more tests and services are provided, the more money we pay. And a lot of people in this room know what I’m talking about. It is a model that rewards the quantity of care rather than the quality of care; that pushes you, the doctor, to see more and more patients even if you can’t spend much time with each; and gives you every incentive to order that extra MRI or EKG, even if it’s not truly necessary. It is a model that has taken the pursuit of medicine from a profession – a calling – to a business.
“That is not why you became doctors.”
When it comes to practicing evidence-based medicine, the president was blunt “We have the best medical schools . . . . Yet we are not doing a very good job harnessing our collective knowledge and experience on behalf of better medicine. Less than one percent of our health care spending goes to examining what treatments are most effective. And even when that information finds its way into journals, it can take up to 17 years to find its way to an exam room or operating table.”
Here he emphasized the need for comparative effectiveness research: “too many doctors and patients are making decisions without the benefit of the latest research. A recent study, for example, found that only half of all cardiac guidelines are based on scientific evidence. Half. That means doctors may be doing a bypass operation when placing a stent is equally effective, or placing a stent when adjusting a patient’s drugs and medical management is equally effective – driving up costs without improving a patient’s health.
“So, one thing we need to do is figure out what works, and encourage rapid implementation of what works into your practices. . . .Let me be clear: identifying what works is not about dictating what kind of care should be provided. It’s about providing patients and doctors with the information they need to make the best medical decisions.”
He acknowledged the argument that so many physicians use to justify over-treatment: “The lawyers made me do it.”
“Now, I recognize that it will be hard to make some of these changes,” Obama acknowledged, “if doctors feel like they are constantly looking over their shoulder for fear of lawsuits. Some doctors may feel the need to order more tests and treatments to avoid being legally vulnerable. That’s a real issue.”
The applause was loud —so loud that Obama felt obliged to caution the doctors: “Now don’t get too excited . . . I’m not advocating caps on malpractice awards which I believe can be unfair to people who’ve been wrongfully harmed.”
But, he added, “I do think we need to explore a range of ideas about how to put patient safety first, let doctors focus on practicing medicine, and encourage broader use of evidence-based guidelines. That’s how we can scale back the excessive defensive medicine reinforcing our current system of more treatment rather than better care.”
Just as he didn’t give ground on caps on malpractice reform, the president stuck to his guns about “fast-tracking” the Medicare Payment Advisory Commission’s recommendations for removing waste from the health care system. He reiterated his proposal that, in order to raise money for health care reform, tax deductions be limited on those earning over $250,000, insisting that this would not hurt charitable deductions.
The President Takes Charge of Health Care Reform
Less than two weeks ago, White House Budget Director Peter Orszag gave the New York Times a head’s up: “Ultimately, as happened with the recovery act, it will become President Obama’s plan,” Orszag explained. “I think you will see that evolution occurring over the next few weeks. We will be weighing in more definitively, and you will see him out there. …”
Rahm Emanuel, the president’s chief of staff weighed in, saying that the president’s hope is to provide “air cover” for lawmakers to adopt his priorities. “Obviously,” Mr. Emanuel added, “the president’s adoption of something makes it easier to vote for, because he’s — let’s be honest — popular, and the public trusts him.”
But today’s speech signals that the President is doing more than providing “cover” for Congress. He did not budge on a single issue. He did not use the word “bi-partisan”—not even once.
As Robert Reich recently pointed out on TrouthOut.org, the battle is now joined: “The next weeks will show what Obama is made of – whether he's willing and able to take on the most formidable lobbying coalition he has faced so far on an issue that will define his presidency.
“And make no mistake: A public option large enough to have bargaining leverage to drive down drug prices and private-insurance premiums is the defining issue of universal health care. It's the only way to make health care affordable. It's the only way to prevent Medicare and Medicaid from eating up future federal budgets. An ersatz public option – whether Kent Conrad's non-profit cooperatives, Olympia Snowe's "trigger," or regulated state-run plans – won't do squat.
“The last president to successfully take on the giant health care lobbies was LBJ.” Reich pointed out. “He got Medicare and Medicaid enacted because he weighed into the details, twisted congressional arms, threatened and cajoled, drew lines in the sand, and went to war against the AMA and the other giant lobbyists standing in the way. The question now is how much LBJ is in Barack Obama.”
I’m optimistic. Keep in mind: Obama has Rahm Emmanuel covering his back. If someone is needed to scream, threaten, bully and draw lines in the sand, Rahm is your man. No doubt LBJ knew more about where all of the bodies were buried in Congress, but Rahm Emanuel is, without question, a shrewd strategist, able and willing to play hardball with Congress.
And many Democrats, including Max Baucus, will need White House support the next time they come up for election. As Watching the Watchers points out in a post titled “How We’ll Get the Public Option”:
“Obama lost Montana by only 2% or a mere 12,000 votes. He didn't win the state but he had a tremendous base of support in every county statewide; support Senator Baucus cannot spit on if he hopes to get re-elected. He will need every one of those votes to keep his job . . . the situation is not all that different for many of the other key fence-sitters. Obama has strong grassroots support in literally every county of every state in this nation.”
The AMA and the Public Option
Last Thursday,the New York Times reported that the American Medical Association had issued a “general statement of principles” saying that “health services should be provided through private markets, as they are currently.” In comments submitted to the Senate Finance Committee, the organization wrote: “The A.M.A. does not believe that creating a public health insurance option for . . . individuals under age 65 is the best way to expand health insurance coverage and lower costs.
The AMA knows that both the Obama administration and MedPac favor raising fees for primary care physicians, but it frets that reimbursements to specialists for some very lucrative services will be trimmed.
The Times speculated that the AMA’s opposition could be “a major hurdle for advocates of a public insurance plan. The AMA with about 250,000 members, is America’s largest, physician organization . . . While [the AMA is ] not the political behemoth it once was,” the Times acknowledged, “the association probably has more influence than any other group in the health care industry. . . Lawmakers seek its opinion and support whenever possible. ”
But in fact, the AMA now represents only about 25% of U.S. doctors. The same day that the AMA issued its statement, Obama reaffirmed his suppor
t for a public plan.
And then something strange happened. The AMA backed down. Thursday afternoon –just hours after the Times published its story–the AMA issued another statement, essentially retracting what it had said earlier: “The New York Times story creates a false impression about the AMA's position on a public plan option in health care reform legislation. The AMA opposes any public plan that forces physicians to participate, expands the fiscally-challenged Medicare program or pays Medicare rates, but the AMA is willing to consider other variations of the public plan that are currently under discussion in Congress.”
“Why the quick turnaround?” Ezra Klein asked on his Washington Post blog. “Hard to say. But that's not a clarification. It's a backtrack. The original statement was not unclear.”
Klein went on to suggest that the administration and its supporters are beginning to take a hard line on reform: “They’re saying that you’re either with health reform, or you’re against it. And if you’re against it you can’t expect to be taken care of in the final legislation. They’re not going to save your seat at the table while you’re trying to burn down the room. And the AMA, it seems, got the message.”
I think Klein nailed it. I just wish I had been in the room when someone in the White House made the call.
Finding the Money
How will we fund healthcare reform? As part of the budget that was passed a few months ago, the White House put aside $635 billion over ten years in what it called a Health Reserve Fund. Then the President threw the ball to Congress, saying in effect, now it’s your turn to make some of the hard decisions—and find the rest of the money.
For months, legislators have flailed about. They have suggested taxing everything from junk food to employer-based insurance. Some legislators argue that we just can’t afford health care reform—at least not this year.
Now, the president has stepped forward. When he endorsed the idea of putting MedPac in charge of Medicare, he pointed out that MedPac knows where money is, because MedPac has been studying the waste in our health care system for years.
In his very reasonable voice, President Obama turned to Congress and said in effect “Hey fellows, I know you’re having a hard time making these decisions. But MedPac knows that there is $200 to $300 billion to be saved . They’ll make the choices for you.
Then, Saturday, in his regular radio broadcast to the nation , the president spelled out, in detail, where $313 could be trimmed from Medicare and Medicaid spending in ways that would encourage both doctors and hospitals to provide better care at a lower cost.
Of course, Congress doesn’t have to go along with the president’s suggestions. But the nation does want universal coverage. Someone has to find the money. Sunday, speaking on NBC’s “Meet the Press,” Vice-president Joe Biden signaled a new attitude in the White House: “They're either going to have to agree with us, come up with an alternative or we're not going to have health care.”
"And we're going to get health care.”
Transferable health care would go much farther than public health care. It is basic economics that competition always drives down costs more effectively than government. Transferable health care would give insurance companies incentive to invest in the long term health of their customer and to provide competitive value and prices. Insurance companies would earn more money if less of their customers become seriously ill, and we would have true “health care”, rather than “disease insurance.” For example, insurance companies could create groups of people at varying fitness levels: the more fit someone is, the less insurance would cost, because the risk of heart disease and diabetes would be less, statistically. The fitness levels could be tested by doctors. This would give customers added incentive to become more fit to save money on insurance. Another health factor that insurance companies could become involved in is nutrition.
Markets are said to optimize efficiencies. But despite widespread belief that competition is the key to cost containment, healthcare does not lend itself to market discipline. Private insurers compete on price, they do not compete on quality. Commercial incentives are not fixing what’s broken.
whilst its fun to beat up insurers, the fact is that less than a decade ago there was price competition fueled by a strategy known as managed care. providers and patients rejected it, saying they didn’t want an efficient system that set parameters. insurers responded to the market, jettisoned managed care and raised rates.
Canberra:
Can you provide a few more details on transferable health care?
Are you referring to those who switch insurers?
What incentives would the higher claimants have to switch?
Don Levit
Canberra–
Charging “fit” people less penalizes the poor. The poor are, far and away, the sickest people in our society, because of the environment they live in.
We need healthy, affluent people to pay their full share of healthcare premiums in order to cover the poor.
We have a great deal of medical evidence showing that environment–rather than lack of will-power–causes the poor to be much sicker than the wealthy.
See the posts I have written about the Robert Wood Johnson Foundation’s excellent research. (Google my name and Robert Wood Johnson.)
Your solution carries just a whiff of Nazi Germany– let’s celebrate the Uber-Class (“fit” Aryans) while getting rid of the “unfit”
Gregoroy– yes, healthcare does not lend itself to market discipline.
Jim– As Gregory points out, when trying to “manage care” the vast majority of for-profit insurers mrely tried to manage costs, not quality of care.
So they were just as likely to say “no” to effective care as they were to say “no” to ineffective care.
They didn’t spend the money to do the reserach to figure out what works and what doesn’t.
And they didn’t even read the reserch that was readily available.
So they continued to cover Vioxx until it was pulled from the market.
Meanwhile, Kaiser, Mayo and the VA had stopped using Vioxx for most patients because they paid attention to he reserach published in medical journals that showed it might be very dangerous, and they observed that it was no more effective than cheap-painkillers for most patients.
That’s “managing care” based on medical evidence–which is what MedPac would do.
“lower take-home pay…lower standard of living for all Americans.”
We’re already looking at that.
AMA represents the dinosaurs.
GO OBAMA!
Comparative effectiveness research is essential. We waste billions of dollars on unneccessary care. We spend more of our GDP on health care than other nations who score higher on important medical quality benchmarks. Our administrative health care costs are excessive. We have tens of millions of uninsured Americans. All of this is inarguable. The more difficult question is if the Obama plan is the cure we seek. I am wary of his ‘public option’, which I fear will become the only option. In addition, non-partisan economists have concluded that Obama’s own plan is unaffordable and won’t cover the uninsured. Let’s not be seduced by slogans. Perhaps, we need some comparative effectiveness research on health reform plans before we pull the triggers. http://www.MDWhistleblower.blogspot.com
“non-partisan economists have concluded that Obama’s own plan is unaffordable and won’t cover the uninsured”
Since Obama has not released a specific health care plan, I assume this comment refers to the OMB analysis of Kennedy’s plan.
Over at the New Republic health blog “The Treatment,” Jonathon Cohn points out that this analysis is based on a preliminary version of the plan not including the full mandate provisions and not including the public option. Ezra Klein also has several different entries pointing out the same thing. This analysis of the preliminary plan has very little to say about the final bill.
As long as I am directing people to information about what is actually going on — as opposed to spin — everyone should take a look at David Leonardt’s discussion of the issue of health care rationing in the NYT. This one is good enough to deserve a link:
http://www.nytimes.com/2009/06/17/business/economy/17leonhardt.html?hp
Michael–
You are right– comparative effectiveness reserach can lift quality and save money.
On what Obama’s plan would cost and who would be covered: It is impossible for any economist to figure out what the plan would cost at this point–or how many people would be covered because there are so many UNKNOWNS:
— We don’t know who would be covered by subsidies. Democrats in the House are saying everyone earning up to FOUR Times the Federal Poverty Level; the Senate Democrats are saying everyone up to FIVE times the Federal Poverty Level.
That is a huge difference in what it will cost taxpayers.
The Obama administration has not weighed in on either side.
(I susepct it will be Four Times. Massachusetts provides subsidies up to only Three Times the Federal Poverty Level. )
We don’t know whether there will be a Public Insurance Option. If there is, it will be significantly less expensive, meaning that more people will be able to afford insurance. (See my recent post “The AMA would make health care unaffordable . . .” where I quote Karen David, head of the Commonwealth Fund, estimating tha that a “Medicare-like public plan would cost a family $8,424” (in 2008 dollars) “compared to $12,106 for a typical employer-based private plan. This 30 percent reduction in premiums would go a long way toward making coverage more affordable for small businesses and individuals,” Davis adds.
–We don’t know how much insurers will charge older people, which also will have a huge impact on how many Americans will be able to afford insurance.
The House Democrats outline for reform would let insurers charge older people up to Twice as Much as they charge younger people. The Senate Democrat’s draft would let insurers charge older people more, but they say they would put a limit on how much more . ..
Again the Obama administration has not spoke out on this point.
–we don’t know how comprehensive “basic coverage” will be –which makes it very hard to estimate which insurance will cost.
–On top of all of that, savings to be reaped by bringing down drug prices, paying Medicare Advantage insurers less (forcing them to enter competitive bids), refusing to pay hopsitals for avoidable readmissions, using comparative effectiveness research to steer doctors and patients towrad the most effective treatment (raising co-pays and lowerin fees for less effective treatment), and providing incentives for doctors to work together in teams and provide higher quality care (rather than paying them for the quantity of care they provide) are all open questions.
We know the administration supports these proposals, but it’s impossible at this point to accurately estimate how much will be saved.
Pat S.–
Yes, CBO doesn’t have anything close to a final bill to mark up.
(See my reply to Michael)
Thanks for the link to the Leonhardt piece. It is very good. We are already rationing; it’s question of whether we ration intellligently (reducing ineffecient, ineffective care that puts patients at riks) or unintelligently (rationing by ability to pay, or by failing to install systems that would reduce errors in hospitals while investing in hotel-like amenities.
Perhaps the greatest argument for a public option being included in the coming reform is the practice of post claim underwriting. I was not up to speed on this practice used by the “soul eating bastard” industry (aka: the health insurance industry). It is just unfathomable to me how a company can take premiums for what is years sometimes and then retroactively cancel someones coverage when they seem to need it most. Of course The “SEB” industry claims it is only weeding out those that commit fraud, but it sure didn’t sound that way in a recent congressional hearing where VICTIMS of these companies related their stories under oath. The following panel of SEB CEOs whined about how they couldn’t handle doing business any other way. Oddly when they were quizzed about their own applications, they didn’t have a clue on what some of the questions meant, even though they use these questions to rescind coverage retroactively.
Health Care and Health Coverage are not interchangeable terms.