Author Archives: Maggie Mahar

Medical Industrial Complex Announces $3 Million Campaign to Maim Health Care Reform

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A new group that calls itself “Partnership for America” has announced that it will be spending $3 mllion on a campaign to “freeze, investigate and replace’” the Affordable Care Act (ACA).

The “Partnership” didn’t come up with this idea on its own. It is backing a bill introduced by Rep. Sam Johnson (R-Texas) that would freeze implementation of the Patient Protection and Affordable Care Act until its full impact can be investigated. Johnson introduced the “Freeze and Investigate Affordable Care Act” (H.R. 3095) on Wednesday. If enacted, the Act would immediately suspend implementation of President Obama’s health care law and require Congress and the President to appoint aAffordable Care Evaluation Commission to study the measure’s impact on patient care, the economy and private-sector job creation.

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Health Care Reform: The Next Stage, Part 1

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Free Market Competition Cannot Make Heath Care Efficient: Why Health Care Should Be Regulated, Not By Government, but By Science

Not a few politicians and pundits continue to believe that free market competition offers the best solution to creating a health care system that offers good value for our health care dollars. House Budget Committee Chairman Paul Ryan, for one, argues that if we just give every American a tax credit, and let each person shop for his or her own insurance, consumers would pick the insurance network that offered the best care at the lowest price.

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Medicare and the President’s Deficit Reduction Plan: Shifting Costs to Seniors

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How Cost-Sharing Leads to More Cost-Sharing: A Slippery Slope

President Obama’s newest proposal for reducing the federal deficit would slice Medicare reimbursements to drug-makers, nursing homes, rehabilitation facilities, home health services and teaching hospitals. As I explained in Part 1 of this post, using figures from the non-partisan and highly respected Medicare Payment Advisory Commission (MedPAC), these are groups that Medicare often overpays.  Some skilled nursing facilities turn an 18 percent profit on Medicare patients while reimbursements to home health agencies have consistently and substantially exceeded costs.

By and large, these recommendations make sense, and could help throw a spotlight on excesses in Medicare spending. But I very much doubt that either Congress or the Super Committee charged with addressing the deficit will embrace the President’s proposals in these areas. The lobbies that represent drug-makers, our most prestigious academic medical centers and three health care industries that have been taken over by for-profit companies (skilled nursing facilities, rehab centers and home health service agencies) can write the checks that help swing elections.

Proposals That Are Far More Likely to Find Support in Washington

President Obama’s plan also targets future retirees, asking them to shoulder a larger share of Medicare’s costs. Specifically, starting in 2017:

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Medicare and The President’s Plan to Reduce the Deficit—Cuts That Make Sense

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Some of the largest cuts in President Obama’s proposed package of Medicare savings target areas where Medicare does, in fact, over-spend. Unfortunately, these are the reforms that Congress is least likely to adopt. In each case a powerful lobby representing those who profit from Medicare’s largesse will howl, and many legislators may well bow to their wishes. Nevertheless, it is useful for the President to call attention to areas where Medicare can save money—without cutting benefits.

  • Prescription Drugs: The President’s plan would save $135 billion over ten years, starting in 2013, by requiring that drug companies provide additional discounts, or rebates, to Medicare for prescription drugs bought by low-income beneficiaries enrolled in the Part D Low-Income Subsidy program. In the past, I have written about the drug industry’s double-digit profit margins. In theory, the industry needs these margins in order to innovate. In fact, the number of new and effective drugs coming out of the pharmaceutical industry has slowed in recent years. Too often, they focus on creating “me too” drugs that they know will find a large market.

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The Affordable Care Act: Laying Out the Details in One Place

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An Itemized List of Savings and Revenues

Today, over at The American Prospect, Robert Kuttner makes an important point: “in 2010 Republicans convinced a lot of seniors that the Affordable Care Act would come at the expense of Medicare. In truth, you can demonstrate that the ACA will actually save costs without cutting care,” he adds. But to do that, “you have to get so far down in the weeds of health policy that you lose most voters.”

Kuttner is right: the truth lies in the details, and this makes it difficult to explain the Affordable Care Act (ACA) to the public. If Congress had chosen to pay for health care reform by slashing doctors’ fees by 20 percent, and capping how much Medicare will spend on anyone over the age of 75, it would be far easier to sum up the ACA in a few pithy paragraphs.

Instead, legislators focused on trimming $19 billion here, saving $145 billion there, and another $20 billion over there, by; closing tax loopholes, phasing out overpayments to those private sector Advantage insurers that are not delivering  good value for Medicare dollars, and eliminating redundancies within Medicare. These are just a few of the ways that the legislation squeezes some of the waste out of Medicare spending without cutting benefits, or reducing reimbursements to doctors. In addition, reform legislation raises new revenues, including $107 billion in new fees that insurers, drug makers, and medical device companies have agreed to pay. (They can afford to contribute to reform because they know the legislation will bring them millions of new customers.)

I have written a few posts that delve into the details of how “The Affordable Care Act Pays for Itself and Cuts the Deficit.” And now I have put all the numbers together in an issue brief titled “Better Care for Less.”

Granted, it takes more than a few pages to lay everything out, itemizing and explaining both savings and new revenues. This is why you won’t find a detailed breakdown of the ACA in the newspaper, or even on the blogosphere. Most bloggers believe that they must be brief. I should add that I admire tight one-page overviews of reform legislation, but I also think there is a place for clear in-depth analysis of the most important piece of legislation this nation has seen in more than 45 years.

You may not want to sit down and read “Better Care For Less” in one sitting, but I hope you’ll find it a useful resource that will answer many of your questions about the ACA. It may also help you explain reform legislation to skeptical friends. You can click here to download the brief from The Century Foundation’s website.

Medicare Spending Slows: Proof that Providers Can Trim Fat — Part 3

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While no one was looking, Medicare spending quietly began to slow early in 2010. As I explained in Part 1 and Part 2 of this post, from 2000 through 2009, Medicare reimbursements snowballed by an average of 9.7 percent a year. Then, in 2010 Medicare payments rose by just over 4 percent. So far this year, Medicare inflation is running a little under 4 percent. Yet Medicare has not sliced benefits for seniors, nor has it trimmed payments to providers in any significant way.

Why, then, are Medicare payouts no longer spiraling? Both Zeke Emanuel, a White House health care adviser during the first part of the Obama administration, and his boss at the time, Peter Orszag, former director of the Office of Management and Budget (OMB), agree that many health care providers are trying to rein in costs as they prepare for full implementation of the Affordable Care Act in 2014. Today, hospitals and most doctors are rewarded for “volume”: those who “do more” (more tests, more surgeries, more hospitalizations) earn more. Inevitably, perverse financial incentives lead to unnecessary care.

By contrast, under the ACA, Medicare will begin paying for “value” (better care at a lower cost”), not volume.  Hospitals are keenly aware of the changes that are coming. “My conversations with various hospital executives . . .  suggest they anticipate less generous reimbursement and more focus on value in the future,” Orszag told me while I was writing the second segment of this post. “Therefore they are trying to become more efficient now.”  Emanuel also has been traveling the country:  “Everywhere I go,” he reported in Part 1, “medical schools and hospitals are asking me, ‘How can we cut our costs by 10 to 15 percent?’ Hospitals know that “either [they] get volume under control, or prices paid both by private insurers and Medicare will drop.” Medicare won’t pay top dollar for unnecessary tests, and private sector insurers have told the Medicare Payment Advisory Commission (MedPAC) that if Medicare takes the lead, they will follow.

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Medicare Spending Slows Sharply; Peter Orszag Isn’t Surprised Either—But Will the Slow-down Continue?

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It is an article of faith, at least among conservatives, that as long as Medicare remains a government program, outlays will rise relentlessly, year after year. Only “the market” could possibly tame Medicare inflation, they say. The fear-mongers argue that unless we either shift costs to seniors; raise the age when they become eligible for Medicare; or turn the whole program over to private sector insurers, Medicare expenditures will bankrupt the country.

Here is the truth: Both Standard & Poor’s (S&P) and the Congressional Budget Office (CBO) now have 18 months of hard data showing that Medicare spending has begun to slow dramatically. Health reform legislation has not yet begun to kick in to pare Medicare payments, but something is changing on the ground. As I pointed out in Part 1 of this post, Medicare spending began to plunge in January of 2010. After levitating by an average of 9.7 percent a year from 2000 to 2009, CBO’s monthly budget reports show that Medicare pay-outs are now rising by less than 4 percent a year. (Over the year ending June 2011, Standard & Poor’s reckons that the cost of Medicare claims rose by just 2.5 percent.  But S&P’s Medicare index does not include Medicare Advantage, the private sector option that costs the government significantly more than traditional Medicare.)

Pessimists argue that Medicare pay-outs often fluctuate, and that this is just a short-term drop.  Moreover, the naysayers insist, over the next few years, a horde of aging Hippies will push Medicare’s outlays higher. But hard numbers fly in the face of their assertions. Over 40 years, Medicare pay-outs have rarely dipped, and even a cursory glance at U.S. birth rates makes it clear that the baby-boom bulge will not have a significant impact on Medicare expenditures for another ten to fifteen years. By then, the Affordable Care Act (ACA) will have had a chance to rein in health care spending.

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Sleep-Deprivation: Can Residents “Learn” to Function with Less Sleep?

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Imagine that you been in labor for 18 hours, and the resident who will be delivering your baby tells you that he hasn’t had any sleep for 25 hours. Would you ask for a new doctor?  On the one hand, this resident has been checking you since the beginning of labor. You like him. But, he confides, that this is his second 28 hour shift in three days. He adds that he hasn’t had 24 hours off for two weeks.
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An Institute of Medicine (IOM) investigation released in December 2008 concluded that physician fatigue accounts for a growing number of medical errors: “the scientific evidence base establishes that human performance begins to deteriorate after 16 hours of wakefulness” wrote the authors of the report. They called for elimination of resident shifts exceeding 16 hours without sleep. The Accreditation Council for Graduate Medical Education (ACGME), the organization charged with setting and enforcing standards for graduate medical education, has finally responded. New rules regulating how long residents and interns can be asked to work while caring for patients went into effect last month.

In the past, the ACGME let residents work 30 hours at a stretch. But as of July 1, interns (a.k.a first year residents) will be limited to 16-hour tours of duty, following IOM’s recommendation. But, to the dismay of patient safety advocates, under the new rules second and third-year residents still will be permitted to work 28 hours at a time. Moreover, “time off” in between long shifts has been cut from ten hours to eight. This gives residents eight hours to go home, sleep, shower, grab something to eat, and get back the hospital for another 28 hour shift. At best, they may catch seven hours of sleep.

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Medicare Spending Slows Sharply; Zeke Emanuel Is Not Surprised

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While our elected representatives wrangle over slicing entitlements, virtually no one seems to be paying attention to an eye-popping fact: Medicare reimbursements are no longer accelerating at a break neck-pace. The new numbers should be factored into any discussion about healthcare spending:  From 2000 through 2009, Medicare’s outlays climbed by an average of 9.7 percent a year. By contrast, since the beginning of 2010, Medicare spending has been rising by less than 4 percent a year. On this,  both Standard Poor’s Index Committee and the Congressional Budget Office (CBO) agree. (S&P tracks healthcare spending with the help of Milliman Inc., an independent actuarial and consulting firm.)

What explains the 18-month slow-down?  No one is entirely certain.  But at the end of July David Blitzer, the chairman of Standard &Poor’s Index Committee, told me: “I’m hesitant to say that this is a clear long-term trend.  But it’s more than a blip on the screen."     

Since then, I have talked to an analyst at the Congressional Budget Office who is involved in putting together numbers on Medicare payments for CBO’s Monthly Budget Review. He confirmed that they, too, have seen a dramatic slow-down in Medicare spending. 

When I asked, “Why?, he replied: “We have some theories.” 

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