Category Archives: Medicare Reform

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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The Debt Ceiling Debate–A “Charade,” says Paul Volcker; Trumped-Up Political Drama, Never an Economic Crisis

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In Washington, Medicare cuts are back on the table. Sunday afternoon, the Senate failed to find the 60 votes needed to pass Senate Majority Leader Harry Reid’s debt-cutting proposal, a bill which would have left Medicare and Medicaid untouched. The vote was 50 to 49.  That it was so close illustrates just how divided this country is.

Now the president and Congressional leaders have signed off on a “compromise” that might best be described as “Conservatives 10; Liberals 0.

What is mind-boggling is that none of this had to happen. We were not facing a debt crisis. Conservatives manufactured a crisis, and then demanded Draconian spending cuts.  For decades, the U.S., like other developed countries, has been lifting its debt ceiling on a regular basis.  Normally, raising the deficit ceiling does not lead to a pitched partisan battle.

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How Soon Can We Expect National Health Reform?

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On this blog, we have debated how soon Americans will be ready for national health reform.  Many observers believe that we’ll only get reform when more people are uninsured—specifically when more middle-class and  upper-middle-class families find themselves “going naked.”

The chart below comes from a new Commonwealth Fund Report which shows that while two-thirds of low-income adults (earning less than 200 percent of the federal poverty threshold) were uninsured or underinsured in 2006, just 17 percent of those earning more than 200 percent of the federal poverty level (FPL) were either underinsured or uninsured at some point during the year.

 

Uninsuredandunderinsured_2

“Underinsured” is defined as someone who finds himself spending 10 percent or more of his income on out-of-pocket medical expenses. (For those earning less than 200 percent of FPL, the number is 5 percent.)

The report observes that employers are continuing to back away from offering health benefits:  “Between 2000 and 2005, the proportion of workers receiving employer-provided health insurance declined from 74.2 percent to 70.5 percent,” and again “middle- and lower-wage workers,” suffered most, with “the largest decreases” hitting this group.

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Complaints about Medicare Advantage Mount…While Congress Contemplates Slashing Fees Traditional Medicare Pays Docs

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Recently I argued that eliminating the private insurance industry would not suddenly make health care affordable. But this is no reason to gratuitously overpay private insurers to provide health care to Medicare patients—while simultaneously planning to slash the fees that Medicare pays physicians.

Begin with the insurers. When Congress created Medicare Advantage, the program that allows private insurers to offer Medicare to seniors, it agreed to pay for-profit insurers about 12 percent more per patient than traditional Medicare would spend if it were covering those patients directly.  Add up those extra payments and they amount to a $16-billion-a-year subsidy for the health insurance industry.

Why the sweetener?  Lobbyists argued that the government would have to pay more to persuade for-profit insurers to join the Advantage program.  Moreover, they promised that the insurers would use the $16 billion to offer patients extra benefits like acupuncture and eye exams that they would not receive under traditional Medicare.  And Congress agreed. Now, think about this for a minute: legislators agreed to use our tax dollars to help for-profit insurers draw customers away from a government program that most people liked—and that cost taxpayers less.  This is not about saving money by transferring Medicare to the supposedly more efficient private sector. This is about the conservative agenda: some politicians are determined to try to outsource government to for-profit corporations.

Predictably, private insurers structured their plans to siphon off the healthiest seniors.  In New York City, for example, Oxford included free memberships to some pretty posh gyms as part of the package. They called it the “Silver Sneakers” program. Unfortunately, a year after seniors signed up they discovered that the number of gyms involved in the program had suddenly shrunk. The options that remained weren’t nearly as tony, and most were no longer located in upper-middle-class residential neighborhoods. Is this “bait-and-switch”? You decide.

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Reform under the Radar: What Medicare Needs to Do to Control Costs

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Below, a very welcome contribution from Shannon Brownlee,  author of Overtreated: Why Too Much Medicine Is Making Us Sicker and Poorer (2007),  an outstanding report on why ‘more care’ often is not ‘better care’.   An award-winning journalist and Schwartz Senior Fellow at the New America Foundation, Brownlee has written extensively about health care for the many publications including the Atlantic Monthly, the New York Times, and the Washington Post.

As I’ve suggested in the past, Medicare reform could be a stepping stone to national health reform. Ideally, we would do both simultaneously. In this post, Brownlee puts her finger on what is wrong with the way Medicare has traditionally tried to cut costs.  In future HealthBeat posts, we’ll talk more about specific proposals for cutting Medicare waste.

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While Barack, Hillary, and Paul Krugman slug it out over the individual mandate, it’s worth pausing for a second to wonder why nobody is saying much about controlling health care costs. Yes, covering everybody is the right thing to do, it’s the moral thing to do, but it isn’t the only thing to do. Theoretically, it shouldn’t even be the hardest thing to do, because at its core, covering everybody is mostly a matter of being willing to come up with the money.  In reality, of course, coming up with the money is a political nightmare.

Controlling costs, on the other hand, is a much deeper problem, but oddly enough it may be easier to achieve politically at the federal level than universal coverage. That’s because cost containment can begin with Medicare, which has been instituting cost control measures under the radar for years. Its efforts have resulted in a lot of bitching and moaning from the hospital industry and doctors, but not a lot of political fallout.

So why aren’t Medicare’s cost control measures working? Because CMS has focused most of its efforts to limit spending on controlling prices. This strategy arises out of the mistaken belief that if they could just rein in the price per unit of care, the price of each CT scan and each office visit, they could control spending overall. This would be a dandy strategy in any other industry, but in health care it hasn’t worked out. And it hasn’t worked out because in health care, the real driver of cost is volume. Costs go up when the amount of care doctors and hospitals deliver to each patient goes up. And because the amount of care delivered doesn’t have all that much to do with the amount of care that patients actually need, whenever Medicare slashes the price it will pay, hospitals and individual physicians can always find ways to deliver more stuff in order to maintain their revenue stream.   

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Health Beat Hosts Health Wonk Review

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Today, Health Beat is hosting Health Wonk Review, a biweekly compendium of the best of the health policy blogs. More than two dozen health policy, infrastructure, insurance, technology, and managed care bloggers participate by contributing their best recent blog postings to a roving digest, with each issue hosted at a different participant’s blog.

Thanks to all of you for your submissions. I couldn’t do justice to all of them, but here’s a sampling of some of the best posts about health care on the blogosphere:

At Health Care Policy and Marketplace Review Robert Laszewski takes on Mitt Romney’s assertion that there are “pots of money” in the states –enough to allow states to follow Massachusetts’ initiative and fund health care reform without raising taxes. Laszewski demolishes the argument, pointing out that even Massachusetts doesn’t have enough money to follow Massachusetts’s initiative. That’s why the state has had to exempt some citizens from the mandate that everyone buy insurance.

On Health Access California, Anthony Wright offers the clearest explanation I’ve seen of Governor Schwarzenegger’s plan for reforming care in California, and its merits and limitations when compared to both HRC’s proposal and the Romney plan in Massachusetts.

On Physician Executive, Zagreus Ammon’s ambitious post “Defining Universal Health Care” begins by addressing the theory that each of us is responsible  for our own health—i.e. “that people do well because they make good choices and people do poorly because of poor choices.”

Here Ammon is responding to Peter Huber of Manhattan Institute fame and his editorial in IBD (Investors’ Business Daily) arguing that universal healthcare is an idle dream because eventually, the “pocket-book healthy” (read: wealthy) will get tired of paying for the “health-careless people” who don’t “live informed, disciplined lives”(read: less well-educated and poorer.) The righteous would rather see that money funneled into products that would provide them with “better hair, skin and sex,” Stern suggests.  For a more generous synopsis of Huber’s argument, see H.G. Stern’s rave review on Insureblog. 

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The Truth about the Politics of National Health Reform

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For the past year, progressives have begun to talk about health care reform as if it is inevitable. Listen to the Democratic Party’s presidential candidates, and it seems just a question of what form the health care revolution will take, how quickly it will happen, and how we’ll finance it. After all, the polls show that the majority of taxpayers, employers and even most doctors want to see a major change.  Moreover, health care research shows that if we cut the waste in our system, we could fund universal coverage. What, then, is stopping us?

As regular readers know, I recently attended a Massachusetts Medical Society Leadership Forum where what I heard about the Massachusetts plan made my heart sink. While everyone in Massachusetts wants health care reform, no one wants to pay for it. Those who are receiving state subsidies to buy insurance are enthusiastic. But uninsured citizens earning more than 300% of the poverty level are expected to purchase their own insurance. The state hoped that 228,000 of its uninsured citizens would sign up; as of last month, just 15,000 had enrolled. Many have decided that they would rather pay the penalty than buy health insurance.

At the forum, Robert Blendon, professor of health policy and political analysis at Harvard’s Kennedy School of Government, talked about what Massachusetts’ experience might mean for the national health care debate: “Massachusetts is the canary in the coal mine,” Blendon, who is also a professor at Harvard’s School of Public Health, declared bluntly. “If it’s not breathing in 2009, people won’t go in that mine.”  If the Massachusetts plan unravels, he suggested, Washington’s politicians will say “If they can’t do it in a liberal state like Massachusetts, how can we do it here?” 

I’m not writing Massachusetts off. The state’s leaders are behind the plan and they may be able to persuade the Commonwealth’s citizens to come on board. But it won’t be easy. 

In the meantime, this week I decided to ask Blendon some follow-up questions: Just what would it take, politically, to achieve national health care reform sometime in the next two to four years?  How many seats would reformers have to capture in Congress?  Is this likely?   Some observers say that if a reform-minded president hopes to succeed, he or she will have to ram a plan through Congress sometime in 2009. But health care is complicated; wouldn’t it make more sense for a new administration to take its time and explain what it is doing to the public, while trying to create a sustainable, affordable, high quality health care system?

Finally, what are the biggest barriers to reform?  If major change proves impossible, what more modest back-up plans should a new president have in mind? What other health care legislation could he or she hope to pass?

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We Need to Begin A Conversation About “Cost Effectiveness”

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As any policy-maker knows, catering to public opinion, ensuring the public interest, and managing costs can seem an impossible task–especially when what the public thinks it wants is at loggerheads with what it needs. But in the case of health care, there may be an opportunity to do all three at once according to a proposal in the September/October Health Affairs.

The proposal argues for cost-effectiveness analysis (CEA) “to set priorities for Medicare coverage of new or costly interventions” through a citizens’ council made up of “a cross-section of users” who can provide leadership with “well-considered social-value judgments.” This citizens’ council model is borrowed from the UK, where a group of 30 men and women advise the National Institute for Health and Clinical Excellence (NICE) on behalf of the public.

The British experience shows that there are likely to be practical complications with implementing a citizens’ council, but it’s still an idea that’s on the right track. We need to turn “cost-effectiveness” from a bad word into a public interest issue in the US.

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Race and Health Care: Dimensions of Inequity by Niko Karvounis

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Yesterday I talked a little about segregation of patients by race in NYC hospitals, and noted how this is likely a problem repeated across the nation. Wonder no more: a 2006 study in the Journal of the American Medical Association (JAMA) analyzed about 719,000 Californians who had received a wide range of complex surgeries. The authors found that blacks, Latinos, and Asians were far less likely to get these operations done at high-volume hospitals, which tend to have better outcomes for complex surgeries. (After all, practice makes perfect).

If you’re white, you’re more likely to receive care at high-volume, better-performing hospitals. This is bad in and of itself; but unfortunately, discrimination continues beyond the level of medical institutions and into the level of individual doctors. A 2004 study in the New England Journal of Medicine looked at the primary care experience of Medicare patients, specifically looking at 150, 391 visits by black and white Medicare beneficiaries for “medical evaluation and management who were seen by 4355 primary care physicians.” Here is what they found:

“Most black patients were confined to a small group of physicians (80 percent of visits were accounted for by 22 percent of physicians) who provided only a small percentage of care to white patients. In a comparison of visits by white patients and black patients, we found that the physicians whom the black patients visited were less likely to be board certified (77.4 percent) than were the physicians visited by the white patients (86.1 percent) and also more likely to report that they were unable to provide high-quality care to all their patients (27.8 percent vs.19.3 percent).

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Screening for Prostate Cancer: Before Medicare Pays, Patients Need to Know More About Risks

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Roughly two-thirds of all men on Medicare are screened for prostate cancer. Most feel they have no choice. After all, this year more than 27,000 American men are likely to die of the disease. When men are asked about their fear of cancer, a survey from the Harvard Risk Management Foundation reveals that prostate ranks at the top of the list. Colon cancer, which kills roughly as many men in the U.S. each year, ranks number seven. There is something about prostate cancer that pushes buttons. No wonder so many men sign up for the “PSA” test which measures levels of prostate-specific antigen in the blood.
But the truth is that current research offers no proof that widespread screening and early diagnosis saves lives. What we do know is that patients who are tested and treated may suffer life-changing side effects that outweigh the uncertain benefits of early detection.

In June the National Cancer Institute made its position clear: “Screening tests are able to detect prostate cancer at an early stage, but it is not clear whether this earlier detection and consequent earlier treatment leads to any change in the natural history and outcome of the disease.” The U.S. Preventive Services Task Force agrees.

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