The Senate Finance and HELP committees are working feverishly to cut the projected cost if health reform to under a hundred billion a year, submitting various and sundry ideas concepts and proposals to the CBO for scoring, hoping that some combination of service cuts and copays will enable the bills’ authors to squeak in under “the trillion over ten years” bar.
Wrong question.
Have the Senators given up on the real issue, cost control? Or is that subject just too toxic, with lobbyists and interest groups lined up to attack any assault on their respective constituencies?
Instead of worrying about cutting benefits and increasing cost sharing the focus should be on a significant expansion of comparative effectiveness research and an overhaul of reimbursement to incent and motivate providers to better manage chronic conditions.
Sure there’s talk about thus, and there’s even a bill in the House to drop the SGR process in favor of a more rational approach to reimbursement. And I know these initiatives haven’t yet gotten much credit from the CBO. My sense is that is because there isn’t much in the way of teeth in the proposals to date. If and when fundamental change in these areas is proposed along with a structured implementation process, we may well see the CBO revise their estimates.
This is going to be very very difficult as many in the health care industry will get their wallets lightened. But without real, meaningful, and measurable cost reduction we can’t afford universal coverage.

The Committee for Economic Development announced earlier this month that they are endorsing the Wyden-Bennett Healthy Americans Act.
The HAA is a universal coverage, individual mandate program that delivers significant savings over the current system as well as most of the proposed reform initiatives.
The Committee is comprised of current and former business executives, including representatives from Wall Street, McKinsey, IHS Global Insight, Bausch&Lomb, Avaya, Burson Marseller, the Boston Consulting Group and others.
Notably, in a poll released yesterday by CED, sixty percent of business leaders polled agree that the current employer-based system is unsustainable.
They are right.
While my sense is a ‘passable’ reform bill will be based on the current system, my belief is that health coverage should not be linked to employment, as this limits portability, leads to job lock, and adds an unnecessary burden to most employers.
I’d add that the current system hasn’t worked to either improve health care quality or control prices. So expecting that a ‘new and improved’ employment based system will do better is rather speculative.

That’s what an airline pilot told me after he asked what I did for a living. To which I responded that France’s health care system costs a lot less than ours’ and delivers excellent results.
End of conversation.
I would have been happy to engage further but he wasn’t. The rest of the ride in the hotel shuttle was awfully quiet.
The mis- and dis-information spread by pundits and politicians about the Democrats’ plans for health reform is having its desired effect, at least on those predisposed to believe their claims. Whether the superficial ‘understanding’ evidenced by the captain’s statement will be affected is anyone’s guess but it is clear that reform opponents are ramping up their efforts to ‘Harry and louise’ the 2009 version of reform.
President Obama and his fellow Democrats have not done a very good job convincing Amerucan voters that they can keep the health care they have today-if they want to. The message discipline that typified Obama’s campaign has been noticeably absent in the health care reform discussion; if it doesn’t return and fast the chances of major reform becoming law are going to diminish by the day.
Fear is a powerful motivator, and reform’s opponents have shown themselves to be masterful in its use in the public discussion.

The feel-good talk about health reform – covering all Americans, reining in those nasty insurance companies, improving health through prevention and wellness – has all but ended, replaced by reality – as presently conceived, reform is unaffordable.
Now, PR firms are asking bloggers to encourage readers to sign petitions decrying taxation of health benefits, specialty medical societies are fighting to hold onto their high reimbursement, lobbyists for imaging companies want expanded coverage of MRIs (!?), employers are getting increasingly uneasy and budget hawks are amping up the volume.
As I’ve said for months, comprehensive health reform is a doubtful proposition.
Everyone wants universal coverage, but no one wants their taxes raised or their share of the pie cut.
While the latest polls indicate some willingness on the part of Americans to accept somewhat higher taxes to help fund universal coverage, on the expense side of the ledger there is precious little evidence of belt-tightening. Sure, pharma volunteers to cut $80 billion over ten years (remember the current annual health expenditure is $2.2 trillion); that’s a mammoth two-tenths of one percent.
And yes, we all recall the health care/union execs who promised to cut $2 trillion from the nation’s budget over ten years – and then stumbled over each other as they backpedaled away from that ‘promise.
The draft of the Baucus bill is a clear indication that some of the Senators ostensibly driving the health reform process have very little appetite for taking on the health care industry; the bill is all about coverage with almost no meaningful effort at controlling cost.
And this from the Chair of the Senate Finance Committee. The bill that emerges from the HELP Committee has the weight of Senator Kennedy behind it; that said early indications are it does not exactly take the long knives to spending. Kennedy may be the best hope; in a Nixon-goes-to-China way the ailing Senator has the political weight to win cost concessions that Baucus et al are avoiding like the plague.

As Bob Laszewski has been assiduously noting, all the happy talk will amount to naught if the CBO and OMB can’t find meaningful spending reductions.
Without a significant reduction in projected health care spending universal coverage is unaffordable. Fortunately OMB and the CBO are watching our pennies.
So, what could happen?
There are at least three potential results.
President Obama has proven himself capable of achieving the seemingly impossible. Think on this – which is more unlikely – America electing a black man to the Presidency or passage of health reform? Do not discount his ability to deliver.
Incremental reform has already occurred – SCHIP is but one example; there is also a bill before Congress to reform Medicare’s physician reimbursement process; ending medical underwriting and requiring community rating would dramatically alter the insurance system (leaving aside the problem of community rating without universal coverage, which should be inextricably linked). Big changes in drug and device approval and reimbursement are also likely, and hospital reimbursement is already on the chopping block. In any other environment, any of these changes would be big news. Together, they make for the biggest change in health since 1964.
There remains one plan that reduces cost, covers everyone, and already has bipartisan support – the Wyden-Bennett Healthy Americans Act.
I’ve long supported this bill, and believe it is our best chance for meaningful reform that addresses cost and coverage.

Details of the Senate Finance committee’s draft plan for health reform were obtained yesterday by Ezra Klein (now of the Washington Post).
Here’s how Ezra characterizes the draft:
“The numbers tell the story. In [the original version that was submitted to the CBO] that plan, subsidies reached 400 percent of poverty. In this plan, they’ve been cut to 300 percent. In that plan, Medicaid eligibility was as high as 150 percent of the poverty line. In this plan, it’s 133 percent for pregnant women and children, and 100 percent for childless adults. In that plan, the “gold” coverage was 93 percent of a person’s estimated expenses, and “bronze” coverage was 68 percent. In this plan, those numbers are 90 percent and 65 percent, respectively. That means people with a low-cost plan might be covered for only 65 percent of what they’re likely to need.
Another way of looking at the plan is that it remains a significant step forward. Subsidies to 400 percent of poverty would be nice, but subsidies to 300 percent of poverty are far beyond anything we offer now. Coverage that protects against 65 percent of anticipated costs is better than no coverage at all. The co-op idea isn’t a public plan, but with federal seed money to start new co-ops, it’s a good idea on its own merits. There’s an individual mandate, state-based health insurance exchanges, and a substantial health and wellness initiative. Insurers are barred from discriminating based on health history and Medicaid is sharply expanded.”
Note that this is a draft version, from one committee, from one legislative body. Senator Kennedy’s committee will come forward with its own bill shortly, and the bills will have to be merged/compromised into something acceptable to the House and the President.
Rather than get into the details, which are a) in draft form and b) likely to be changed before the bill emerges from the Finance Committee, here’s what is missing.
Anything having to do with cost control.
A public plan option.
Here’s what’s there.
An individual mandate.
To say this is disappointing is to damn it with faint praise. The commercial insurance industry has shown itself completely unable to restrain cost. As I’ve noted before, I’m not convinced that a public plan is a requirement – BUT – unless there are much stronger cost controls in a health reform bill, the public plan option may be the only way to control cost inflation.
Why? With an individual mandate, there are no incentives for private insurers to hold down costs.
Not true, you say, the market will.
To which I respond, what market?
As I noted in January, There’s been so much consolidation in the health plan industry that many markets are dominated by one or perhaps two health plans.
In two-thirds of MSAs, one insurer had market share equal to or greater than 50 percent, and in a quarter of MSAs, one insurer had market share of at least 70 percent.
Blue Cross of Alabama has market share ranging from 67 percent in Tuscaloosa to 95 percent in Gadsden. Blue Cross of Arkansas’ share goes from a low of 63 percent in Hot Springs to 97 percent in Texarkana. The two dominant health plans in Ohio have combined share ranging from 46 percent to 80 percent.
THERE IS NO FREE MARKET IN THE HEALTH INSURANCE BUSINESS.
The Finance Committee’s effort is a path to financial ruin; without cost controls we’re looking at a deficit creator that will make Part D’s eight trillion dollar ultimate liability look paltry in comparison.
Recall that Part D relies on the private sector to provide benefits to individuals, albeit without a mandate. Well, after Part D, the largest expansion of government-assisted health care since 1964, went into effect drug manufacturers raised prices by an average of 7.4%. Why? Because they knew there was a large new customer base, eager to get drugs, that was not very concerned about cost.
The passage of Part D was a boon for big pharma, as the industry enjoyed a substantial increase in profits and revenues attributable to Part D. In 2009, the big Part D carriers raised premiums significantly; Humana by 51% and United Healthcare by 18%, with copays also on the rise.
On a national scale, the program is a disaster. The ultimate liability for Part D is $8 trillion, a liability that is unfunded.
This is what we can expect if Congress passes and President Obama signs into law national health reform that does not aggressively, and forcefully, address cost – a deficit explosion that will make the cost of the current bailouts look like lunch money.

For-profit corporations are legally and ethically obligated to first deliver value to their shareholders. That obligation has enormous implications for the delivery, evaluation, and reimbursement of health care services.
The impact of this situation was brought home in the film version of Maggie Mahar’s book “Money-Drive Medicine”; I attended a screening of the documentary last week in NYC.
I wasn’t sure what to expect; there have been quite a few films on health care, reform, insurance and related topics recently, but none that defined the fundamental problem as clearly and cogently as MDM. Care is fragmented and disorganized, with patients not treated as humans but as discrete and separate body systems; in the film the care appears coldly mechanistic. Physicians’ narrow focus on their specialty is part of the problem; this isn’t to blame the docs entirely but rather to illustrate how the entire reimbursement process has bastardized health care.
With docs narrowly focused on body systems they ignore issues that affect other systems. Their very deep but quite narrow knowledge seems to stop at the outer layer of the heart tissue for cardiologists or the fluid surrounding the eye for opthalmologists. Of course the body isn’t a collection of ‘systems’ operating independently but a marvelously interconnected and interdependent whole.
Kind of like the health care system.
Maggie’s film doesn’t offer a solution. Instead it reminds us that the health care system is just that. If reform is to work, it must consider the impact of change on the entire ‘body’.
At the top of the list is thinking through the motivations of the players. For profit insurers and health care companies are in business to make profits for their owners. That isn’t necessarily a bad thing. But it does mean patient care is of secondary importance. While insurers and hospital chains and Investors may yell ‘foul’, their charter requires them to work for their owners and to claim they have reordered their priorities isn’t credible.
This isn’t meant to infer that not for profit entities are entirely different; as the CEO of a regional hospital told me years ago; “no margin no mission”.

The Democrats are pushing hard, very hard, to get health reform passed this year. Heck, they want to get it done this summer. And so far, the GOP’s involvement has been limited to standing on the sidelines lobbing rhetorical rocks at pretty much every aspect of reform – and getting little traction in return.
That may change – if they stop repeating pollster Frank Luntz’ talking points, and focus on the real issue – cost.
Today offers the GOP a chance to do just that; the CBO’s scoring of Sen Kennedy’s (D MA) proposal indicates it will cost over a trillion dollars over ten years and only cover 15 million more Americans. This is an initial draft bill, there is much left to do, and the final bill will likely address many of the CBO’s concerns; but it does offer the GOP a chance to focus on the real issue.
Which so far they haven’t done.
President Obama is wooing doctors, employers, politicians, health plan execs, people with a plan that builds off the current employment-based system supplemented by a public plan option. The President, and most of the Dems in Congress, strongly support reform efforts that do not eliminate the current employer-based system.
(Personally, I’d prefer to see a system that eliminates the employment linkage for reasons of portability and efficiency, and to allow employers to get out of the health insurance business, but I can’t say that publicly because my good friends who are insurance brokers will blow up my house.)
Looking just a bit deeper into what looks like the bare bones of reform, it appears:
– some form of mandated coverage will become law, likely over several years;
– strict controls on medical underwriting, risk selection, rating, and benefit design will be mandated;
– some form of medical liability reform will be passed;
– physician payment will be altered to favor primary care;
– supplemental payments to insurers for Medicare Advantage will be dramatically reduced;
– pharmacy costs for Medicare and Medicaid will be slashed (either by a mandated rebate or price negotiation); and
– hospital reimbursement will be cut rather significantly.
There’s no question that’s a lot of ‘change’.
But it is change that appears to be welcomed by Americans. For most voters (the key constituency here), there’s not much in the way of wildly objectionable issues. This isn’t a single payer solution, individuals won’t be forced to get coverage for several years, those currently covered by a health plan at work will continue to get that coverage, docs will continue to practice and pick the insurance companies they work with and bill like they do today.
From a Kaiser Foundation poll to be released today:
“A solid majority of the American people (61 percent) continue to believe that health reform is more important than ever given the country’s economic problems; sizable majorities support key elements of reform currently being debated such as employer mandates (69 percent), individual mandates (71 percent), and a public plan option (65-67 percent depending on wording)…A narrow majority of the public (53%) supported limiting future increases in how much doctors and hospitals are paid under Medicare to help pay for health reform (37% opposed)…A large majority (70%) liked the idea of insurance exchanges–tested with different descriptions–as a way to help people purchase insurance on their own.
And according to the KFF poll, a majority of Democrats (68%), Republicans (69%) and independents (75%) agreed insurance exchanges that guaranteed that “participating plans would not deny coverage to those with pre-existing conditions or charge higher premiums to those who are in poorer health” would be helpful if one had to purchase health insurance on one’s own.
I’m kind of puzzled by the way Republicans are reacting to the Democrats’ strategy, reform initiatives, and tactics.
Here’s how the Republican Congressional leadership reacted to President Obama’s speech to the AMA yesterday.
John Boehner, D OH
“We’re pleased the President has expressed rhetorical support for medical liability reform, but fact is the effect of even the strongest medical liability reforms would be negated by a government takeover of health care that raises taxes, rations care, and drives health care costs even higher.”
Eric Cantor, R VA
Democrats are touting a government-run health care option that creates an unlevel playing field leading to the destruction of the private market, reducing choice and putting Washington bureaucrats in charge of family health care decisions. In addition, their approach will cost over a trillion dollars – money this country simply does not have.
“There is a growing chorus of concern about the Democrat’s trillion dollar government health proposal. More campaign-style events and speeches do not give the American people the answers they need. Can Americans keep what they have if they want to? How will this Administration pay for it? Is it productive for government to restrict our doctors’ ability to treat patients as they see fit? Serious questions remain unanswered, and it’s time for the Administration to end the happy talk and get down to the difficult decisions ahead.”
Sen. Jim DeMint R SC
“I’m working on a bill to give *every* American access to health care they can control, without forcing them into a government rationed plan” [Twitter, 6/10/09; emphasis added]
Sen. John Barrasso R WY
“Their plan is what we know doesn’t work in England, doesn’t work in Canada – it is a complete Washington takeover of health care.”
Rather than engaging on meaningful issues, the GOP is sticking to Republican strategist Frank Luntz’ talking points.
Here are examples.
“some bureaucrat puts himself between you and your doctor, denying you exactly what you need.”
Wait, isn’t that what happens today in the vaunted private insurance sector?
“THEY decide if you’ll get the procedure you need, or if you are disqualified because the treatment is too expensive or because you are too old.”
Deja vu…
reform should “protect the sacred doctor-patient relationship, and allow people to choose the personal care that suits their individual needs.”
Double deja vu…
“The plan put forward by the Democrats will deny people treatments they need and make them wait to get the treatments they are allowed to receive.”
I don’t see this working. Or rather, if the President continues to stick to his talking points, and if the reform bill that emerges follows the current path, the GOP will find itself arguing against a bill that exists only in their minds.
The GOP is already smarting from its label as the “Party of No”. If they continue to avoid meaningful engagement, that label will get increasingly sticky.
That’s bad for them, and bad for the country. The big winner is cost control. The President is finally addressing the cost issue, and his announcement that the plan will cost about a trillion dollars over ten years is the big opportunity. I don’t often offer advice to the GOP, but I’d suggest that the cost issue is where they can regain their long-lost reputation as the party of fiscal restraint. As presently configured, health care reform is unaffordable. We need reform, but we need reform we can afford.
Given the GOP’s proclivity towards parroting Luntz’ anti-clinical guideline nonsense, this may not be possible, but the way to control costs while ensuring higher quality is to make sure patients get the right care, docs are rewarded for delivering that care, and not for providing unnecessary, expensive, and unproven care.
Instead of fighting comparative effectiveness, the GOP should embrace, strengthen, and support it as a way to hold down costs.
I don’t see that happening, as they appear convinced that their future is assured by following Nancy Reagan’s time tested “Just Say No”.