'Consumer Option' to have Negotiated Rates

According to the NYTimes, Speaker Nancy Pelosi has decided to propose a government-run insurance plan that would negotiate rates with doctors and hospitals, rather than using prices set by the government.

Ms. Pelosi said the public plan, which she prefers to call a “consumer option,” would compete with private insurers.

Members of the House Democratic leadership team offered these details of their bill, to be unveiled on Thursday.

• It would provide coverage to 35 million or 36 million people.
• The 10-year cost of expanding coverage would be less than the $900 billion ceiling suggested by President Obama.
• The cost would be offset by new taxes and by cutbacks in Medicare, so would not increase the federal budget deficit in the next 10 years or in the decade after that.
• The new bill retains a surtax on high-income people, but increases the thresholds to hit married couples with adjusted gross incomes exceeding $1 million a year and individuals over $500,000

Link to article

Small Business Premiums Double Last Years Increases!

Insurance brokers and benefits consultants say their small business clients are seeing premiums go up an average of about 15 percent for the coming year — double the rate of last year’s increases. That would mean an annual premium that was $4,500 per employee in 2008 and $4,800 this year would rise to $5,500 in 2010.

Some experts ... think the insurance industry, under pressure from Wall Street, is raising premiums to get ahead of any legislative changes that might reduce their profits... Small businesses ... employ about 40 percent of the private labor force.

Owners of small companies say the lack of options is why they have been paying increasingly higher premiums for less and less coverage — this year perhaps more than ever.

NYTimes Article

Ingenix Replacement Announced - Unfair (Insurance Company) Practice Reversed

New York State Attorney General Andrew Cuomo announced the establishment of an independent database for consumer health care reimbursement and a consumer website. Cuomo said that, previously, industry data was skewed to show lower health care costs so insurers could underpay for out-of-network services.

Mr. Cuomo, acting upon concerns raised by the AMA and MSSNY, achieved settlements with the major insurers to replace the flawed Ingenix database with a new database. This will be developed by Fair Health Inc. and an upstate research network headquartered at Syracuse University. Funding is from the Cuomo settlements.

Cuomo stated that this will bring much needed transparency, accountability and fairness ... to a broken system. According to the Cuomo press release, this announcement arises from a wide-ranging investigation which uncovered 'a fraudulent and conflict of interest ridden system'.

Link to WSJ

Link to LIBN

Link to Attny General Cuomo's statement

United Health's Better Than Expected 3Q Earnings

Mr. Hemsley, the United CEO, said, ... that ... Ingenix -- a health-care data and consulting operation (and home of the fraudulent database) -- will be the company's widest-margin business in 2010.

Link to WSJ Article

SGR is not a Problem of the Uninsured

On a NY Times blog was this entry regarding the politics of S 1776:

'(Providing an SGR fix), ... in legislation separate from the big health care overhaul, is raising uncomfortable questions for President Obama and for Democratic leaders in Congress ...

(This is so, because they) promised that revamping the health care system would not add to the nation’s deficits.'

Physicians recognize that the flawed SGR, and Congress's repeated 'patches' over the years, are essentially a 'loan'. Repayment of this loan, which itself derives from flawed budget legislation from 1997, does not in any way redress the current health care system problems of the uninsured and of expanding access. It would thus be illogical to consider this cost in the same breath as true Health System Reform.

Senate Bill on SGR

Repealing the SGR is one policy objective that is a common goal of all physicians. The Stabenow bill, S. 1776, the “Medicare Physicians Fairness Act of 2009,” creates the pathway to achieve that goal. Call (888) 434-6200 toll free to leave a message for your senator.

S. 1776 will:

1. serve as the Senate legislative vehicle for eliminating Medicare’s sustainable growth rate (SGR) formula and
2. lays the foundation for establishing a new Medicare physician payment update system.

The procedural path for passing S. 1776 will be complicated, requiring the support of 60 Senators on several procedural motions over the next few days.

S. 1776 will be the subject of a cloture vote on late Monday afternoon (Oct 19). 60 votes are needed to invoke cloture to allow formal consideration of the bill.

A vote on final passage is expected to occur next Thursday (Oct 22) or Friday ( Oct 23).

Harry Reid, the Senate Majority Leader, Sen. Baucus, Chairman of the Senate Finance Committee, and Sen. Chris Dodd, along with President Obama all strongly support passage of S. 1776.

Again, call (888) 434-6200 toll free to leave a message for your senator. Keep the momentum going.

Health Plans Strike Back

America's Health Insurance Plans engaged PricewaterhouseCoopers to examine the impact of four components of the health reform bill being proposed by the Senate Finance Committee. The report, on behalf of the insurers, will assert that under four of the provisions of the senate finance bill, health premiums will rise faster than they would under the current system.

According to the PricewaterhouseCoopers report, there are four provisions included in the Senate Finance Committee proposal that could increase private health insurance premiums above the levels projected under current law:

o Insurance market reforms coupled with a weak coverage requirement,

o A new tax on high-cost health care plans,

o Cost-shifting as a result of cuts to Medicare, and

o New taxes on several health care sectors.

The flaw in this analysis results from the failure to consider the impact of each of the four provisions independently. For example, the 'weak coverage requirement' of the senate bill alone is identified as promoting adverse selection for the health plans. This is the basis of much of the bill's impact upon premium. The report fails to project the impact upon premium should this 'weakness' be eliminated.

Additionally, the report is limited in that it examined just the four provisions considered likely to increase costs. No consideration is given to the beneficial effect on premiums of other provisions of the bill such as health exchanges or the public option (not contained in the senate bill) that would likely result in premium reduction.

The States and Health Care Reform

A new compromise proposal by Sen. Tom Carper would spell out how to boost competition in the private market by enacting government-run plans at the state level.

Under the proposal, in its current form, each state would have the option to:

1) Participate as grantees in the CO-OP program and apply for seed funding.

2) Open up that state’s employee benefits plan to all citizens.

3) Create a state administered health insurance plan (public option) with the opportunity of banding together with other states to create a regional insurance compact.

"Conceptually, having the states take responsibility makes a great deal of sense," said Nebraska Sen. Ben Nelson, a key voice for moderate Democrats ... states are already in the health-insurance business because they administer Medicaid and other federal-state programs.

One key Republican in the debate, Maine Sen. Olympia Snowe, cast doubt on the Carper idea. She favors the so called 'trigger' should private insurers fail to provide affordable coverage.

But, when it comes to the twin objectives of lowering costs and providing coverage to all, the experience of state-by-state systems hasn't been a happy one. The vicissitudes of the business cycle make stable funding problematic. Unable to run budget deficits in lean years, recession-strapped state governments invariably must cut benefits, beneficiaries or even their programs altogether.

Most Republicans remain opposed to the president's plans. Yet recent census data suggest that those Americans lacking health insurance now are far more likely to live in states that usually vote Republican — the very states with senators and representatives least likely to support a law to extend coverage.

Opposition to health care reform thus presents a double quandary for the Republican leadership in Congress and in the states. It is their residents that need health care reform most, and as it turns out, the funding in part would come from blue state (northeast and midwest) taxpayers. Health care reform spending would be little different from the overall pattern of red state socialism (chart).

Retard Innovation

David Brooks, in the New York Times, supports the Wyden approach to health care reform, which he says infuses a combination of universal coverage and (consumer) choice. Brooks favors a more transparent system, in which people see the consequences of their choices.

Brooks points out the many weaknesses of The Baucus approach. "It entrenches a flawed system. It creates greater uniformity and rigidity ... It squeezes people into a Rube Goldberg complex of bureaucracies ...

The biggest problem is that it will retard innovation. Top-down systems just don’t innovate well, no matter how many Innovation Centers you put in ... The bill will retard innovation"

The problem with individual consumer choice is that, while desirable (and transparent), it alone is insufficient to overcome such powerful forces such as insurers, employers, pharm, government, and even the complexities of illness itself. Neither the pending bills, nor Brooks himself, defines an important role for the physician. Physician driven innovation will be needed to define and to sustain true reform.

Baby Steps

According to the CBO, "the bill would reduce deficits by a total of $81 billion in the decade starting next year ... the analysis “demonstrates that we can expand coverage and improve quality while being fiscally responsible ... (but) 25 million people — about one-third of them illegal immigrants — would still be uninsured in 2019"

Link

Get the Profit Motive out of Health Care Financing

In a Letter to the New York Times, Burton C. D’Lugoff & James Hawthorne note that "The United States is the only developed country that allows for-profit companies to eat up 20 cents of every premium dollar to provide insurance for basic health care." Favoring no specific solution, they instead urge, " The important thing is to get the profit motive out of health care (financing)."

Thus far, Congress has balked at health care reform due to the projected costs, about $1 trillion over the next ten years. In contrast, the Fed has been most aggressive in supporting the market for mortgage-backed securities ... purchasing about $905 billion worth of government-guaranteed mortgage-backed securities through mid-September (about 80 to 85 percent of the market).

Referring to these purchases, George Miller, executive director for the American Securitization Forum declared, “This is public support ... the mortgage risk is held by the taxpayer.”

Viewed solely on the basis of its cost, health care reform does seem expensive. But, when viewed relative to other initiatives of similar cost (and less certain benefit) the investment in health care reform is good value.

Waste and the Big Doctors’ Salaries that Go With it

Cohen's piece strikes a cord:

'In America ... There is endless worry that one’s neighbor may be getting more than his or her “fair” share.” ... (Americans) mythologize their rugged (always rugged) individualism as the bulwark against initiative-sapping entitlements.'

Cohen points out that, 'We’re not talking about health here. We’re talking about national narratives and mythologies — as well as money. These are things not much susceptible to logic.'

But he strays from his point, and loses my support when he provides as the second reason to support a public option; '... to provide competition to private insurers and so force waste, excess and cozy arrangements out of the American system. Behind all the socialized medicine babble lurks a hard-headed calculation about money — all the profits skimmed from that waste and the big doctors’ salaries that go with it.'

So, despite a decent appraisal of how the cultural differences between europeans and americans are shaping the discourse on health care, Cohen's (incorrect) assumptions about doctor's salaries, and their relation to waste and skimmed profits reinforce the important viewpoint of those skeptics within our profession.

'Trial Lawyers Trade on the Unreliability of Justice'

Philip K. Howard is an outspoken critic of a civil justice system that creates 'legal fear'. He is chairman of Common Good www.commongood.org, an organization dedicated to restoring reliability to our justice system. In a recent WSJ article Mr. Howard makes the following observations:

"Eliminating (the unreliability of justice and) defensive medicine could save upwards of $200 billion in health-care costs annually ...

Although trial lawyers suggest (that) they alone are the bulwark against ineffective care, Congress now realizes it can't completely stonewall legal reform ... 83% of Americans believe that "as part of any health care reform plan, Congress needs to change the medical malpractice system"...

What has unfolded so far is a series of ... token proposals—all of which assiduously avoid any specific ideas that might offend the trial bar. According to Katharine Seelye on the New York Times's Prescriptions blog, "the comparatively small budget seems commensurate with the administration's level of interest in the subject."

A few thousand trial lawyers are blocking reform that would benefit 300 million Americans ... It's a scandal—it is as if international-trade policy was being crafted in order to get fees for customs agents"

Link to WSJ Article