Today, many in the media are making a special effort to report on what the Baucus bill does right. I also am delighted to see provisions in the bill which follow suggestions in the House bill.
But I’m dismayed when I see a reform suggested by House Democrats—or by the White House – rendered toothless in the Senate Finance Bill. Here’s just one example:
Today, in Ezra Klein’s Washington Post column New American Foundation Health Care Policy Director Len Nichols praises a plank in the Baucus bill that would create an Independent Medicare Commission charged with making sure that Medicare cuts costs in ways that are consistent with maintaining quality. The Commission would be appointed by the President and confirmed by the Senate.
Sounds good—and very much like something that White House Budget Director Peter Orszag suggested, in July, in a letter to Congressional leaders. At the time, he outlined the administration’s support for “an Independent Medicare Advisory Commission (IMAC)–
a non-partisan body of doctors and other health experts, appointed by the President, confirmed by the Senate, and serving for five-year terms. "The IMAC would issue recommendations as long as their implementation would not result in any increase in the aggregate level of net expenditures under the Medicare program; and either would improve the quality of medical care received by the program’s beneficiaries or improve Medicare’s efficiency.”
IMAC would have the ability to set fees with an eye to how much patients benefit from particular services. Presumably, this means lowering fees for services that are of minimal benefit to many patients– unncessary back surgeries, angioplasties, by-pass surgeries and diagnostic tests, for example—while raising fees for primary care, preventive care, palliative care and in other areas where providers are underpaid for effective care.
Today, powerful lobbies make it very difficult for Medicare to lower fees. In Congress, Medicare rates become a political football, with the most powerful specialties (already the best paid) almost always winning the game.
Politicians should not be making these decisions. As Senator Jay Rockefeller confided to Ezra Klein not long ago: “ if you really want to be honest about it, eight to 10 percent of the members of Congress understand health care. At maximum. I chaired the intelligence committee, and health care makes it look like riding on a tricycle it's so complicated. So what you have is lobbyists picking on congressmen who don't know health-care reform, and they say, you know what, you could get a lot more jobs in your state if you only put more money into oxygen or a certain medical device. If you're going to do Medicare right, understanding that the trust fund is going to go downhill in 2016, you can't have Congress making these decisions. You need professionals.”
Under Orszag’s plan, political meddling would be kept to a minimum: “As with the military base-closing commissions, this proposed legislation would require the President to approve or disapprove each set of the IMAC’s recommendations as a package. If the President accepts the IMAC’s recommendations, Congress would then have 30 days to intervene with a joint resolution before the Secretary of Health and Human Services is authorized to implement them.”
Orzag offers a tactful explanation: “This approach would free Congress from the burdens of dealing with highly technical issues such as Medicare reimbursement rates while rightly giving them . . . a say in the matter."
No surprise, surgeons made it clear that they "vigorously oppose" legislation that would give an “unelected executive agency” power to set Medicare rates, in a letter that the American College of Surgeons sent to House Speaker Nancy Pelosi in July. Several surgical-specialty societies also signed the letter. What’s wrong with an “unelected” group? They don’t need campaign contributions, so lobbyists have little sway over their decisions.
By contrast, the Baucus bill responds to the surgeons’ concerns. Nichols acknowledges the difference. Under the Senate Finance Committee’s proposal: “The commission’s ‘recommendations would not be implemented automatically, but they would take effect fairly quickly after recommendation if Congress did not promulgate equally effective proposals on its own.’”
As Kaiser Health News explains, the Senate Finance proposal would give Congress plenty of opportunity to meddle: “In years when Medicare costs are projected to be unsustainable, the Commission’s proposals will take effect unless Congress passes an alternative measure. Congress would be allowed to consider an alternative proposal on a fast-track basis.
Whoosh! You can almost hear that fast track: there go the higher fees for palliative care that the Commission recommended. Here comes reinstatement of the status quo: top pay for useless back surgery, rock-bottom pay for the much dreaded “end-of-life counseling” that might allow a patient to make choices about his final treatment. Without a palliative care physician to protect him, the patient is left to the tender mercies of a physician who may well tell him: “This is the protocol.” In other words, you have no choice. The patient can only hope that this physician is as good at controlling pain as a palliative care specialist would be.
The Heart of Healthcare Reform
Meanwhile, by eliminating the public sector option, the Baucus bill has cut the heart out of healthcare reform.
As Bob Laszewski explained over at the HealthCare Policy and Marketplace blog last week, “Health care reform will be very good for the healthcare business . . . as long as a health care bill passes without a public option. Hospitals, drug companies, device makers, and insurers will be in a terrific place.”
To help fund reform, each of these stakeholders put a fairly small amount of “savings” on the table "that amounts to only about 1% of what the group, as a whole, would have received over the next ten years,” Laszewski explains. Meanwhile, the health care bills under consideration will deliver millions of new customers to the marketplace, government subsidies in hand, increasing “ the aggregate revenue of the key stakeholders by almost twice what they would give up."
Granted, insurance companies, drug companies, labs, and device makers would pay $88 billion in new taxes. Insurers would pay excise taxes on high cost health plans which would raise another $215 billion.” But, Laszewski notes, “both the excise tax and stakeholder taxes would almost certainly be passed on to the customer as new premium or sales taxes.”
From the health care industry’s point of view, the only real threat to bigger profits is a public plan that might take the “money” out of “money-driven medicine”. As Jay Rockefeller recently told Ezra Klein: “The public health insurance option doesn't have to make a dime. It doesn't have to make Wall Street happy or shareholders happy. It just has to sell a product at cost. That will put pressure on private insurance companies to bring down their premiums.” The Commonwealth fund estimates that a family that picks the public plan would pay $2000 less for insurance than a family forced to buy a private sector plan.
Private insurers know that they will have a hard time competing with a plan that is less expensive both because its administrative costs are lower, and because it doesn’t have to deliver profits to shareholders. The fact that a public plan wouldn’t have Wall Street breathing down its neck, looking for quarterly earnings growth, means that it could set long-term goals, and reward providers who kept patients healthy over time, rather than simply treating them once they became sick.
Insurers are not the only ones opposed to a public plan.Hospitals, drug-makers, device-makers and some specialists are wary because they fear that a national public plan might use its clout to rein in health care inflation by squeezing some of the waste out of the system. The House bill would let Medicare negotiate discounts on drugs—and stipulates that the public plan would follow Medicare’s reforms.
By contrast, the small co-ops that the Baucus bill calls for would have no market power. Even if the final bill includes a “trigger” that would allow states to create public plans if insurance proves too expensive, those state plans would lack the market muscle that national Medicare E (for everyone under 65) would enjoy.
Some have argued that since only the uninsured, the self-employed and those who work for small companies would be eligible to join the public plan in 2013 and 2014, it would be so small that it wouldn't really have any leverage in the market.
This ignores the fact that anyone who is temporarily uninsured at some point during the year (up to one out of three Americans) could go to the Exchange and buy into the public plan. And the House bill specifically states that once you are in the Exchange, you can stay in the Exchange (where the public plan is available) even if your circumstances change.
The House bill makes it clear that the utlimate goal is to open the public plan to everyone—including employees of large companies—within a few years.
So yes, many in the for-profit health care industry have much to fear from a public sector opotoin.
But there is one other “stakeholder” in the health care system that Laszewski doesn’t mention until the end of his piece:– the patient:
"The President and Democratic leaders have done a masterful job of managing special interest politics. But they may have overlooked, or taken for granted, the most important special interest of all—the voter/patient.
"Whether the Democrats can pass a bill or not will depend on whether wavering Democrats ultimately see voters back home for or against all of this . . .."
Laszewski doesn’t offer a solution, but I will.
President Obama should stay the course and continue to insist on a public sector option that would set a high bar for affordable, comprehensive care while forcing private insurers, drug-makers, device-makers and hospitals to deliver value to patients –quality at a lower price..
Without that option, too many Americans are going to find healthcare unaffordable.