The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

A Few More Unrelated Health Care Reform Items

Posted by Alan on December 23, 2010

There’s always something happening related to health care reform in general and the Patient Protection and Affordable Care Act in particular. As I continue my year end “clean-up” here’s some short takes on some of the more noteworthy events and ideas I’ve come across lately.

The AMA and the Individual Mandate:
The American Medical Association is of two minds when it comes to requiring everyone to obtain health care coverage  This individual mandate is at the heart of many of the law suits seeking to overturn the PPACA in court. During the health reform debate they supported this requirement. As reported over at the HealthAffairs blog, during their recent interim House of Delegates meeting the AMA voted to reverse this position. Only after “desperate scrambling by AMA leaders” the House voted to refer the issue to the AMA Board of Trustees and to hold a vote concerning their their position on the individual mandate when the House reconvenes again in June.

Both votes were close and reveal a deep schism within the AMA. Like the Wright on Health blog where I came across this item, I don’t believe the result will actually split the AMA, but if the organization abandons its support for the individual mandate it would be a serious political blow to the Obama Administration.

The PPACA and Medicare:
President Barack Obama and his allies argue that the Patient Protection and Affordable Care Act will strengthen Medicare even though the health care reform package cuts about $500 billion from the federal health program over the next 10 years. The Associated Press did an interesting fact check that sheds some light on the PPACA’s impact on Medicare. The bottom line: unless there are offsetting cost reductions in Medicare, the cuts to the program required by the PPACA will simply need to be replenished by other sources. While the Associated Press’ Q&A points out another example of the financial gimmickry so common in Washington, it also highlights the need to reform Medicare, especially in terms of reining in medical spending. The PPACA creates some pilot projects and the like to do just that. Whether they will generate the savings necessary in time is the $500 billion question.

And for a lighter look at Medicare, feel free to check out “The New Medicare Drug Card” brought to you by the Onion.

Speaking of Controlling Medical Costs:
Health insurance premiums reflect the cost of health care. This is a fact that many lawmakers seems unable to grasp. Perhaps its a gap in their education or, at the risk of being appropriately cynical, perhaps it’s because it is easier – and better politics – to beat up on insurance companies than it is to take on hospitals and doctors.

One way to reduce costs is to reduce needless care. As David Leonhardt wrote in the New York Times earlier this year, the potential savings from eliminating unnecessary medical treatment is huge, both in terms of dollars and in lives. Mr. Leonhardt, who writes the Economic Scene column for the paper, identifies three steps necessary to earn these savings: 1) “learning more about when treatments work and when the don’t;” 2) “give patients the available facts about treatments;” and 3) “changing the economics of medicine to reward better care rather than simply more care.”

What’s especially interesting, and especially for those who believe the PPACA does nothing to restrain health care costs, is Mr. Leonhardt’s point that the new health care reform law makes a good start down this path. As he makes clear, the PPACA doesn’t go as far as is needed, but it lays the groundwork for much of the hard work yet to come.

Physician Owned Surgery Centers:
Here’s a not surprising headline: “Doctors with ownership in surgery center operate more often: U-M study.” Shocking, no? The University of Michigan study shows the financial incentives gained by doctors when they have a financial stake in a a surgery center. One possible explanation the researchers mention for this is “that these physicians may be lowering their thresholds for treating patients with … common outpatient procedures.” Those financial incentives can be hefty, amounting to what the authors call a “triple dip.” Doctors with a stake in a surgery center “collect a professional fee for the services provided … share in their facility’s profits and [in] the increased value of their investment.”

Writing in Health Affairs, the data showed that “owners operated on an average of twice as many patients as non-owners” and their caseloads increased more rapidly and dramatically. Significantly, the study reports that doctors have a stake in 83 percent of surgery centers in the United States. To be fair, these out-patient centers often charge less for comparable treatments than hospitals do. But if they double the number of surgeries, how much do they really contribute to constraining health care costs?

The “Best of” CBO’s Health Care Reform Reports:
The Congressional Budget Office occupies a unique position in the legislative process. In a hyper-partisan Congress, they are an island of non-partisanship. (Of course, partisans in both parties only admit this when what the CBO reports supports their position, but that’s politics). This is not to say that the CBO is always right or that they’re not constrained by the questions asked or the data they are provided. But at the end of the day, when it comes to reliable information and analysis, there are few places better to turn to than the Congressional Budget Office.

When it comes to health care reform the CBO was instrumental in providing meaningful input to the debate. And now those reports – and other health care related studies – are compiled in a greatest hits collection entitled “Selected CBO Publications Related to Health Care Legislation, 2009-2010.” The information contained in this 364-page compendium is invaluable. But what will be even more fun five or 10 years from now will to look back on the CBO’s projections and see how rarely the world world abides by the predictions of even well-informed and well-intentioned economists.


5 Responses to “A Few More Unrelated Health Care Reform Items”

  1. Curt Cella said

    Merry Christmas everyone. I just came across this article and thought I’d pass it along. I don’t know what it says to the readers of the Alan Katz Blog but each and every time I read this kind of article it screams one thing: Health Care Reform will go down as the single biggest travesty that has ever come out Washington DC.

    For me the thing that just screams when reading this article is the line about the Obama admin wanting to propose new rules about rate hikes above 10%. Uhh….okay….why would you need THAT Mr. President? I thought Reform and the Exchanges were supposed to help cap rate increases? So in other words – in the historic Health Reform legislation – it now turns out there’s nothing really in any of this that can help hold down health insurance premiums except…..more legislation!!!

    You know, let’s just say the rate increase is capped at 10% annually. And let’s say you start with a premium at $200. At the end of any period you want to use as a parameter, your premium has increased. You received no buying power. Other than the ability to step down in coverage levels you’re stuck in a situation that has been mandated by Congress. You can only step down so many times and then you find yourself buying the “cheapest” plan at the same or higher premium than when you first started. The big winner here are the insurance companies: They have got you (by law) and they can raise their rates each and every year to eternity.

    Alan – check me on this? Am I missing something here? I mean I look at this every day and I ask myself: How in the world is the consumer better off than where we started this whole thing back when Obama came in? Even as I write this I keep saying there’s something really obvious that I’ve missed but when I go to I literally can’t see anything in any of this that makes the health insurance landscape demonstrably better in 2014 moving forward…

    Please don’t think this comment facetious – I just literally can’t connect the dots on this.

    • Curt Cella said

      Just a follow up – I got to thinking about this and I think lots of us have already seen this time and again for potential PCIP clients: The premium rates are simply unaffordable. While the person would love to have the insurance plan being offered by PCIP, it is simply out of their financial grasp. Okay so 2014 comes along and you now have to buy a health plan – you go to the exchange and you must buy a plan. Problem is you can’t afford the plan – your monthly income simply won’t allow you to buy a $200 (Example) plan.

      That’s okay – you’ll be given a tax credit to buy the plan. The government will chip in to help you buy the plan. But – here’s the thing: Tax credits are all about looking back aren’t they? I mean you have to spend the money to earn the credit. What if you don’t have the money to spend in the first place? If you’re struggling to meet the rent, the mortgage, the grocery bill, the whatever, and you sacrificed the purchase of a health plan in that mix in the first place, aren’t you always going to sacrifice the same thing going forward?

      How many of us routinely talk to folks who just can’t afford what we’re selling and especially so when you look at the situation surrounding PCIP here in CA? How in the world are tax credits going to help someone who doesn’t have the money to begin with??

      Alan – maybe you wrote about this and I missed it, but how can a tax credit help those who can’t currently afford these very same products? Check this out:

      That web page above is a very clear shout out to folks who are in need of health insurance that they currently can’t afford. How in the world do tax credits help these same people on a practical level?? They don’t. Try this exercise: The next time you pass a homeless person and they ask you for a buck; tell them you won’t give them that dollar now but instruct them to go down the street, buy a $10 lunch, and you’ll mail them $2 next year. There’s your health insurance tax credit in a nutshell.

    • Jim Thornton said

      Curt, I am a little confused by at least a little of your confusion.

      The first article you link to points out:

      “California drew national attention this year when Anthem Blue Cross tried to raise rates as much as 39 percent for its 700,000 policyholders in the state who buy coverage as individuals.”

      The Legislature snapped into action, asking Anthem to justify this increase. The article then goes on to say:

      “The proposed increases helped jump-start the debate over national health legislation and prompted the state to conduct an independent actuarial review of the rate increase filing. After the review found that Anthem Blue Cross had erred in its rate calculations, the company reduced its increases to an average of 13.5 percent.”

      The review process thus saved the average individual policy holder a lot of money–still unaffordable for many, but if someone like me is currently paying $20,000 a year (actually, it’s $22,000, but whose counting), then a 39 percent rise equals $7800 more (or $650 a month) A 13.5 percent rise, on the other hand, is $2700 ($225 a month.)

      Personally, I think holding insurers publicly accountable for justifying their rate increases does at least two things:

      1) makes them prove that the proposed increase is necessary to cover the costs of these insureds and not a way to increase revenues generally to offset group rates, which are prohibited by law from rising so precipitously–in other words, they can’t cost-shift onto the already breaking backs of the individual market what they may be losing from groups, which have at least a little negotiating clout to hold their premium increases down

      2) the threat of having to go through a review process, and all the attendant publicity and potential bad PR if they CAN’T justify the increase but levy it anyhow–this might make a few insurance company number crunchers realize they will pay at least some indirect price for passing an unjustifiable burden on to individuals

      In any event, I agree that it would be nice if the government had someway to enforce insurers to NOT exceed justifiable premium increases. But barring that, shining some light on the process is better than nothing.

      By the way, don’t you just love how the actuaries found that “Anthem Blue Cross had erred in its rate calculations”? Like it was an honest mistake that somebody with a broken calculator accidentally made?

      When was the last time that such an “erring” happened that inadvertently helped consumers? One would think that honest mistakes would happen just as often to the good of the customer as to the seller.

      Ultimately, the only workable solution to this horrid mess will be single payer–or at the very least, a public option so that we in the clutches of the individual market can band together in significant enough numbers to negotiate on an equal playing field with the Fortune 100 companies of the world. Right now, we are like the isolated fish on the fringe of the school–easy pickings for any shark that comes along.

      • Curt Cella said

        Well Jim we all know Anthem screwed up on that one – you’re preaching to the choir on that score. (Frankly Jim let’s take it a step further – their TIMING on the increase which reignited the whole drive towards Health Reform was unfortunate in the extreme.) The take-away here is that premiums will continue to go up – Reform or no Reform. You’re darn right there should be a review of premium increases – that’s what a state DOI SHOULD be doing: I certainly don’t know why they waited until 2010 to put some teeth into that! No argument there! There’s a new DOI Commish coming in here in CA and given his political affiliation, I’m sure he’ll delight in doing just that. But you know what Jim? No matter how many different ways or how intensely you look at future rate increase proposals the chart is going to keep trending UP. Say it with me brother: Health insurance is how we pay for health care in this country. If the underlying costs continue to rise (And there’s no legislation in place to cap those!) then so too will your health insurance premiums.
        That public option you’re so fond of? Why don’t you ask the folks who can’t get within shouting distance of affording a PCIP plan how much they are loving a public option? Good luck with that.

  2. Mark Goodman said

    From Alan’s AMA link on this post is the following:
    “Without a mandate and universal coverage, insurers won’t eliminate the bad things we want to get rid of,” said Dr. Mario Motta, a cardiologist who is immediate past president of the Massachusetts Medical Society. “But opponents don’t have an alternative model. They are hung up on individual liberty. It’s ludicrous.”

    For those not in the industry that is it in a nutshell.

    I know some folks were pleased with the Virginia decision against the individual mandate but I see it as really problematical. Perhaps I’m using the same logic that judge did but if you can’t mandate people to purchase health coverage but Medicare (at least Part A) legal then his decision brings us closer to single payer.

    The great advice of being careful what you wish for seems to apply here.

Sorry, the comment form is closed at this time.

%d bloggers like this: