Health Care Reform 2009: More Required Reading

There’s a lot of moving pieces to the health care reform process currently underway in Washington, D.C. Politics, policy, and personal interest are all colliding as lawmakers and President Barack Obama Administration try to fix what everyone is calling America’s broken health care system. To put the debate in context it helps to know what the participants are thinking. To understand what they’re thinking it helps to know what their reading and writing.

Earlier this year I put forward a list of required reading for understanding the health care reform debate. Here’s the second installment of what will be a series of such posts. (Note: a third list of required health care reform reading was added August 2, 2009).

1. The Senate Finance Committee, chaired by Senator Max Baucus, will play a major role in determining the health care reform legislation that is likely to arrive on President Barack Obama’s desk this Autumn. And they are taking this role very seriously. The Committee has produced three policy option documents to facilitate their deliberations. The policy papers don’t describe what the Finance Committee will decide upon, but it does provide insight concerning what they will be deciding upon. The option papers are:

• Transforming the Health Care Delivery System
• Expanding Health Care Coverage (which covers market reforms of special interest to brokers)
• Financing Comprehensive Health Care Reform

2. The Senate Finance Committee isn’t the only one in the upper house with jurisdiction over health care reform. The Senate Health, Education, Labor and Pensions Committee and its chair, Edward Kennedy, will have a great deal to say about the final legislative package as well. The Committee released an outline of its reform plan yesterday. I have yet to get my hands on that document, although I did find a Senate HELP Committee Briefing Paper dated May 21, 2009.  (When I get a copy of the most current outline I’ll post it here). In addition, as I’ve posted previously, Senator Kennedy recently described his vision for health care reform in some detail. The HELP Committee’s plan stakes out the most liberal, yet still politically realistic, proposals (meaning it doesn’t call for a single payer system). Whether Senator Kennedy expects to get much of what’s laid out in the outline into legislation is unknown. At the very least, by providing an anchor on the left his plan will help him keep the final product from moving what he would consider too far to the middle.

3. As members of Congress begin drafting legislation they will be paying close attention to the impact health care reform will have on the federal budget. The analysts they will turn to for answers work in the Congressional Budget Office.  The CBO recently published guidelines explaining how they will evaluate the budget impact of various proposals in the Budgetary Treatment of Proposals to Change the Nation’s Health Insurance System. An added bonus: the director of the CBO, Douglas Elmendorf, posts frequently to the Congressional Budget Office Director’s Blog, providing additional insight into the agency’s thinking.

4. The Emanuel family has hit the trifecta. Their youngest son is a major Hollywood agent. The middle son is a former Congressman and currently the White House Chief of Staff. Their oldest son is a doctor. Not just any doctor. He is the Chair of the Deparment of Bioethics at the Clinical Center of the National Institutes of Health (that must be one huge business card he’s got). But wait, there’s more. Earlier this year, Dr. Ezekiel Emanuel was named a special adviser to the director of the White House Office of Management and Budget for health policy. In other words, he’s pretty close to health care reform’s ground zero in the Obama White House.  (No slight intended of the Director of the White House Office on Health Reform, Nancy-Ann DeParle, who gets to sit on the actual bulls eye — see #5).  How Dr. Emanuel views reform, consequently, matters. He’s thought long and hard on the subject and, fortunately for inquiring minds, he’s written extensively on the topic, including the book Healthcare, Guaranteed: A Simple, Secure Solution for America. Other writings by Dr. Emanuel include a posting he made to The Huffington Post and another he co-wrote for the New America Foundation.

5. As noted in #4, Nancy-Ann Deparle’s is charged with coordinating President Obama’s health care reform efforts. It’s her job to keep the various players and issues in the debate from spinning out-of-control. Like a traffic cop, it’s up to her to keep things moving toward eventual passage of comprehensive legislation. It’s hard to find much on her personal health care reform positions (if anyone out there has links to her writings on the topic, please let me know).  In an April 2009 briefing for reporters sponsored by the Kaiser Family Foundation, Families USA and the National Federation of Independent Businesses, she did define what she means by a “public health plan.”  You can read a transcript or view a video of her presentation to the press on the Kaiser Family Foundation site

6. Everyone knows the key to health care reform is controlling medical costs. You can have all the market reforms Congress can dream up, but if medical inflation continues to outpace general inflation and wage growth at the rate it has been, it will cripple the economy. Even entrenched stakeholders recongize this reality, which is  how the Advanced Medical Technology Association (AdvaMed), America’s Health Insurance Plans (AHIP), American Hospital Association (AHA), American Medical Association (AMA) , the Pharaceutical Research and Manufacturers of America (PhRMA) , and the Service Employees International Union (SEIU) came to publish their medical cost reduction proposals. The document contains cost cutting committments the organizations have made to President Obama.

7. Perhaps the most talked about article on cost containment making the rounds today is a New Yorker article by Dr. Atul Gawande. It is a terrific read that recounts his investigation into why McAllen, Texas is “the most expensive town in the most expensive country for health care in the world.”  It seems MediCare pays twice as much per person in McAllen than it does 800 miles away in El Paso. Dr. Gawande investigates why, offering insights into the health care system that are too rarely considered.

8. It is generally accepted that 30% of health care spending in the united states is unnecessary. That’s $700 billion we’re talking about that could be spent insuring the uninsured, among other uses. Folks like Peter Orszag, the former director of the CBO and currently director of the White House Office of Management and Budget (which makes him Dr. Emanuel’s boss, for those keeping track) often sites this statistic — and its source: Dartmouth University’s  “Atlas of Health Care.”  They have done numerous and extensive studies on the connection (or lack thereof) between medical spending and health outcomes. Their most recent findings, published February 27, 2009, are described in Health Care Spending, Quality, and Outcomes. It’s subtitle: “More Isn’t Always Better,” pretty well sums up the results.

9. A bonus item: For a 3 minute summary of the health care reform debate, presented in a surprisingly entertaining, clear, and balanced way, take a look at the video at myhealthreform.org.  The video is not an in-depth dive into the issue, but rather an informative overview of the topic. If you’ve got friends, clients or colleagues who are looking for a simple explanation of what the debate is all about, it’s a great place to start. (Full disclosure: the site is run by Humana who clearly has a stake in the outcome of health care reform).

There will be more required reading coming soon. For example, we should hear very soon from the  three House Committees with jurisdiction on health care reform with details on their proposals for change. In the meantime, if you come across any articles, books, postings or the like you think belongs on a list of required health care reform reading for 2009, please send them my way.

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Health Care Industry Groups Identify Cost Savings

The devil dances in the details and that’s especially true when it comes to health care reform. Words and policies seem to mean something different depending on your perspective and where you fit in the system. It’s like a group of people each looking into a room from a different window. It’s the same room, but it sure looks different depending on where you stand. Testing this is both easy and fun: get a doctor, hospital administrator and insurance executive in the same room and ask them to come up with a shared definition for the term “cost containment.”  For extra fun, ask them to come up with ways to implement cost containment.

Meanwhile, back at the details: back in May, leaders of six health care stakeholders met with President Barack Obama to promise $2 trillion in medical cost savings over the next 10 years. The meeting was groundbreaking, in that the six groups were: a) willing to appear together; and b) asking to be part of the reform process instead of simply opposing everything. In the past, these organizations — the Advanced Medical Technology Association (AdvaMed), America’s Health Insurance Plans (AHIP), American Hospital Association (AHA), American Medical Association (AMA) , the Pharaceutical Research and Manufacturers of America (PhRMA) , and the Service Employees International Union (SEIU) — were not known for working together.

While the mere act of making the promise was significant, as a friend of mine is fond of saying, “it’s trash ’til it’s cash.” Promises are cheap — especially in Washington, D.C. — so the real question was: how would they go about achieving these savings?

Now we know. The six groups sent their medical cost reduction proposals to the White House today. It calls for simplifying administration and reducing the cost of doing business (expected to generate $500-$700 million in savings), better managing chronic disease ($350-$850 billion in savings), and helping clinicians and other providers more cost effectively improve quality and safety for their patients ($150-$180 billion). You may have noticed, even the high end fails to reach $2 trillion, coming in at around $1.73 trillion — still a healthy number (you’ll pardon the pun). And the groups claim their cost estimates were conservative, so the proposals may represent even more savings.

According to the Associated Press, are already harping that the proposals fail to identify how any savings “would accrue to the federal government, rather than to the health care system as a whole.” Because the Obama Administration needs to find the resources to pay for health care reform, this kind of detail is critical. Further, as noted by Politico.com, it’s not clear how the proposals would be enforced — or even if they are enforceable.

Another interesting aspect of the submission is that each organization wrote their own section. There’s nothing wrong with this and it may even help hold each group accountable. But it does make for a disjointed presentation.

While imperfect, the document moves the health care reform debate forward. Lawmakers will no doubt comb through the package to find elements they can incorporate into legislation. And even if there are still lots of dancing devils yet to identify, the mere existence of proposals put forward by these groups to reduce costs in the system is a sign that the health care reform debate this time actually has a chance of improving America’s health care system.

Making Health Care Cost Reduction Promises Real

Representatives from insurance companies, doctor groups, hospital organizations and the pharmaceutical industry had their moment in the presidential sun on May 11th promising to slow down how quickly medical care costs increase. Their promise: $2 trillion in savings over 10 years. That would not only make it more affordable to provide coverage for the uninsured, it would be a huge boost the economy and to the financial condition of state governments.

In a letter signed by, among others, the American Medical Association, the American Hospital Association, the Pharmaceutical Research and Manufacturers of America, America’s Health Insurance Plans and the Service Employees International Union, which, as the Los Angeles Times described it “shepherded the agreement.” The unprecedented agreement among these health care stakeholders is meaningful for two reasons. First, these organizations were among the leading opponents of the Clinton Administration’s failed health care reform effort in the 1990s. Second, if it’s real, we’re talking about serious money.

And there’s the rub: is it real? President Obama is trying to find out. He’s instructed the organizations to come back to White House with specifics on how it will make this pledge real. As the Administration has demonstrated with the business plans demanded of the auto industry, the White House will hold these interest groups to a high standard. Which it should. The political stakes are high. If the cost cutting plans lack credibility President Obama will look, as the Associated Press noted, he “will be seen as naive for entertaining such promises.”  By holding them to a high standard, however, President Obama also has the power to undercut the industries’ opposition to his health care reform plan. Accusing them of insincere promises and inadequate commitment to cost cutting would bolster those who seek a bigger role for government in any new health care system.

The stakeholders have an equally important political task. By coming forward with voluntary, credible proposals for cutting costs, they provide political cover for those opposing the expansion of the government’s involvement in the system. If their proposals pass muster they will have gone a long way toward morphing from being a target of reform to being a part of the solution.  Their specifics for cutting costs will be part of the health care reform legislation Congress will produce this summer, which means they’ll have to live with them. But if that means the forthcoming legislation is a bit friendlier to their interests, that’s a reasonable price to pay.

Fortunately, the target, while a stretch, is eminently doable. Researchers at Dartmouth University have done several studies over the years that demonstrate that high costs for medical care do not correlate with better outcomes. As the Associated Press reports, they found that “as much as 30 cents of the U.S. health care dollar could be going for tests and procedures of little or no value to patients.”

One person who paid attention to this finding is Peter Orszag, Director of the Office of Management and Budget. As I wrote in 2007, when he was Director of the Congressional Budget Office, Mr. Orszag was “pushing for more evidence based assessments of new technologies and the need to expand research on comparative effectiveness. They key, Mr. Orszag indicated, is to provide new incentives in the system aimed at changing provider and consumer behavior.” His goal: to eliminate the $600 billion in “wasteful or low-value services” currently in the system.

If health care reform is going to work, squeezing this $600 billion out of the system is crucial. The associations’ efforts are an important first step. According to the Associated Press article, the groups are focusing on different aspects of the problem. Insurers, for example, are looking at reducing administrative costs by, among other initiatives, establishing a common, shared on-line claim form doctors and patients could use. Doctors are looking at establishing guidelines for medical practice. Improving information on drug interactions and reducing hospital readmissions are also part of the mix.

Most experts agree that the savings are there to be found. Identifying the savings will require political will and a willingness to change “business as usual” in the medical, pharmaceutical and insurance industries. Whether they pass the test will be determined by President Obama. Having shared the stage with him to make the promise, the price of failure will be extremely high.