25 February 2009

The Hard Part

So Obama has proposed a national health insurance plan which would be, ostensibly, more or less universal.   Great!   Let's declare victory and go home!

What

We have to pay for it?

I thought it was supposed to be free.

Crap.

Tomorrow, the Washington Post and Wall Street Journal report, Obama will release the blueprint for a budget with will make a "down payment" on financing his health care package.   Key details:
  • Estimates vary, but universal health insurance is expected to cost about $100 billion annually, or a Trillion dollars over the ten-year time horizon they use in BudgetLand.  His finance plan covers about $634 billlion of that amount, leaving Congress to find the other $35 billion annual allocation.
  • New taxes are in the mix, and they are targeted at the wealthy.   Deductions would be limited or eliminated for taxpayers with incomes over $250K.  This provision would raise $318 billion.
  • Medicare Advantage programs, in which private insurers are paid an average of 14% extra to cover Medicare beneficiaries, would be subject to competitive bidding.  This would save $175 billion, and, this author suspects, would essentially phase Medicare Advantage plans out of existence.
  • Medicare would no longer pay for re-admissions within 30 days of a hospital stay, and will penalize hospitals with a lot of bounce-backs, at savings of $25 billion.
  • Expanding the Hospital Quality Improvement Program (saving, according to the Obama administration $12 billion over 10 years);
  • Wealthy medicare patients would have higher premiums for the Part D drug plans.
  • Drug makers will have to increase the rebate on drugs for Medicaid patients from 15% to 21%
  • Reducing drug prices by allowing more generic drugs on the market
  • Improving Medicare and Medicaid payment accuracy
More details will come out of the health summit next week.   At this point, the principles outlined by the administration regarding the health plan itself are sparse: all will Americans have their choice of health plans, will have the option of keeping their employer-provided health plans, there will be subsidies for some, and an expanded role for medicaid for the indigent.   The working assumption at this time is that the universality of the plan will require mandates, but to my knowledge the administration has not clearly articulated that point, and may be taking an incremental approach.

A couple of thoughts:
  • Expanding Medicaid is a bad idea.   It can cover drugs and hospital-based acute care, but it a huge drain on inelastic state budgets, and the reimbursement rates on medicaid are unsustainably low.   Most private physicians simply will not take Medicaid patients -- in this case, the government may be providing health insurance, but is not providing meaningful access to health care.   (Further, I've always found it morally offensive that the life of a poor person is worth less than that of a retiree.)  Ideally, Medicaid should be ended; if impossible, its reimbursement should be brought into line with Medicare's.
  • Medicare Advantage is an expensive boondoggle; if its costs are brought in line with standard medicare, that will be a good thing.  If it cannot survive on its own, then the market will ensure its extinction.
  • Taxes.  Obama just signed the biggest tax cut in history into law -- and it's aimed squarely at the middle class.  The obligatory tax increases are being aimed at people like me, who can afford them.   It's like I've died and gone to progressive heaven.
  • Hospitals will feel the pinch, but it may help improve quality if they respond -- lower costs and higher quality?   Where's the catch?  
  • I suppose it's a bit too inside-baseball for a blueprint like this, but I'm still waiting to see if they are going to take on the contentious and necessary physician payment reform as part of this package.   I'm suspecting not.
  • Though Obama has acknowledged the necessity of cost containment in health care as an integral element of health care reform, I do not see anything here which will do much to truly rein in costs.   We'll see if that is addressed in the health care summit next week, or if they kick that can down the field a bit (which is more likely).
  • "More accurate" Medicare payments is probably a euphemism for the expansion of the RAC program.   Bear in mind it's mostly aimed at hospitals, but is beginning to turn its attention to physicians.
Exciting times.   Gotta give the man credit for having the balls to stick to his guns and put health care out there in the middle of a recession, but then, this is a perhaps one-time opportiunity to get it through.   This was a tough first step -- acknowledging the costs (partly).   There are a lot more difficult decisions to make, and we'll see if his team confronts them as well as they have this one.

[Updated: more details via Jake Tapper]

13 comments:

Anonymous said...

If this works, it will be a huge boost for small business owners and entrepreneurs. When I was unemployed, I considered starting my own practice or business, but the inability to get insurance with a scary pre-existing condition ruled that out. And I quit a job with a small business that couldn't provide insurance. How many new businesses will pop up if medical care is no longer a barrier for the cautious or prudent?

ERP said...

Lets hope it comes together!

scalpel said...

I don't understand why you are so excited about a plan that even you admit won't work. Expanding Medicaid? Placing even more JCAHO-like restrictions on hospitals? Cutting Medicare payments to hospitals?

Oh, but taxes will be raised on the wealthy, so it must be a good plan anyway. Yay.

scalpel said...

Oh, and giving welfare checks to those who don't pay taxes is not "cutting taxes" it's increasing spending.

doc said...

Please do me a really big favor. Cut this out, hang it on your fridge, and when the whole mess goes to hell in a basket, it will save me the aggravation of saying, "I told you so".
Government makes NOTHING work better or cheaper. NOTHING. You are cheering the death of good medical care in this country. Costs rise, as government costs ALWAYS do, and the only way to keep the system going is to pay out less, thus rationing of care is inevitable.
Government health care has failed or is failing in virtually every country it has been tried. What makes us so stupid as to believe that this time it will be different. You hate arguing with 3rd party payers now, just wait until you try to argue with some gov't clerk somewhere to get approval for what you think your patient needs. Just think about going to the motor vehicle bureau, and multiply that by a factor of 50.
Just as an aside, if you think it is such a great idea to tax the "wealthy" more, exactly how much have you paid beyond the required amount for this noble work of the gov't????

cynic said...

It has been a while since I read a fairy tale...

dimitrios said...

I have a problem with this:

Medicare would no longer pay for re-admissions within 30 days of a hospital stay, and will penalize hospitals with a lot of bounce-backs, at savings of $25 billion.

How a doctor can say the above is a good thing makes me question either their experience or their abilities.

Now lets say you went in for in patient surgery that required anesthesia. You come out of the surgery ok, have a 3 day stay at the hospital for observation, and are able to urinate on your own and you get sent home. Keep in mind this patient has a history of not being able to urinate properly after getting put under. But on your third day at home you haven't been able to urinate for a day and are in some serious discomfort. You head the the ER, they make you pee in a cup, and guess what you have a UTI.

Under this plan they can't admit you to the hospital and oh man are you screwed. Sure there might be special reviews, etc, but you have to know what it is like dealing with a government lackey is no picnic. You yourself have never let a moment slip where you can't rail again Medicare. What makes you think this system will not be run with the same rules and by the same people. The path of least resistance will be in full affect here and there is no way the federal government will scrap an existing health care program for something new. They will take medicare and give that to everyone with all the same bullshit that doctors and patients have to deal with when they deal with medicare. The only difference is that they will be doaling monies out from a larger pool and to more people. I will laugh my ass off if the government makes it a condition of you keeping your medical license that you rich fat cat doctors (see how the class game sucks when it is pointed back at you) have to take medicaid/medicare patients.

Don't forget that this government health care will also limit the number of medical visits you can have in one year. Something that they currently do with medicare/medicaid.

I wouldn't be so doom and gloom about federal health care if the federal government has ever shown an ability to handle something like this efficiently.

Leigh said...

I like the plan, it seems to use existing programs to get everyone insured. I still struggle to understand how people can be so against expanding coverage.

The hospital I work at gives away 22-23% of its care. So I pay for the uninsured not only in higher insurance premiums, but also in the bottom line budget that dictates my pay raises.

With the Obama plan, that doesn't change, it just means that we need to comply with some quality improvement efforts.

The sticking point is about quality. Quality does lower costs in the long run, however it does require an infrastructure and up front investment. However, it's like mom and apple pie, you can't be against improving quality.

I disagree that Medicare is not efficient... it's the most efficient insurer out there. For the most part, people like medicare and it is arguably the most successful government program. Why not replicate the success?

tyro said...

I don't see the claim that health care in other countries is 'failing'. There are problems in other countries, too, but not 'failing'.

Besides, our system is on the edge of collapse, so why argue to preserve the status quo? Think the market will solve all? Really?

Look, health care cannot be free market because the goal of providing good care is at odds with the goal of making a profit. That will always be a problem. If you don't believe me, just try and use one of the pharma-sponsered programs to provide low cost drugs. They don't work.

Will 'socialized' medicine work? I dunno, to be honest. But are you really so enamoured with the current system?

tyro said...

Obama keeps saying he's going to cut costs with preventative care. If this means increasing the number of fam med docs, it WILL work--if I have a reliable PMD who can see a patient tomorrow, I probably save a fair amount of admissions.

I'm not so sure about not paying for 30 day bouncebacks. Those seem awfully common, and what are we supposed to do when the heart failure patient gets tuned up and then goes out and eats salty fish with a case of beer (true story)?

As you can see, I'm ambivalent.

your kidding, right? said...

What an amazing steaming pile of horse**** this is.

If it doesn't cover "bouncebacks" then they are just going to bounce out to the street. All the burden (and liability) is going to be put on you doctor. Are you going to take these "bouncebacks" home with you????? Are you going to take homethe patient with DM, CHF, COPD, ESRD who decided to skip dialysis for a week and has a K+ of 8 because he was admitted 2 weeks ago for the same noncompliance? Practicing in the ER is going to become the shittiest of places to practice.

Costs will not be reduced until unless some tort reform goes hand in hand with tort reform.

The unintended consequences of these things will be worse than can be imagined. You are not a very profound thinker if you can't see that.

ERP said...

As for the "bounceback" clause (and the Medicare cuts to hospitals) - I hope it puts more pressure on PMD's and nursing home docs to make sure their patients are property tuned up before they are discharged. It may also motivate them to work harder keeping them out of the ER - the is ESPECIALLY true with nursing home patients that they have a lot more control over than folks at home. Second, fortunately for us their is no plan to cut Medicare payments to doctors - unlike that crap that the Bush Administration pushed.

Brian and Jennifer said...

i love the fact that I chose to work in a profession that I love in which my reimbursement for the insane amount of work I do will go down, and my taxes will go up, making it harder to pay off my med school debt.