I’ve repeated myself a lot over the years on reform. The frequency of me going in circles has increased as passage of reform neared. That’s boring. As all encompassing as health care reform has loomed I clearly am not in the loop enough, not able to blog enough to comment on the minutiae. My general thoughts are well layed out, and I need to stop repeating them ad nauseum.
Consider this a last all encompassing post. One intended to look at the arguments for why reform was necessary, what the current reform entails, what the current reform proposes to cost, how the current reform will fund itself, how the current reform succeeds and how it fails.
Reform Is Necessary
Or so the argument goes.
I don’t support reform, not reform that requires the further redistribution of wealth. I have sideline relativistic moral arguments for such. But arguments that either reform isn’t necessary or that progressive/redistributive reforms cannot improve the population’s access to care in all the quantifiable ways, well, I don’t buy them.
Now let me concede and give those who disagree with me their due that: 1) measuring ‘health’ is an incredibly difficult thing and 2) the United States’ failings in terms of health (if we grant they even exist) are multietiological.
Things like our genetic heterogeneity, our economic inequality (independent of how that effects access to care), even the way we measure health outcomes and a multitude of other factors play into why the United States appears to trail many of its western counterparts in measurements such as life expectancy, infant mortality, hospitalization rates for chronic conditions, etc.
Granting all those, it must also be granted that in this country insurance status effects access to care and that access to care effects overall health. Arguments that we enjoy an established safety net and that our health care resources are distributed with some sort of uniformity so that all have some sort of baseline, appropriate access to care are beyond the pale. They’re ridiculous. It is a settled issue that your insurance status, as an independent factor, influences your health. It effects lifetime mortality (pdf), it effects baseline functional measurements, it effects the stage at which cancer is found, it effects mortality related to a whole host of chronic diseases such as heart disease. Without a doubt lack of long term health insurance is an independent culprit behind excess deaths in this country.
I refuse to even have a further discussion on whether, in our current financing system, insurance effects access and thus health. It is settled.
We can debate the economics of the un- and under-insured and the census of such people, but the lay down is, whatever the measurements and whatever the causes, that the problem is real and far from insignificant.
Reform is necessary if your goal is to improve the ‘health’ of this country because one of the key components of improving such is improving access to care.
And so we get the motivation behind an effort like the Patient Protection and Affordable Care Act.
What The Bill Does
There are a lot of great resources out there laying out the health care reform bill in plain terms (see The New York Times or The Huffington Post). I want to create a brief Prezi presentation explaining the bill and its financing in general terms. Until then here’s a non-inclusive run down of what the bill does year by year. That phrase, ‘year by year,’ is our first hint at what the bill is. It’s incremental. The world didn’t end for the tea partierers the day after Obama signed it because, well, right now the bill doesn’t do a whole lot.
This coming year we start seeing the limits on the insurers come into play. For instance lifetime coverage limits on policies will be dead soon. We’ve also heard a lot about how kids will be able to stay on their parent’s insurance plans through 26.
This year also sees the donut hole in Medicare Plan D start to close with a $500 reduction in the gap; until it does years from now, those Medicare patients who reach the donut hole will get a $250 tax rebate.
Small businesses with less than 25 workers who do choose to provide insurance and contribute to premiums will get a small tax rebate, which will phase out as the exchanges come into play later.
It is the next year where we see some alterations in Medicare reimbursement scheme. Primary care specialists and general surgeons serving in census designated underserved areas would get a 10% bonus in Medicare reimbursement in 2011. The bonus is actually Medicare budget neutral (i.e. radiologist cpt codes aren’t reimbursed at a shittier rate to pay for the primary care bonus).
As well this year Medicare Advantage begins to die. Payments to insurers who run the plans are frozen at 2010 levels and begin to contract year by year from here on out. All insurers have to start reporting what percentage of premiums are paid out in reimbursement. Employers start calculating and reporting the value of paid for insurance premiums on W-2 forms.
All payees, Medicare and the private insurers, are required to start allowing a single yearly physician wellness visit without charging deductibles for the visit itself.
In 2012, a voluntary pilot program for accountable care organizations come into play for Medicare. The incentivization for such organizations is meager. Hospitals get some bogus pay for performance type reimbursement changes where CMS is instructed to track readmission rates and punish acute care hospitals at their discretion.
The year following, 2013, is pretty boring as well. The Medicare ACO pilot goes national but remains voluntary and with questionable incentives.
The final year, 2014, sees the major reforms finally come into play.
The individual mandate comes into effect. In general you are required to have insurance or pay a fee of 2% of your annual income up to $750. Of course those who can claim religious exemptions or whom can demonstrate that even with subsidies premiums would cost more than 8% of household income. Subsidies are in place for those households earning up to 400% of the poverty level.
The health insurance exchanges come into place in 2014 as well.
Employers with more than 50 employees who do not provide health insurance are subject to a fine of $2,000 per every employee over thirty who have to get insurance as an individual within the exchange or 8% of wages, whichever is greater. Employers will be limited to a waiting period of 60-days before they insure new employees, otherwise there are further penalties.
Private health insurers come into their limitations. Already limited from placing lifetime caps and dropping individuals who become sick while on insurance, they are now prohibited from not insuring someone because of a pre-existing condition. As well annual caps are no longer allowed.
There’s more after 2014, but not much. For instance, by Medicaid eligibility eventually has a basement of eligibility the individual state programs must meet under which any adult living in a household at 133% of the FPL would be eligible. The federal government in addition will pay 100% of Medicaid expenses for new enrollees between 2014 and 2016. As well, by 2019 CMS is supposed to have implemented an as yet completely undefined pay-for-performance reimbursement scheme for Medicare. Amorphous at best, at current. There’s plenty missing from the above rambling survey of the health care bill but it should give you an idea of the extent of what we’re dealing with.
What I didn’t mention at all above is when the various new ‘taxes’ and ‘fees’ go into effect to help fund some of these provisions.
What The Bill Costs
The reconciled health care bill was scored by CBO at costing less than a trillion dollars over ten years and reducing the federal deficit by $138 billion over the same period. As I’ll discuss below these estimates aren’t without criticism.
The health care bill has a number of new government revenue streams to attempt to fund it and generally garner the positive deficit influence rating from CBO. The funding mechanisms come on line at various times between now at 2015. I’ll leave out some of the penalties we’ve discussed above – such as the penalty associated with the limited employer mandate and the penalty for those failing the individual mandate. There are some other ones as well, such as penalties for hospitals who fail readmission rates and other quality measures as to be determined by CMS by 2012.
The most famous tax, but one with likely limited revenue benefit, is the excise tax on Cadillac health plans. The premiums subject to the tax are scaled, but a good estimate by the time most of the features of the reform are implemented in 2014 is annual premiums between $8500 and $9000.
There’s a new tax on the pharmaceutical industry based on their revenue. A similar one on medical device makers as well. And a tax on health insurers based on net premiums. Those are pretty easy to simply lump together.
There’s a 5% tax on the cost of any non-deformity related cosmetic procedures and a 10% national sales tax essentially on the purchase of tanning equipment and the rental of such at salons.
The bill increases income tax rates for those earning more than $200,000. There’s a 0.5% increase for those making between that and $350,000, a 1% increase on wages from $350,000 to $500,000, a 1.5% increase for wages up to $1,000,000 and a 5.4% increase for wages earned over that.
There is also an increase in the penalty for withdrawing planted income from an HSA and using it for non-medical related expenses. That tax goes from 10% to 20%.
What The Bill Doesn’t Do
There are 31 million who would otherwise be uninsured in 2014, who will have coverage that year because of this bill. Or so the CBO says. The heart tugging, anecdotal stories of those with chronic illness stumbling through the wilderness with their pre-existing condition will be a thing of the past. Let’s give some credit. But I’m willing to end it there.
To be honest this bill is something less than health system reform. It does essentially nothing to alter the way we finance health care in this country or deliver it. There will be no seismic shifts in favor of a more tertiary delivery system, no monumental moves to truly bring primary care into the lime light, no dramatic telling of providers what is acceptable and what is not (certainly not on a scale bigger than what payers already dictate to exacerbated physicians), no global budget or truly more capitated reimbursement system, no real move towards more transparent rationing.
Indeed, I’m surprised at the level of outcry from the right. Conservative elements faced broad public dissatisfaction with health care, huge democratic majorities in the legislature, a generational democratic president and all they conceded was this?
Restrictions on who insurers can refuse to insure, subsidies to pay for private insurance, and relatively small taxes on some biomedical industries and the wealthy to pay such.
There is almost nill reimbursement reform (don’t let the fear mongers scare you about the ill defined future of qualitative reimbursement and ACOs), there’s no public option, there’s no road to a single payer system, there’s no hope for reversing the cost curve, there’s no ‘universal’ access, there’s no drug negotiation, there’s no patent reform for devices or pharmaceuticals. There is not a true progressive accomplishment in the bill from where I’m sitting.
It is a boon for physicians, for hospitals, for big pharma, for device makers. And to be honest, despite the new restrictions they face, even for health insurers who now have millions of new customers dumped into their laps in the next four years. There are downsides, no doubt. Medicaid expansion without reimbursement increases isn’t really enticing. But in general it is all rosy from where most of the health care industry sits. Even the Canadians can see this ‘reform’ is essentially a concession to the industry.
Health care stocks, outside the insurers which are a mixed bag, are almost universally up since the bill was signed.
The major failing of this effort are that it holds limited promise of cost control. Without such; with continued growth in health care spending, this improved access to care the reform promises is unsustainable. If premiums keep rising, subsidizing them and maintaining the individual mandate is untenable.This bill is far from deficit positive or even neutral.
Beyond the traditional criticism of how the reconciliation bill was scored (and such criticism of the CBO isn’t unique to this bill) with the double counting of Medicare savings, the more major fact is the CBO assumes Medicare savings to take place in the form of standing provider reimbursement cuts under the SGR formula. Nevermind that yearly those cuts are held by Congress. Indeed we’re likely as close as we’ve ever been to a permanent SGR fix, which is probably one of the reasons national organized medicine threw their half hearted weight behind reform.
With an SGR fix reform contributes to the deficit over the next ten years.
True reform has to include provisions for cost control. Ideal reform, in terms of improving global utilitarian health metrics, would center around a global budget where costs could be met and rationing would be rational and evidence based. Savings from such a system would come from many places, including from providers. The reality is that, even factoring the expenses of education, American physicians on the mean have far greater lifetime gross earning potential than their counterparts just about anywhere in the world. That includes the primary care physicians. Not to say that they’re overpaid if you try to value physician services in a vacuum; just that there’s an argument when looking at comparative international data that American providers have something to give up to help pay for health care reform.
I know that’s an unpopular opinion in the medical community, but it’s reality. There are trade offs of course in a global budget system in terms of choice, in terms of promoting innovation and development, in terms of treatment for comparatively rare peripheral disease processes requiring highly specialized care. But really it’s nearly beyond argument that such a system, if managed with any half level of confidence, can’t both reduce costs and promote population level ‘health’.
The examples are all over the world. For all the anecdotal problems you can pull from the various single payer and socialized systems throughout Canada, western Europe and east Asia the fact is by any reasonable measurement of population ‘health’ they’re successful, at least as compared to here. I challenge anyone to come forth with something more than anecdotes of wait times or prominent foreigners traveling abroad from those countries for care; to come forth with data of something less than those system’s success in terms of broad public ‘health’ metrics. The argument is well cited elsewhere in this blog.
To be fair, I’m not a fan of such a system. I have philosophical problems with the redistribution of wealth. And I certainly don’t think American physicians are overpaid. But I’ll concede to proponents of a single payer system that it’s likely to achieve what they want it to achieve in terms of improving the health of this country and turning our sky heading health care expenses around.
This reform is far from that. It doesn’t even sniff of a future of that. It includes no public option, the obvious path to an eventual global budget system.
It poses essentially no risk to physicians in this country and if an SGR fix is mustered out of this congress then it even holds great promise.
Liberals can dream about what might be built off of this reform, and indeed if this reform is anything they better hope it is a building block. But, as is, there is nothing progressive about this reform.
Everyone needs to read Firedoglake’s look at the failings of this bill.
It is a giant concession to the health care industry beyond the insurers. And that is not promising for progressives. Future reforms will have to muster reimbursement reform, a public option, more transparent rationing of care. Having taken a first step may indeed make the next ones a little bit easier. But a once in a lifetime White House and congress failing to stand up to any of the money or lobbyist from the industry, beyond the AHIP, doesn’t bode well for reform in the future. If Democrats couldn’t get it done in this environment, it is unlikely to ever be this easy again. There is too much in play for too many stake holders. If this effort has shown us anything I think it’s that.
I suppose we’ll see what the future holds, and when we do I’ll write about it, but as is this bill does a lot of minutiae, and oh so little on the meaningful side.