The New Health Dialogue

COST: Can Health Reform Heal the Federal Budget

Paul Testa — Fri, 06 Nov 2009 16:58:00 -0500

Can health reform heal our federal budget? Yes, but whatever passes now is just the beginning, and there will always be room for improvement.

That's our takeaway from an excellent event we tweeted this morning hosted by the US Budget Watch, a joint project between the Committee for a Responsible Federal Budget and The Pew Charitable Trusts.

There was a lot of ground covered by a panel of experts moderated by the Washington Post's Ceci Connolly and featuring New America's director of health policy Len Nichols. They tackled everything from raising Medicaid eligibility rates to fixing the Sustainable Growth Rate formula in a fiscally responsible way. But for now, we'll just give you the highlights of the discussion.

What impressed us the most was how little question there was about whether health reform will be paid for. Sure, James Capretta of the Ethics and Public Policy Center questioned the accounting of the bills and Donald Marron from the Georgetown School of Public Policy wondered if we're using some pay-fors for health reform that should be used elsewhere. For example, the savings from Medicare Advantage could be used to permanently fix the SGR. But all of the panelists agreed that if passed, health reform one way or another will be paid for and that, as Paul Van de Water of the Center for Budget Policies and Priorities says, is a big accomplishment.

The real discussion focused on whether health reform will actually bend the cost curve. Van de Water was quick to list many provisions such as the excise tax, accountable care organizations, medical homes, and bundled payments that have the potential to revolutionize care. Still, Marron and Capretta were skeptical of the real impact of these provisions -- whether cuts would be made and savings realized. During the Q&A, one questioner asked a similar question about how scalable these reforms were and whether best practices could really be universalized using Medicare as a leader. Len replied that past changes in Medicare such as prospective payment and DRGs had dramatic effects -- for example, reducing inpatient stays by two days without lowering the quality of care. The challenge, of course, was taking these principles (which are sort of a form of bundled payments within hospitals) and applying them across the system to promote better and more coordinated care.

Finally, on the question of predictions, AARP's John Rother believes that there will be a signing ceremony in the Rose Garden -- he just doesn't know when and what they'll be signing. He noted that in talking about a federal budget, it is important not to lose sight of costs in the context of households and the system as a whole. The key, Len said, is that the legislation must make a credible commitment to changing business as usual and moving us toward a system that rewards high-value care. He noted that when President Obama pledged to be the last president to take on health care, what he really meant was that he would be the last to discuss "whether." There will still be plenty left to do after reform passes, which Ceci Connolly noted, enhances the prospects for full employment for wonks like us.

QUALITY: A Good Beginning for Better Endings

Joanne Kenen — Fri, 06 Nov 2009 16:02:00 -0500

After all the sound and fury of last August, we're pleasantly surprised that the right hasn't risen again with all sorts of horror stories about the resurrection, so to speak, of the "death panels." Maybe because all that fear-mongering was finally discredited. Maybe we are finally getting just a little bit smarter.

The inevitable focus on the politics of health reform, and the disproportionate amount of attention paid to the public plan, sometimes obscures the many ways that the House and the Senate health plans are ambitious. Not perfect. Ambitious. I've heard experts, people I like and respect, say the legislation does "nothing" to advance the cause of quality of end of life care in America. They are wrong. The House and Senate bill each contain measures that would advance that cause -- not fix it completely, far from it, but they will take us important steps in the right direction. It's too soon to know which of these measures - if any -- will survive a final melding of House and Senate legislation. But let's look at them here because, except for the end of life consults which got way too much of the wrong kind of attention, they haven't gotten adequate attention. In an accompanying guest post. Dr. Ira Byock, director of palliative medicine at Dartmouth-Hitchcock Medical Center in New Hampshire, talks about what these changes can mean for his patients and their families.

One of the most damaging myths, or at least misunderstandings, in what passes for our national discourse about health policy is that our culture (and too often our doctors) have trouble talking about end of life care. And when we do talk about it, we don't always know what we're talking about. That confusion in turn fueled the "death panel" chaos of last summer.

An advanced directive -- whether a "living will," a health care proxy or a Physician Order for Life Sustaining Treatment -- does not mean "pull the plug." It does not constitute a license for rationing. It does not obligate you to "give up." It is not irrevocable.

An advanced directive is a tool. Properly used, it is a tool that helps you decide how you want to live out your final days, weeks or maybe even months. It is a tool that helps your doctors know what your wishes are so they can respect them. It is a tool that lets your family know what you want, so they too can respect your values and wishes, and avoid the anguished second-guessing and potential family conflict that ensues when people don't know or can't agree on what is best for an incapacitated loved one. If you want aggressive high tech care, a ventilator and a feeding tube and all that is offered in an advanced ICU, you can state that. If you want a DNR you can state that. And if you want something in between those options, you can say that too. (And we do so wish that the move to change the terminology eventually catches on, so that instead of Do Not Resuscitate, or DNR, we talk about Allow a Natural Death, or AND).

The House kept in its bill the VOLUNTARY advanced directive consult provision.(The word VOLUNTARY appears at least five times.) Basically, this means that Medicare will reimburse doctors for taking the time to talk to an elderly patient about what he or she may face medically and how he or she wants to confront it. Right now, there are all sorts of built-in disincentives -- cultural, emotional, legal and yes financial -- against having that conversation. The incentives lie in the other direction: Doctors, and ERS and ICUs are all reimbursed for giving you the aggressive care, and aggressive care is often the default form of care. Maybe our system should make sure you want it.

In addition, the House bill (Section 240) requires health plans in the new insurance exchanges make available to beneficiaries information about end of life planning and the option (Repeat after me: The Option. Not the requirement. The Option) to complete an advance directive or, in accordance with state law, a Physician-Order for Life-Sustaining Treatment (Not Life Terminating Treatment. You can repeat that a few times too.) The bill explicitly states this "shall not promote suicide, assisted suicide, euthanasia, or mercy killing." It also explicitly states that the provision "shall not presume the withdrawal of treatment and shall include end-of-life of life planning information that includes options to maintain all or most medical interventions."

The Senate left that out of the Finance bill. But the Senate bill does incorporate some -- not all -- of what's been on the wish list of hospice and palliative care doctors and nurses and social workers and chaplains for years. For instance, a number of states have been individually seeking Medicaid waivers so that seriously ill children can get hospice for 12 months instead of six -- and that they can also get concurrent, curative care. In other words, as a parent, you don't have to choose between say, chemotherapy, and all the support and symptom management and family assistance of hospice. The Finance bill would wipe out that lengthy, cumbersome, bureaucrat, financially-restrictive waiver process. All seriously ill children in Medicaid in any state could get concurrent curative and hospice care. It isn't that expensive, and it is so badly needed.

And it's not only kids who benefit. The Finance bill sets up a 26-site hospice concurrent care demonstration project in Medicare, so adults too in these test programs can have both curative and hospice care. Some earlier tests and research suggests that this isn't just going to improve the quality of care for people with advanced and life-threatening illnesses, it's actually cost effective. Given a better and gentler continuum of care, without having to make the stark either/or choice of hospice, people often end up gradually shifting the balance as their disease progresses. It is their choice. But their choice is often less aggressive care toward the end.

The concurrent care model, says Jon Keyserling, vice president of public policy and communication at the National Hospice and Palliative Care Organization, "lets you meet patients where they are." The NHPCO and other trade and advocacy groups have a longer list of programs they'd like tested, but Keyserling noted that legislation can be monumental or incremental -- and in some ways, health reform 2009 is both. The sweep of the whole bill is monumental; some components are incremental. But they are a start, and they can be built upon.

The House and/or the two Senate bills do include numerous provisions that have the potential to improve care for seriously ill people (and even nibble around the edge of the long-term care crisis -- which isn't addressed head-on by the current health reform bills). This post is long enough, so we won't go into detail here. But the bills include things like advanced medical homes for people with chronic disease, iniatives to reduce hospital readmissions, bundled payments, transitional care benefits (paying hospitals to do a better job of moving a patient from one care setting to another), assorted quality measurements, pilot programs to improve home-based (as opposed to institutional) care, even a new research initiative on undertreatment of pain. All these steps, whether they survive in a final bill this year or become part of the "building on" agenda for the future, mean paying attention to, and talking about, and doing something about, the needs of the old, the frail, the seriously ill and the vulnerable among us. Our grandparents. Our parents. And someday, ourselves. It's the one thing we all have in common.

HEALTH CARE: Time for a Serious Discussion

Health Policy — Fri, 06 Nov 2009 15:06:00 -0500

We just posted on some of the measures within the House and Senate bills that may help lead us to improved care for people at the end of life. Here, Dr. Ira Byock, director of palliative medicine at Dartmouth-Hitchcock Medical Center in Lebanon, N.H., returns as a guest poster to tell us what it all means for his patients -- and the doctors who treat them. Byock, the author of Dying Well, has written for us before about the need to think more broadly about what kind of changes we need in our health care system -- and our communities -- to do a better job of caring for sick and frail people trying to get by in their homes.

It's back. The provision that ignited histrionic accusations of Democratic Death Panels and a Newsweek cover about Killing Granny has been resurrected, (so to speak) tucked away on page 641 of H.R. 3962, the House's Affordable Health Care for America Act. Section 1233 would reimburse doctors for a voluntary discussion with patients about their preferences for care at the end of life. Over the summer, Chairman Max Baucus excluded such a provision from the Senate Finance Committee's health reform bill at insistence of ranking Republican, Sen. Charles Grassley. This made little sense then, and even less now that bipartisanship has collapsed.

As I scanned this 1990 page legislation, I thought of a Sarah (a pseudonym), a patient, who is a granny herself. Sarah is generally fit, the result of a healthy diet and a habit of walking five or more miles daily. So, despite her 82 years, it was a shock to her to be diagnosed with colon cancer with a metastatic tumor in her liver. When I saw her in clinic and asked if she had an advance directive, she protested, "But the oncologist said he could cure me!" True, with a combination of chemotherapy and surgery, Sarah has a chance of being cured. Still, it is fair to describe her condition as life-threatening. Yet, neither her internist, nor the oncologist, gastroenterologist, surgeon, or radiation oncologist she has seen since being diagnosed has brought the subject up.

I explained that I expected that she would do well with treatment, but that at our cancer center, we routinely ask all our patients about advance directives. We believe that discussing people's values and treatment preferences and, at a minimum, knowing who they want to speak for them if they become critically ill are components of good medical care. I hoped to reassure her by sharing that I have an advance directive. So does every adult in my family.

Recently, I introduced this topic in a medical school class on palliative care and clinical ethics. In addition to recounting my discussion with Sarah, I told the students that my two daughters, who are in their late twenties, also have advance directives. A few of the students chuckled nervously. Young adults, after all, tend to think they are invincible. Medical students are no exception.

Responding to the chuckles, I pointed out that history shows otherwise. In 2005, we all watched the Terri Schiavo case. I can't bear the thought of one of my daughters being critically ill. The only thing worse would be having a judge or elected officials meddle in our family decisions and her treatment. So when my daughters asked what I wanted for Father's Day that spring, I requested that each of them fill out an advance directive.

That got more laughs in the lecture hall. Yet this is deadly serious. The very cases that have framed American ethics and law on medical decision-making -- Karen Ann Quinlan, Nancy Cruzan, and Terri Schiavo -- were all young women in apparently good health. You don't have to be dying for these discussions to matter. You just have to be mortal.

Without an advance directive, even society's most powerful members could get dragged into a drawn out legal mess at the end of their lives. Under state law in New Hampshire, where I live and practice, if Sen. Baucus or Sen. Grassley were to suffer critical injuries in an accident, their families would not have statutory authority to speak for them -- unless an advance directive on record specifically gave them that power. Otherwise, a court, the New Hampshire legislature -- or as in the Schiavo case, the U.S. Congress -- might weigh in on whether and how long life support should be maintained.

I teach physicians-in-training that it is their responsibility to talk about advance directives with all adult patients, no matter whether these conversations are reimbursable or not. Yes, it can be uncomfortable for both doctor and patient. That's no excuse. I wonder if the senators' doctors have raised the issue with them during routine health visits. If not, why not? It is time doctors and legislators faced this issue like responsible professionals.

IN THE NEWS: Will Health Care Reform Heal the Federal Budget

Paul Testa — Fri, 06 Nov 2009 14:25:00 -0500

Will be tweeting an event from US Budget Watch, a joint project between the Committee for a Responsible Federal Budget and The Pew Charitable Trusts, asking whether health reform fix our fiscal problems (Tag: #budget). Len Nichols, the director of New America's Health Polciy Program will be participating in the discussion along with a panel of experts on health care and fiscal policy. Things are about to get going, but in the meantime you can check out the two most recent papers from U.S. Budget Watch: Evaluating Health Care Plans and Comparing Health Care Plans.

HEALTH REFORM: Big Day for the House

Allison Levy — Thu, 05 Nov 2009 19:50:00 -0500

Today was a big day for the House's health reform efforts.

The AARP, the American Medical Association and the American Cancer Society Cancer Action Network publicly announced their support for the Affordable Health Care For America Act (H.R. 3972) (and, particularly for the doctors, the Medicare Physician Payment Reform Act (H.R. 3961) aka the "doc fix.")

Today was the first time that the AARP has put its "full weight behind a comprehensive health reform package," the AARP statement says. "We started this debate more than two years ago with the twin goals of making coverage affordable to our younger members and protecting Medicare for seniors," said AARP CEO Barry Rand. "We've read the Affordable Health Care for America Act and we can say with confidence that it meets those goals with improved benefits for people in Medicare and needed health insurance market reforms to help ensure every American can purchase affordable health coverage."

The AARP maintains that the bill contains several measures that would lead to marked improvements in the health care system for all older Americans and their families:

Ensuring seniors can see the doctor of their choice or find a doctor if they need one by improving Medicare's payments to doctors
Lowering drug costs for seniors by closing the Medicare Part D "doughnut hole" and allowing Medicare to negotiate with drug makers for lower drug prices
Taking steps to reduce waste, fraud, abuse and inefficiency in the Medicare program
Requiring Medicare and insurance companies to provide free certain preventive services like screenings for diabetes, cancer and osteoporosis
Stopping insurance companies from denying you affordable coverage because of your age
Preventing insurance companies from denying you coverage if you have a pre-existing condition or dropping your coverage if you get sick
Limiting how much your insurance company can make you pay out-of-pocket
Providing affordable health insurance options for those who don't have insurance
Providing benefits to help seniors and people with disabilities live in their own homes and communities by establishing the Community Living Assistance Services and Supports (CLASS) program

"This is no small endorsement," President Obama stated. He has hope that the AARP's endorsement will encourage seniors to support his Administration's health reform efforts.

The American Medical Association -- whose support for earlier versions of the House legislation gave the reform movement needed momentum a few months ago -- also announced its support for both the health reform and the doctor payment bill. As J. James Rohack, the AMA president, insists, "The time to make health system reform a reality is now ... compromise is a necessity in the legislative process, but we, as physicians, will never compromise our principles or the public trust."

"That is why we are supporting H.R. 3962 and H.R. 3961 -- two bills that passed together will go a long way toward making health system reform a reality in 2009," he continued.

Michael D. Maves, MD, MBA, in a letter to Speaker of the House Nancy Pelosi, states that the bill effectively addresses the AMA's greatest concerns: expanding coverage, insurance market reforms, patient-physician decision making, investments in quality, prevention, and wellness, repeal of the sustainable growth rate, and the administrative burden.

While the AMA would like the concurrent passage of the two bills, they did not explicitly say they would withdraw support if the pay fix failed to pass. They do, however, warn that "While short-term patches have temporarily averted widespread access problems, they have also grown the size of the problem -- and the cost of reform." Rohak asserted that “this legislation is not perfect, but this debate isn’t over and the work isn’t done."

And finally, the American Cancer Society Action Network expressed its support of health reform today in a letter to the House.

"This legislation represents an exceptional opportunity to advance our mission of reducing suffering and death related to cancer," said cancer society head John R. Seffrin, PhD. "We have the potential to transform our nation's health care system in a fundamental way that begins the process of making adequate and affordable health care accessible to all Americans." For example, the bill would:

Eliminate the use of pre-existing medical conditions and health status in determining insurance premium rates, and would limit rating differential to 2:1 on the basis of age, geography, and family size only
Guarantee issue and renewal of insurance policies, and the elimination of rescission except in the case of fraud
Eliminate annual and lifetime benefit caps
Establish a national health insurance exchange to facilitate access and affordability
Offer premium subsidies for low- and middle-class people
Limit out-of-pocket expenses

Today was full of hope and promise for comprehensive health reform. Let's hope Saturday is even better...

HEALTH REFORM: CBO Confirms GOP Bill Offers Scant Coverage

Allison Levy — Thu, 05 Nov 2009 17:38:00 -0500

Last night, the Congressional Budget Office released a preliminary analysis of the House Republican health care bill. The bill focuses mostly on cost and repackages a lot of the conservative ideas that have been around for years (and never came to fruition even while Republicans held the torch.)

According to the CBO, by 2019, the Republican bill would only extend health coverage to three million more Americans and reduce the federal deficit by $68 billion. In comparison, by 2019, the House Democratic bill would insure 36 million more Americans and reduce the federal deficit by $104 billion.

The Republican bill would only cost $61 billion over the next ten years (significantly less than the $1.1 trillion Democratic option) and could potentially reduce premiums for some Americans who currently have insurance. (See the CBO Director's Blog -- some premiums could come down in the small and individual markets. But it would still be hard for sick people or those with pre-existing conditions to get covered at all, let alone get affordable coverage).

The Republican bill does not eliminate discrimination based on pre-existing conditions. It allows insurers to "cherry-pick" healthy consumers. It's "Association Health Plans" lets small businesses pool together to buy insurance -- but strips that insurance of many state and consumer protections. The new insurance exchanges in the Democratic legislation would create even larger pools, and add rather than subtract protections.

The Republicans never claimed that their alternative would try to expand coverage to all Americans, but Rep. George Miller (D-CA) explains that, "Tonight the CBO confirmed that the Republicans' only solution for health reform is to preserve the status quo. It will leave 52 million Americans literally out in the cold, does nothing to help low-income and middle-class families afford quality health care, and protects insurance companies' power to deny claims and stand between patients and their doctors."

QUALITY: A Thoughtful Critique of ACOs

Tom Emswiler — Thu, 05 Nov 2009 16:22:00 -0500

In case you missed the ‘Space' section of your daily paper a few months ago, two planets -- one the size of Mercury and one the size of our Moon -- collided in a far off solar system. The smaller planet went the way of Alderaan. The larger planet suffered a big dent.

My own worlds collided this week when former-professor-in-my-department Kelly Devers teamed up with my former boss (on a research project) and friend-of-the-blog Robert Berenson to publish a thoughtful critique of the panacea fever surrounding Accountable Care Organizations (ACOs). As much as we have trumpeted ACOs as the best cure-all since Clark Stanley's Snake Oil Liniment, Drs. Devers and Berenson's thoughtful analysis published by RWJF is a welcome contribution to the dialogue.

This document succinctly summarizes much of the ACO literature, including articles by the authors' colleagues Steve Shortell and Larry Casalino, as well as Elliot Fisher and MedPAC. Drs. Devers and Berenson believe that working on ACOs solves the problem of whether to tackle payment reform or delivery system reform first: work on both and grow the two initiatives together over time. Additionally, they think the ACO model can take many forms, making it more likely to succeed in the various diverse U.S. health care markets.

The ultimate hurdle that ACOs face is one we already deal with in health care finance: taking incentives to the extreme, will providers get paid more for doing more (fee-for-service) or get paid more for doing less (capitation)? ACOs could be modeled under both forms. The authors argue that we could end up facing the same cost dilemmas we are currently dealing with, despite the promise of shared savings programs (in fee-for-service) or population based payment (partial capitation). While increased coordination of care will help saving money at the margins, it might not be enough to meaningfully bend the cost growth curve.

One blended approach they briefly reference is the independent practice association (IPA). IPAs offer a mix of both methods: the IPA receives a per member per month capitated payment from the health plan, but the affiliated clinician receives a fee-for-service payment. (For more on IPAs, see my paper with Health Policy Program Director Len Nichols on Hill Physicians Medical Group here.) Could this sleeping giant hold the keys to real delivery system reform -- a way to bring ACOs to providers not yet ready to leave the fee-for-service world? Physician-Hospital Organizations, profiled by me last week here, could also be a semi-autonomous model for ACOs.

The point of the Devers/Berenson paper is to explore how we could get ACOs to work. But it's good to keep in mind this recent story from Kaiser Health News that lists successful Medicare demonstration projects that end up being killed off by NIMBY-minded Members of Congress (although health reform could, we hope, tamp that down somewhat by giving more power to HHS to implement and build on successful test programs). So even if ACO projects prove successful, they could face staunch opposition from lawmakers, not to mention providers and patients. I've only pulled a few things out of the Devers/Berenson piece for this post. The document itself is not long and worth your time. A summary is here if you're on the go.

HEALTH POLITICS: The Long View -- Why History Propels Democrats' Reforms

Joanne Kenen — Thu, 05 Nov 2009 16:04:00 -0500

David Rogers, now with POLITICO, formerly of the Wall Street Journal, may be the least chatty reporter in Washington (trust me, I sat about 5 feet away from him for 12 years in the Senate Press Gallery... although I suppose if you averaged his taciturnity with my extroversion, you would have had two average chat-ers). He's also one of the best and clearest-thinking. He has institutional memory and historical context often lacking in the 24/7 rush-rush of much of the media today. So while so many people are hyperventilating about whether two off-year GOP gubernatorial wins will spell doom for health reform, David comes up with this reassuring and well-reported story, "Dems want to seize historic moment."

Health care is big for House Democrats: big like Social Security in the '30s and civil rights in the '60s, big like the war stories retold now in party caucuses as lawmakers grapple with the floor vote that is just days away.

All politicians live in the present -- or risk perishing, as seen Tuesday night. But history also sits on the shoulders of Democrats these days, and having failed to act on health care in 1994 -- and then having lost power -- they feel an almost inexorable push to seize this moment before it slips away.

Turning back "would be an absolute disaster," House Majority Whip Jim Clyburn (D-S.C.) told POLITICO Wednesday. "I can tell you right now, if we don't pass this bill, I don't care who you are; if you have a D behind your name and this bill has not been passed, you are in tremendous peril next year

It's a great and thoughtful piece, vintage Rogers with anecdotes about obscure congressional races of the 1930s, when Social Security was enacted. The backlash against the New Deal, you may recall, brought us Father Coughlin... the prototype for today's right wing bloggers, Fox Newsers and Tea parties...

Let's hope the House's sense of history helps jittery Senate centrists get centered.

HEALTH POLITICS: Let's Talk Endorsements

Paul Testa — Thu, 05 Nov 2009 14:29:00 -0500

The AP reports that the AARP is ready to announce it's support for the Democratic health reform legislation in the House. The endorsment from the influential retiree's lobby should provide a big boost as House Democrats are expected to vote on H.R. 3962 Saturday evening. Streaming video of the AARP announcement, set to begin at 11:30 a.m., is available below.

Meanwhile, the American Medical Association will announce it's position on the House bill's at 12 p.m. More on that after we get off the call.

QUALITY: Is Safeway's The Best Way to Promote Wellness

Paul Testa — Thu, 05 Nov 2009 14:15:00 -0500

Residents of D.C. love to talk about their Safeways. Apparently, so do Members of Congress.

During the mark up of Senate Finance Committee's bill in September, Senators John Ensign (R-NV) and Tom Carper (D-DE) introduced an amendment that increased the financial rewards companies could offer their workers for meeting certain health goals and criteria such as losing weight, lowering their cholesterol or quitting smoking. Pushing hard for this change, were companies like Safeway which puts a great deal of stock in their efforts to help manage and improve their employee's health, as explained this week in by the LA Times:

Nationwide, 25,000 nonunion employees in Safeway's health insurance plan are eligible for the premium-reduction program, most of them in California. The company says that 74% have signed up.

Once a year, participants submit to tests of four health risk factors: smoking, obesity, blood pressure and cholesterol. If they pass all four, they receive a $780 annual discount, which is 20% of the total cost of their insurance. If they do not pass initially but make progress in some areas -- quitting smoking or losing 10% of their weight -- they can get a premium rebate.

After making several changes in the health policy offered to nonunion workers, Burd said, the company's healthcare costs have "flat-lined" over the last four years, while other companies' costs have gone up nearly 40% on average.

The Ensign/Carper amendment passed by a vote of 18-4. If enacted, it would raise the maximum discounts employers could offer their employees from 20 to 30 percent of insurance premiums and give HHS the authority to raise that threshold to 50 percent if it so chooses.

For some the amendment is common sense, especially given the lingering concerns about health reform's ability to control costs. Yet, as the LA Time's notes, not everyone is happy with the potential changes. The American Cancer Society, the American Heart Association, and advocacy groups worry that such incentives will become another way to discriminate against the sick and unfit while cherry picking the healthy.

Both sides have a point. On one hand it seems reasonable for companies to use incentives to encourage health and discourage behaviors which impose costs on others. Charging smokers more seems fair -- as long as they are provided with appropriate cessatiohn progams and encouragement to quit. On other issues, however, such as obesity or cholesterol it may be more difficult to separate the effects of personal choices from genetic dispositions.

The key is balance. As with an individual mandate, it's not just the size of the penalties that matter. As Ken Thorpe, an expert on chronic disease, writes on the National Journal's Health Care Experts blog:

While "sticks" can and are effective in changing behavior, carrots work best, which is the experience of most employers who lead in implementing successful wellness programs. ... [E]mployers are the best place to implement wellness programs, and in doing so, companies must have flexibility to carry them out. What works for a large company like Johnson & Johnson with over 80,000 employees around the world will not work for 12 person printing company with one office.

Kentucky's Employees Health Plan for state workers has had impressive results increasing enrollment in its wellness and chronic disease programs using relatively small incentives like gift cards for Target and Best Buy.

Changing behavior is tough. It requires both carrots and sticks, and a measured approach that is flexible enough to learn from what works and what doesn't. As New America's Director of Health Policy Len Nichols has written, "Compassion demands we present alternatives and limit the penalties, but basic fairness says it is ok to expect effort in exchange for cross-subsidies from the community."