Health Insurance

Three opinions. Right?

Well, apparently not--at least not on some issues. The University of Chicago's Institute on Global Markets has pulled together a panel of respected academic economists, and is asking them to agree or disagree with a series of policy-related statements. Watching the consensus (or lack thereof) is interesting on a variety of topics, but we found last week's statement particularly notable:

There are no consequential distortions created by the tax preference that favors obtaining health insurance through employers.

Obviously, we care because it's health-related, but the level of consensus is interesting as well. Contrary to the common perception of economists as constantly disagreeing with each other, 95% of economists surveyed either disagreed or strongly disagreed with the proposition. Taking their confidence in their answers into account, 97% disagreed (63% strongly).

The poll doesn't ask whether the employer-sponsored system, or even the tax preference, is a good thing--it only asks if it creates distortions. On that, the near-unanimity sends a strong messge: both labor markets and health care markets are affected by the subsidy. It keeps people pinned to jobs that they'd prefer to leave, and induces over-insurance and over-consumption of health care. Addressing that overconsumption--and the incentives that create it--is critical to bringing down our long-term health costs.

Thanks to Jodi Beggs of Economists Do It With Models for the tip on the IGM Forum.

The folks downstairs at the Committee for a Responsible Federal Budget clued us in last week to an ongoing debate they've been having with the Center on Budget and Policy Priorities. The central piece of the debate is CRFB board member Erskine Bowles's recommendations to the Supercommittee, which included about $600 billion in reduced Medicare and Medicaid spending. The posts are interesting throughout, and as the deadline approaches, we felt it was important to check in on the federal budget side of health policy.

Here's the debate, with a our commentary:

The initial post: Bowles Plan Offers Path to Compromise

The most important aspect of Bowles' plan, from our perspective, is the method proposed by the Fiscal Commission for fixing the Sustainable Growth Rate (the ironically unsustainable Medicare reimbursement cuts that Congress pushes back each year). In order to pay for a long-term "doc fix" (which would bring down spending on physician fees by cutting rates of reimbursement), the commission recommended that Medicare "develop an improved physician payment formula that encourages care coordination across multiple providers and settings, and pays doctors based on quality instead of quantity of services."

This recommendation is critical. Moving away from the current fee-for-service system is among the most important ways to change how doctors make decisions; at a bare minimum, the Supercommittee should recommend changing reimbursements to reflect the value of primary care instead of encouraging the overcapacity of specialists we have right now.

CRFB didn't specifically mention it, but another critical Medicare fix that the Fiscal Commission recommended is removing the hospital exemption from IPAB recommendations. Given that hospitals make up a huge amount of our total medical spending and are the setting for a huge amount of unnecessary treatment, it's crucial that IPAB have the authority to recommend changes that improve hospitals' incentives to treat patients efficiently.

Related to the initial post: Actually, Raising the Medicare Age Is Also A Good Idea

CRFB's discussion of raising the Medicare age from 65 to 67 is the primary inspiration for this post's second title: we just can't find any good reason to support it.  (If you're really interested in why, we recommend The Incidental Economist's podcast on the subject.)

The thing is, we agree with CRFB on the facts surrounding the issue. Raising the Medicare age would decrease federal health spending somewhat. (The CBO numbers they mention are higher than the ones cited by Carroll and Frakt in the podcast, but not unreasonably so.) On the other hand, they also acknowledge that the shift would increase costs in the private market beyond the savings to the government (because Medicare pays lower reimbursement rates than private insurance). We at New Health Dialogue are concerned with the high total level of spending on health care, rather than simply the level of federal spending on health care. Unnecessarily increasing total medical spending therefore seems like a high cost to pay for a slight reduction in the federal budget which would probably be shortlived, since many of those 65-67 year olds would need help getting insurance, probably through the exchanges specificed in the ACA.

CBPP's initial response: Bowles “Compromise” Proposal to the Right of Boehner Offer to Obama in July

We have to point out a framing problem in CBPP's analysis: not all Medicare and Medicaid cuts are created equal. Some cuts (like those generated by raising the Medicare age) are simply shifting costs from the federal budget to beneficiaries. Those can be fairly labeled as "cuts," and they do increase the burden of health care spending on the elderly. Some of the $600 billion in lower Medicare/Medicaid spending, though, is intended to come from eliminating overtreatment and waste in the medical system. We're well aware that "eliminating waste, fraud, and abuse" is usually what politicians say they'll do to pay for things that they have no intention of actually paying for. However, the Dartmouth Atlas and other analyses have demonstrated that health care really does have a huge amount of wasteful care. Deciding to give patients only the medical care they need, rather than whatever local practice patterns dictate, deserves to be called what it is: responsible management of taxpayer dollars (and of the health system more generally). Demagoguing against such cuts because they reduce health entitlement spending ignores the possibility of making the health system work better, and stands in the way of real progress.

Editor’s Note: This is part of a series of posts contributed by Andrew Wickerham, who attended the 139^th Annual Meeting of the American Public Health Association this week in Washington, DC.

Think back to high school or college when a teacher would offer comments on a test or essay, along the lines of,  “B-, could have included more background on FDR’s reason for passing Social Security.”  That's not far off from the exercise the Department of Health and Human Services (HHS) undergoes periodically as part of its HealthyPeople Leading Health Indicators (LHIs) program, only the note to the country is more alongs the lines of,  “C-, work on diet, exercise, and making sure people with high blood pressure take their medication.” 

Unfortunately, most Americans, like bored, uninterested students in history class, don't seem to care. We have yet to make improvements to our health—and by many measures are worse off than we were a decade ago. So why does the federal government bother with the regular (read: expensive) process of revising the HealthyPeople guidelines?

HealthyPeople (HP)  started with a 1979 Surgeon General’s report intended to focus America’s public health agenda, prevent disease, and promote overall wellness. Three reports—HP1990, HP2000, and HP2010—followed, offering a decennial update to the national health improvement framework. Each report listed a series of LHIs, with the intent of focusing efforts for the coming decade. HP2020 launched in December 2010, and on Monday, HHS Assistant Secretary for Health Howard Koh, MD, MPH announced the newly updated list of 26 LHIs during a press conference at the American Public Health Association annual meeting.

Now, goals and objectives are certainly good things—they can serve to guide policy and reinvigorate practice. “The Leading Health Indicators imply priorities,” former Texas Commissioner of Health Eduardo J. Sanchez, MD, MPH, said at Monday’s event. Yet, the process of setting new goals for HealthyPeople seems rather conflicted.

Early reports on the relative successes and failures of HP2010 suggest that only a few hundred out of almost 1,000 HP2010 goals were achieved, and that ground was lost in the critical area of chronic disease management, with Americans suffering higher rates of obesity and hypertension. Nevertheless, HP2020 rolls out hundreds of new goals and objectives, in addition to the new LHIs.

There was one bright spot at the meeting. For the first time HP2020 includes consideration of the social determinants of health—the non-clinical factors that affect human health—as part of the LHIs. Socioeconomic disparities are widely recognized health indicators because disparity affects ability to access health care, self advocate, and make healthier behavior choices.  High-school graduation rates will be tracked as an LHI under HP2020 as a way to study the socioeconomic factors that influence health, and to encourage policymakers and providers to take a more holistic approach to improving population health.

Health Wonk Review, Muppet Edition!

Hello all, and welcome to another exciting episode of Health Wonk Review! (Regular readers will note that yes, I used line last time. I have half a mind to make Alistair Cookie the official HWR mascot, here at New Health Dialogue.) In honor of what would have been Jim Henson’s 75^th birthday last week, I bring you the Muppet Edition of Health Wonk Review!

Now, without further silliness, the articles!

Quality Care

Here at New Health Dialogue, we’re exulting in doctors’ acceptance that yes, they do overtreat patients! Now, getting them to accept that money is part of the reason why…

Jonena Relth of Healthcare Talent Transformation draws attention to the cool new physician payment system being tried at Fairview clinics in Minnesota: payments are based on patient satisfaction and health, rather than by the number services provided.

David Williams draws a parallel between diagnosis and management consulting: experienced clinicians need to be wary of “early closure,” and avoid becoming like the “more experienced managers [who] are satisfied with two data points – after all, that’s enough to make a line, [or the partners who] just need one data point – they can assume the slope.”

Jessie Gruman, at the Prepared Patient Forum, wonders if the collaboration between HHS, the Robert Wood Johnson Foundation, Dr. Oz, and others will help Americans learn to pay attention to their medical care and improve communication with their providers.

Chris Langston points out that there are fewer people entering training for geriatric specialties—a workforce that may be critical in addressing the communications issue Jessie discussed.

Tarnish on the Golden State, a new report issued by the New America Foundation, exposes how medical debt can lead to ill health and financial insecurity for individuals and families. Tens of millions of American families struggle to pay health insurance premiums and medical bills. In 2010, 44 million working aged American adults had medical debt or medical bills they were paying off over time. In California, over two million people had medical debt prior to the recession and the problem has likely become worse since then.

Last week, we analyzed a comment made by Forbes blogger Avik Roy (@aviksroy) during the Congressional IPAB hearings about Medicaid being worse than having no insurance. Simply put, we (and others such as Austin Frakt) disagree. The recent Oregon study showing increased self-assessed health and medical care usage alone should make a listener skeptical of anyone tossing out throw away lines like "[s]tudies show that health outcomes for many Medicaid patients are worse than those who have no insurance at all," as Roy did in his recent IPAB testimony.

It might seem like the New Health Dialogue and Avik Roy are worlds apart in policy positions, but as with so many things in health reform, unlikely ideological bedfellows abound. Though we disagree on the benefits of public insurance for the poor and the necessity of a failsafe mechanism to constrain health care cost growth (i.e. IPAB), we definitely agree about one thing: repealing the individual mandate is a terrible idea.

McKinsey & Company released a study last week that has caused a kerfuffle here in DC. The study claimed that 30% of employers “will definitely or probably stop offering coverage after 2014” as a result of the implementation of the Affordable Care Act. 

Opponents of the health reform law quickly seized on that number as further proof of President Obama’s anti-business, job killing agenda and bungling of health reform. House Speaker John Boehner’s office posted a blog entitled: “New Report: ObamaCare Will Eliminate Health Coverage, Cost America Jobs,” which breaks down the “troubling” analysis from McKinsey indicating employers ready abandon employee coverage en masse.

On closer inspection, McKinsey’s analysis turns out to be more troubled than troubling. The McKinsey study runs counter to virtually every other non-partisan review of the law’s impact on employer-sponsored insurance, as was pointed out by Time,Business Finance, Politico, the Washington Monthly and others. Even theWall Street Journal acknowledged “previous research has suggested the number of employers who opt to drop coverage altogether in 2014 would be minimal.” That’s not to say that a study countering common wisdom should be discounted out-of-hand, but it does raise enough eyebrows to warrant a closer look – especially when the common wisdom you are countering is your own.

Ironically, the author of an Urban Institute study used by the White House to refute the McKinsey report is none other than McKinsey’s own Bowen Garrett, the chief economist at their Center for U.S. Health System Reform. In his Urban Institute paper, Garrett dismantles “claims that the ACA would cause major declines in [employer-sponsored health insurance],” calling them, “greatly exaggerated.”

Wait, you mean McKinsey published a study claiming 30% of employers will drop employee coverage, in direct contradiction to the expressed position of one of their head health honchos? Mr. Garrett was unavailable to comment.

A closer look at the McKinsey study turns up other inconsistencies. The company has declined to release the methodology or wording of the survey questions – both of which can bias results. McKinsey did acknowledge that the survey “educated respondents about [employer sponsored insurance] implications for their companies and employees before they were asked about post-2014 strategies.” That alone could have influenced respondents’ answers. Without knowing the survey questions, the “educational” script, or the methodology, it’s impossible to know whether or not the design of the survey would itself generate an anti-health reform result. Such a survey is certainly not a sufficient base to support the authors’ prediction of “a radical restructuring of employer-sponsored health benefits.”

What’s most interesting, however, is that McKinsey – institutionally – agrees. Though officials within the company’s press office were unwilling to speak on-the-record, a well-placed source at McKinsey said, “The objective of the survey was to better understand employers' decision making related to employee benefits today and post reform. We were not making a point prediction or forecast about employer behavior after the implementation of health reform.”

The study’s authors appear to have overreached. Their article begins, “the shift away from employer-provided health insurance will be vastly greater than expected and will make sense for many companies and lower-income workers alike.” That certainly sounds like the type of economic prediction that the McKinsey insider says the study was never intended to be.

The California Health Benefit Exchange held its third meeting today at an auditorium in downtown Sacramento. It was an opportunity for the Exchange staff to update the broader health policy community – many of whom were in attendance or watched the webcast – on progress toward planning the development of this new portal to coverage for the state.  The substantive focus was on integration with existing state programs and systems.

Leveling Up

Just 18 months after the health reform debate killed the potential for a national “public option” in health care, one of the 50 U.S. states is poised to breathe new life into government-run insurance systems. Despite its fiercely independent reputation, the State of Vermont is forging a path towards single-payer health care, and its newly elected governor is determined to succeed.

“Everyone else in the developed world has done this, and we haven’t,” Governor Peter Shumlin (D-VT) told an audience at a recent health care forum sponsored by The Atlantic. The event brought together health care leaders, policymakers, and representatives from dozens of DC policy shops for a daylong discussion of the “next steps” during implementation of the Affordable Care Act (ACA).

This coming Wednesday, March 9, the New America Foundation Health Policy Program is co-sponsoring "The Health Care Cost Summit" with America's Health Insurance Plans (AHIP).

Economists, policy makers and budget experts have warned for decades that health care costs are the nation’s most urgent fiscal problem. Unfortunately, while agreement on the problem is easy, bi-partisan solutions have been much more elusive. In fact, the President’s National Commission on Fiscal Responsibility and Reform recognizes the problem of unsustainable increases in health care costs and the challenges these increases cause for the entire nation and calls for aggressive action. The sustainability of the nation’s fiscal house, and more specifically the country’s health care system, will require bold steps to achieve system-wide cost containment.

This Summit will link health care, health insurance, economists, and budget policy experts in a discussion of the politics of cost containment and ways to address the problem of ever increasing health care costs.

Join health insurance plan leaders as well as business, health policy, economists, and political thought leaders at the Health Care Cost Summit, March 9, 2011, to discuss solutions that will enable the nation to build a sustainable, high quality health care system.

The event will take place at the Westin - Georgetown Hotel (2350 M St. NW) from 11:00am to 6:00pm, and features some excellent speakers.  Fellow New American Maya MacGuineas will moderate a panel on the budgetary imperative for reducing health costs, and former New America Health Policy Director Len Nichols will discuss realigning incentives to promote high quality/low cost care.  Also of note, Paul Ginsburg, the President of the Center Studying Health System Change, will lead a panel about how innovative health care contracting must be part of the solution.