The American health-care system suffers from three serious problems: Health-care costs are rising much faster than our incomes. More than 15 percent of the population has neither private nor public insurance. And the high cost of health care can lead to personal bankruptcy, even for families that do have health insurance.
These faults persist despite annual federal government spending of more than $700 billion for Medicare and Medicaid as well as a federal tax subsidy of more than $220 billion for the purchase of employer-provided private health insurance.
There's got to be a better way. And it should not involve the higher government spending and increased regulation that characterize the proposals being discussed in Congress.
A good health insurance system should 1) guarantee that everyone can obtain appropriate care even when the price of that care is very high and 2) prevent the financial hardship or personal bankruptcy that can now result from large medical bills.
Private health insurance today fails to achieve these goals. It is also the primary cause of the rapid rise of health-care costs. Because employer payments for health insurance are tax-deductible for employers but not taxed to the employee, current tax rules encourage most employees to want their compensation to include the very comprehensive "first dollar" insurance that pushes up health-care spending.
A good system should not try to pay all health-care bills. That would lead to excessive demand, wasteful use of expensive technology and, inevitably, rationing in which health-care decisions are taken away from patients and their physicians. Countries that provide health care to all are forced to deny some treatments and diagnostic tests that most Americans have come to expect.
Here's a better alternative. Let's scrap the $220 billion annual health insurance tax subsidy, which is often used to buy the wrong kind of insurance, and use those budget dollars to provide insurance that protects American families from health costs that exceed 15 percent of their income.
Specifically, the government would give each individual or family a voucher that would permit taxpayers to buy a policy from a private insurer that would pay all allowable health costs in excess of 15 percent of the family's income. A typical American family with income of $50,000 would be eligible for a voucher worth about $3,500, the actuarial cost of a policy that would pay all of that family's health bills in excess of $7,500 a year.
The family could give this $3,500 voucher to any insurance company or health maintenance organization, including the provider of the individual's current employer-based insurance plan. Some families would choose the simple option of paying out of pocket for the care up to that 15 percent threshold. Others would want to reduce the maximum potential out-of-pocket cost to less than 15 percent of income and would pay a premium to the insurance company to expand their coverage. Some families might want to use the voucher to pay for membership in a health maintenance organization. Each option would provide a discipline on demand that would help to limit the rise in health-care costs.
My calculations, based on the government's Medical Expenditure Panel Survey, indicate that the budget cost of providing these insurance vouchers could be more than fully financed by ending the exclusion of employer health insurance payments from income and payroll taxes. The net budget savings could be used to subsidize critical types of preventive care. And unlike the proposals before Congress, this approach could leave Medicare and Medicaid as they are today.
Lower-income families would receive the most valuable vouchers because a higher fraction of their health spending would be above 15 percent of their income. The substitution of the voucher for employer-paid insurance would be reflected in higher wages for all.
Two related problems remain. First, how would families find the cash to pay for large medical and hospital bills that fall under the 15 percent limit? While it would be reasonable for a family that earns $50,000 a year to save to be prepared to pay a health bill of, say, $5,000, what if a family without savings is suddenly hit with such a large hospital bill? Second, how would doctors and hospitals be confident that patients with the new high deductibles will pay their bills?
The simplest solution would be for the government to issue a health-care credit card to every family along with the insurance voucher. The credit card would allow the family to charge any medical expenses below the deductible limit, or 15 percent of adjusted gross income. (With its information on card holders, the government is in a good position to be repaid or garnish wages if necessary.) No one would be required to use such a credit card. Individuals could pay cash at the time of care, could use a personal credit card or could arrange credit directly from the provider. But the government-issued credit card would be a back-up to reassure patients and providers that they would always be able to pay.
The combination of the 15 percent of income cap on out-of-pocket health spending and the credit card would solve the three basic problems of America's health-care system. Today's 45 million uninsured would all have coverage. The risk of bankruptcy triggered by large medical bills would be eliminated. And the structure of insurance would no longer be the source of rising health-care costs. All of this would happen without involving the government in the delivery or rationing of health care. It would not increase the national debt or require a rise in tax rates. Now isn't that a better way?
Friday, October 9, 2009
Thursday, October 8, 2009
Reduce the Deficit by Spending $829 Billion. Huh?
According to the new Congressional Budget Office analysis, the Senate Finance Committee’s health care legislation would cost $829 billion to provide insurance coverage to millions of Americans. But over 10 years, it would also reduce federal deficits by $81 billion.
Huh?
Besides providing insurance coverage, the other main goal of the legislation is to slow the steep rise in federal spending on health care, particularly on Medicare, which covers Americans over age 65 and the disabled. The analysis by the nonpartisan budget office shows that the savings generated by slowing Medicare growth, combined with revenue from new taxes, would more than cover the cost of providing health benefits to roughly 29 million people.
Medicare costs vary substantially, per enrollee, from one part of the country to another, and frequently the places where spending is highest, or growing the fastest, are not achieving better outcomes for patients, health care experts say.
“There is a lot of unnecessary care being provided in Medicare,” said Elliott S. Fisher, who helps produce the Dartmouth Atlas of Health Care, which has long tracked regional disparities in medical spending.
Many health economists say that reducing costs in parts of the country with high growth rates in per-patient Medicare expenditures — so they are closer to the national average — could save the nation hundreds of billions of dollars. And they predict that patients would not perceive any reduction in the quality of care they receive.
“Most of the differences across the country in spending are in how much time people spend in the hospital, and then when they are there, how many different doctors they see, how many difference specialists are involved in their care,” Dr. Fisher said.“Nobody thinks that residents of San Diego or San Francisco or other low-growing regions are being denied appropriate referrals to specialists,’’ he said. “They are just not getting unnecessary ones.”
Some experts, though, say the legislation still would not do enough to eliminate wasteful spending. And that debate is certain to intensify as health care legislation heads to the floor in both chambers of Congress.
Huh?
Besides providing insurance coverage, the other main goal of the legislation is to slow the steep rise in federal spending on health care, particularly on Medicare, which covers Americans over age 65 and the disabled. The analysis by the nonpartisan budget office shows that the savings generated by slowing Medicare growth, combined with revenue from new taxes, would more than cover the cost of providing health benefits to roughly 29 million people.
Medicare costs vary substantially, per enrollee, from one part of the country to another, and frequently the places where spending is highest, or growing the fastest, are not achieving better outcomes for patients, health care experts say.
“There is a lot of unnecessary care being provided in Medicare,” said Elliott S. Fisher, who helps produce the Dartmouth Atlas of Health Care, which has long tracked regional disparities in medical spending.
Many health economists say that reducing costs in parts of the country with high growth rates in per-patient Medicare expenditures — so they are closer to the national average — could save the nation hundreds of billions of dollars. And they predict that patients would not perceive any reduction in the quality of care they receive.
“Most of the differences across the country in spending are in how much time people spend in the hospital, and then when they are there, how many different doctors they see, how many difference specialists are involved in their care,” Dr. Fisher said.“Nobody thinks that residents of San Diego or San Francisco or other low-growing regions are being denied appropriate referrals to specialists,’’ he said. “They are just not getting unnecessary ones.”
Some experts, though, say the legislation still would not do enough to eliminate wasteful spending. And that debate is certain to intensify as health care legislation heads to the floor in both chambers of Congress.
Tuesday, October 6, 2009
Adding Health Advice to Online Medical Records
The national health care debate right now is all about giving more people affordable access to doctors and hospitals. Yet the vast majority of health care decisions — 80 percent or more, experts say — are really made by individuals, instead of medical professionals, whether choices are about diet and exercise or ways of managing chronic conditions like diabetes and heart disease.
The long-term answer to improving the health of the nation’s population and curbing costs, experts agree, is to help people make smarter decisions day in and day out about their own health. And the most powerful potential tool in the march toward intelligent consumerism in health care may be the Web.
That is why on Tuesday, a start-up company led by Adam Bosworth, former head of the Google Health team, plans to become the newest entrant to the online consumer health business.
Already, surveys show that a majority of adults in America routinely scour the Internet for health information. Doctors joke that the standard second opinion of diagnosis and treatment has become a patient’s Google search, with the results printed out and brought to the doctor’s office.
But the Web is still mainly a vast trove of generalized health information. The ideal, health experts say, would be to combine personal data with health information to deliver tailored health plans for individuals. That is what Mr. Bosworth and his San Francisco-based company, Keas (pronounced KEE-ahs) Inc., mean to do.
Using the Keas system, for example, a person with Type 2 diabetes might receive reminders, advice on diet and exercise, questions and prompts presented on the Web site or delivered by e-mail or text messages — all personalized for the person’s age, gender, weight and other health conditions.
Although success is far from certain, Keas has some big partners, including Google Health and Microsoft HealthVault.
Health technology experts say Keas is at the forefront of the effort to combine advanced Web and database technologies so it can personalize health education. The promise, they say, is a big step forward for online health tools, and could help accelerate their adoption — much as the spreadsheet program helped kick-start the personal computer industry back in the early 1980s.
“This is the next generation of applications for online health care,” said Dr. David C. Kibbe, a health technology expert and senior adviser to the American Academy of Family Physicians, who is also a member of the Keas advisory board.
The Obama administration has drafted its guidelines for producing electronic health records — patient records held by doctors and hospitals — with applications like Keas in mind. To qualify for government subsidies, the electronic records must be able to generate patient education materials that help guide care, and eventually share information with personally controlled health records of the sort offered by Google Health and Microsoft Health Vault.
“The goal is not just health care information, but knowledge about what that means and what action to take,” said Dr. John D. Halamka, chief information officer at the Harvard Medical School, and a member of a federal advisory group on electronic health records. “And that is what Keas, and others in different ways, are really starting to think through.”
Other initial partners of Keas are impressed with its technology. Healthwise, a nonprofit supplier of online health information, has created 15 care plans for Keas so far, including ones on high blood pressure, cholesterol, diabetes, weight management and stress management.
Healthwise provides health content to major managed care companies, insurers and Web portals, including Kaiser Permanente, Aetna, WebMD, Revolution Health, Yahoo, MSN and AOL.
But Keas, said Jim Giuffre, president of Healthwise, has a feature that is distinct from other health services online. “They have developed the technology to make decisions from personalized data,” Mr. Giuffre said. “We think it’s going to help consumers make better health care choices.”
Dr. Alan R. Greene, a clinical professor of pediatrics at the Stanford University School of Medicine, has two children’s care plans on Keas, for ear infections and asthma, and is working on others. Dr. Greene has done projects with WebMD and Yahoo in the past. “But this little start-up has an extremely powerful tool, both personalized and interactive,” he said.
For medical experts, Keas is currently helping them with technical assistance. But the company intends to keep simplifying the tools so that individual physicians or health experts can build their own care plans.
The technical game plan at Keas bears the imprint of Mr. Bosworth’s career. As a senior engineer at Microsoft in the 1990s, he led the design team that created Access, a personal computer database program, introduced in 1992, which enabled nonprogrammers to build databases. Later, Mr. Bosworth focused on Internet software, working on Microsoft’s Internet Explorer browser and then XML, an open technology for tagging text documents on the Web and data sharing between programs.
Database expertise, easy-to-use tools for nonexperts and automated data sharing among Web documents are all essential ingredients in the personalized care plans.
At Google, which he joined in 2004, Mr. Bosworth worked on Gmail, Blogger, online spreadsheets and other products. But the company’s leaders knew he was interested in using Internet technology to improve health care. Having studied history at Harvard, Mr. Bosworth is a voracious and eclectic reader and a globe-trotting traveler. (The name “kea” refers to a species of alpine parrot, which he spotted on the South Island of New Zealand).
“I spent 25 years of my life building Lego blocks for computing,” said Mr. Bosworth, 54, adding that the time had come to pursue wider horizons.
His years at Google, Mr. Bosworth said, were good ones, and the work the health team was doing with personal health records was important. Moving people’s data online, where individuals can control it, he said, would be vital to using Internet technology to improve health care — and only big companies like Google and Microsoft can do that.
“But I decided my focus should be on the other side of the equation — what to do with the data,” he said.
So Mr. Bosworth left Google, founded Keas and started hiring people in March 2008. The company has 24 employees, and last December it received venture capital backing from Atlas Ventures and Ignition Partners.
The Keas site requires a user to sign in and fill out a questionnaire. Personal health records from Google Health and Microsoft Health Vault can be automatically fed into the Keas care plans.
Another early partner is Quest Diagnostics, the nation’s largest clinical laboratory company, and, with permission, an individual’s lab data can influence the Keas plans. Users can put in as much or as little personal information as they want. Because Keas works with care providers, like doctors, it is required by law to adhere to all federal rules under the Health Insurance Portability and Accountability Act, or HIPAA, for encrypting and handling information to safeguard the privacy of personal information, Mr. Bosworth said.
The care plans present personalized status reports, as individualized dashboards, showing a person to be in the red, yellow or green bands. Green is good, and care plans make recommendations on how to get there.
Initially, the care plans will be free, but eventually Keas will include subscriptions for plans, probably at a few dollars a month. Keas will take a slice, and pass the rest on to the plan creator — the model used by the Apple’s iPhone applications store.
“We’re still learning, so we’re in no rush to charge,” Mr. Bosworth said. “But the idea is that people will get paid for doing things that are really engaging and useful.”
In the long term, Mr. Bosworth hopes Keas will evolve into a marketplace, where health experts are the sellers, and consumers who want the best personalized advice are the buyers. “I think that’s a pretty big idea,” he said. “If it works, it helps drive consumerism into health care.”
The long-term answer to improving the health of the nation’s population and curbing costs, experts agree, is to help people make smarter decisions day in and day out about their own health. And the most powerful potential tool in the march toward intelligent consumerism in health care may be the Web.
That is why on Tuesday, a start-up company led by Adam Bosworth, former head of the Google Health team, plans to become the newest entrant to the online consumer health business.
Already, surveys show that a majority of adults in America routinely scour the Internet for health information. Doctors joke that the standard second opinion of diagnosis and treatment has become a patient’s Google search, with the results printed out and brought to the doctor’s office.
But the Web is still mainly a vast trove of generalized health information. The ideal, health experts say, would be to combine personal data with health information to deliver tailored health plans for individuals. That is what Mr. Bosworth and his San Francisco-based company, Keas (pronounced KEE-ahs) Inc., mean to do.
Using the Keas system, for example, a person with Type 2 diabetes might receive reminders, advice on diet and exercise, questions and prompts presented on the Web site or delivered by e-mail or text messages — all personalized for the person’s age, gender, weight and other health conditions.
Although success is far from certain, Keas has some big partners, including Google Health and Microsoft HealthVault.
Health technology experts say Keas is at the forefront of the effort to combine advanced Web and database technologies so it can personalize health education. The promise, they say, is a big step forward for online health tools, and could help accelerate their adoption — much as the spreadsheet program helped kick-start the personal computer industry back in the early 1980s.
“This is the next generation of applications for online health care,” said Dr. David C. Kibbe, a health technology expert and senior adviser to the American Academy of Family Physicians, who is also a member of the Keas advisory board.
The Obama administration has drafted its guidelines for producing electronic health records — patient records held by doctors and hospitals — with applications like Keas in mind. To qualify for government subsidies, the electronic records must be able to generate patient education materials that help guide care, and eventually share information with personally controlled health records of the sort offered by Google Health and Microsoft Health Vault.
“The goal is not just health care information, but knowledge about what that means and what action to take,” said Dr. John D. Halamka, chief information officer at the Harvard Medical School, and a member of a federal advisory group on electronic health records. “And that is what Keas, and others in different ways, are really starting to think through.”
Other initial partners of Keas are impressed with its technology. Healthwise, a nonprofit supplier of online health information, has created 15 care plans for Keas so far, including ones on high blood pressure, cholesterol, diabetes, weight management and stress management.
Healthwise provides health content to major managed care companies, insurers and Web portals, including Kaiser Permanente, Aetna, WebMD, Revolution Health, Yahoo, MSN and AOL.
But Keas, said Jim Giuffre, president of Healthwise, has a feature that is distinct from other health services online. “They have developed the technology to make decisions from personalized data,” Mr. Giuffre said. “We think it’s going to help consumers make better health care choices.”
Dr. Alan R. Greene, a clinical professor of pediatrics at the Stanford University School of Medicine, has two children’s care plans on Keas, for ear infections and asthma, and is working on others. Dr. Greene has done projects with WebMD and Yahoo in the past. “But this little start-up has an extremely powerful tool, both personalized and interactive,” he said.
For medical experts, Keas is currently helping them with technical assistance. But the company intends to keep simplifying the tools so that individual physicians or health experts can build their own care plans.
The technical game plan at Keas bears the imprint of Mr. Bosworth’s career. As a senior engineer at Microsoft in the 1990s, he led the design team that created Access, a personal computer database program, introduced in 1992, which enabled nonprogrammers to build databases. Later, Mr. Bosworth focused on Internet software, working on Microsoft’s Internet Explorer browser and then XML, an open technology for tagging text documents on the Web and data sharing between programs.
Database expertise, easy-to-use tools for nonexperts and automated data sharing among Web documents are all essential ingredients in the personalized care plans.
At Google, which he joined in 2004, Mr. Bosworth worked on Gmail, Blogger, online spreadsheets and other products. But the company’s leaders knew he was interested in using Internet technology to improve health care. Having studied history at Harvard, Mr. Bosworth is a voracious and eclectic reader and a globe-trotting traveler. (The name “kea” refers to a species of alpine parrot, which he spotted on the South Island of New Zealand).
“I spent 25 years of my life building Lego blocks for computing,” said Mr. Bosworth, 54, adding that the time had come to pursue wider horizons.
His years at Google, Mr. Bosworth said, were good ones, and the work the health team was doing with personal health records was important. Moving people’s data online, where individuals can control it, he said, would be vital to using Internet technology to improve health care — and only big companies like Google and Microsoft can do that.
“But I decided my focus should be on the other side of the equation — what to do with the data,” he said.
So Mr. Bosworth left Google, founded Keas and started hiring people in March 2008. The company has 24 employees, and last December it received venture capital backing from Atlas Ventures and Ignition Partners.
The Keas site requires a user to sign in and fill out a questionnaire. Personal health records from Google Health and Microsoft Health Vault can be automatically fed into the Keas care plans.
Another early partner is Quest Diagnostics, the nation’s largest clinical laboratory company, and, with permission, an individual’s lab data can influence the Keas plans. Users can put in as much or as little personal information as they want. Because Keas works with care providers, like doctors, it is required by law to adhere to all federal rules under the Health Insurance Portability and Accountability Act, or HIPAA, for encrypting and handling information to safeguard the privacy of personal information, Mr. Bosworth said.
The care plans present personalized status reports, as individualized dashboards, showing a person to be in the red, yellow or green bands. Green is good, and care plans make recommendations on how to get there.
Initially, the care plans will be free, but eventually Keas will include subscriptions for plans, probably at a few dollars a month. Keas will take a slice, and pass the rest on to the plan creator — the model used by the Apple’s iPhone applications store.
“We’re still learning, so we’re in no rush to charge,” Mr. Bosworth said. “But the idea is that people will get paid for doing things that are really engaging and useful.”
In the long term, Mr. Bosworth hopes Keas will evolve into a marketplace, where health experts are the sellers, and consumers who want the best personalized advice are the buyers. “I think that’s a pretty big idea,” he said. “If it works, it helps drive consumerism into health care.”
Monday, October 5, 2009
G.E. Chief Sees India Helping Cut Costs of U.S. Health Care
India will play a significant role in reducing health care costs in the United States as the Asian nation’s health care market expands, General Electric’s chief executive, Jeffrey R. Immelt, predicted here on Friday.
The Indian health care industry is “on the verge of substantial growth,” Mr. Immelt said. Health care products and services developed cheaply here will be exported to Western markets, cutting prices there, he said.
G.E.’s health care business includes diagnostic equipment and services, pharmaceutical research and development and patient monitoring.
The Indian public health care system has historically been overburdened and underfunded, particularly in rural areas. As income levels rise, private clinics and labs are springing up, and governments in some Indian states have begun to increase overall spending on health care.
The health care industry in India is expected to more than double in size from 2008 to 2012, to $75 billion, according to Technopak Advisors, a consulting company. In 2007, Americans spent $2.26 trillion on health care, according to the government.
Mr. Immelt’s comments were made at a news conference related to the restructuring of G.E.’s health care business in India. The company said it was aiming to simplify operations, allowing it to take advantage of the growing market.
GE Healthcare, based in Chalfont St. Giles, England, employs 46,000 people in 100 countries around the world. Revenue from the health care division was $17.3 billion in 2008, less than 10 percent of G.E.’s total.
Many analysts and health care executives say they share Mr. Immelt’s belief that innovations from emerging markets, particularly India, could lead to big changes in the United States health care system. Already, American health care companies are cutting costs by outsourcing services to India like reading X-rays or scheduling nursing visits.
India, rather than China, will be the source for new models and ideas about improving and lowering the cost of American health care because the health care industry in the United States has more in common with India than with China, Mr. Immelt said.
G.E. employs more than 14,500 people in India, in divisions from research and development to back-office functions. But to date, just a tiny fraction the company’s revenue comes from India, about $3 billion of a total $182.5 billion in 2008.
G.E. said it was selling three of its health care units in India — Medical Systems India, Life Sciences and Medical Diagnostics — to its venture with Wipro, the third-largest Indian information technology company.
The 19-year-old venture, Wipro GE Healthcare, already distributes 85 percent of GE Heathcare’s products and services in India, which include ultrasound scanners, fetal monitors and cardiology monitors, as well as the software and servicing associated with those machines.
The restructuring will allow G.E.’s units to “develop products even faster,” Mr. Immelt said, by providing “seamless” operations.
The Indian health care industry is “on the verge of substantial growth,” Mr. Immelt said. Health care products and services developed cheaply here will be exported to Western markets, cutting prices there, he said.
G.E.’s health care business includes diagnostic equipment and services, pharmaceutical research and development and patient monitoring.
The Indian public health care system has historically been overburdened and underfunded, particularly in rural areas. As income levels rise, private clinics and labs are springing up, and governments in some Indian states have begun to increase overall spending on health care.
The health care industry in India is expected to more than double in size from 2008 to 2012, to $75 billion, according to Technopak Advisors, a consulting company. In 2007, Americans spent $2.26 trillion on health care, according to the government.
Mr. Immelt’s comments were made at a news conference related to the restructuring of G.E.’s health care business in India. The company said it was aiming to simplify operations, allowing it to take advantage of the growing market.
GE Healthcare, based in Chalfont St. Giles, England, employs 46,000 people in 100 countries around the world. Revenue from the health care division was $17.3 billion in 2008, less than 10 percent of G.E.’s total.
Many analysts and health care executives say they share Mr. Immelt’s belief that innovations from emerging markets, particularly India, could lead to big changes in the United States health care system. Already, American health care companies are cutting costs by outsourcing services to India like reading X-rays or scheduling nursing visits.
India, rather than China, will be the source for new models and ideas about improving and lowering the cost of American health care because the health care industry in the United States has more in common with India than with China, Mr. Immelt said.
G.E. employs more than 14,500 people in India, in divisions from research and development to back-office functions. But to date, just a tiny fraction the company’s revenue comes from India, about $3 billion of a total $182.5 billion in 2008.
G.E. said it was selling three of its health care units in India — Medical Systems India, Life Sciences and Medical Diagnostics — to its venture with Wipro, the third-largest Indian information technology company.
The 19-year-old venture, Wipro GE Healthcare, already distributes 85 percent of GE Heathcare’s products and services in India, which include ultrasound scanners, fetal monitors and cardiology monitors, as well as the software and servicing associated with those machines.
The restructuring will allow G.E.’s units to “develop products even faster,” Mr. Immelt said, by providing “seamless” operations.
Friday, October 2, 2009
Swiss Health Care Thrives Without Public Option
Like every other country in Europe, Switzerland guarantees health care for all its citizens. But the system here does not remotely resemble the model of bureaucratic, socialized medicine often cited by opponents of universal coverage in the United States.
Swiss private insurers are required to offer coverage to all citizens, regardless of age or medical history. And those people, in turn, are obligated to buy health insurance.
That is why many academics who have studied the Swiss health care system have pointed to this Alpine nation of about 7.5 million as a model that delivers much of what Washington is aiming to accomplish — without the contentious option of a government-run health insurance plan.
In Congress, the Senate Finance Committee is dealing with legislation proposed by its chairman, Max Baucus, Democrat of Montana, which would require nearly all Americans to buy health insurance, but stops short of the government-run insurance option that is still strongly supported by liberal Democrats.
Two amendments that would have added a public option to the Baucus bill were voted down on Tuesday. But another Senate bill, like the House versions, calls for a public insurance option.
By many measures, the Swiss are healthier than Americans, and surveys indicate that Swiss people are generally happy with their system. Switzerland, moreover, provides high-quality care at costs well below what the United States spends per person. Swiss insurance companies offer the mandatory basic plan on a not-for-profit basis, although they are permitted to earn a profit on supplemental plans.
And yet, as a potential model for the United States, the Swiss health care system involves some important trade-offs that American consumers, insurers and health care providers might find hard to swallow.
The Swiss government does not “ration care” — that populist bogeyman in the American debate — but it does keep down overall spending by regulating drug prices and fees for lab tests and medical devices. It also requires patients to share some costs — at a higher level than in the United States — so they have an incentive to avoid unnecessary treatments. And some doctors grumble that cost controls are making it harder these days for a physician to make a franc.
The Swiss government also provides direct cash subsidies to people if health insurance equals more than 8 percent of personal income, and about 35 to 40 percent of households get some form of subsidy. In some cases, employers contribute part of the insurance premium, but, unlike in the United States, they do not receive a tax break for it. (All the health care proposals in Congress would provide a subsidy to moderate-income Americans.)
Unlike the United States, where the Medicare program for the elderly costs taxpayers about $500 billion a year, Switzerland has no special break for older Swiss people beyond the general subsidy.
“Switzerland’s health care system is different from virtually every other country in the world,” said Regina Herzlinger, a Harvard Business School professor who has studied the Swiss approach extensively.
“What I like about it is that it’s got universal coverage, it’s customer driven, and there are no intermediaries shopping on people’s behalf,” she added. “And there’s no waiting lists or rationing.”
Since being made mandatory in 1996, the Swiss system has become a popular model for experts seeking alternatives to government-run health care. Indeed, it has attracted some unlikely American admirers, like Bill O’Reilly, the Fox News talk show host. And it has lured some members of Congress on fact-finding trips here to seek ideas for overhauling the United States system.
The Swiss approach is also popular with patients like Frieda Burgstaller, 72, who says she likes the freedom of choice and access that the private system provides. “If the doctor says it has to be done, it’s done,” said Mrs. Burgstaller. “You don’t wait. And it’s covered.”
While many patients seem content, the burdens fall more heavily on doctors, especially general practitioners and pediatricians.
Dr. Gerlinde Schurter, Mrs. Burgstaller’s physician, says she feels squeezed by government regulators and insurance companies that have fought to hold down costs — most recently with a 15 percent cut in lab fees that forced her five-member group to lay off its principal technician.
Dr. Schurter also fears a so-called blue letter, a warning from an insurance company that she is prescribing too many drugs or expensive procedures.
If doctors cannot justify their treatments, they can be forced to repay insurers for a portion of the medical services prescribed. And while prescriptions are covered, the government has insisted that consumers fork over a 20 percent co-payment if they want brand-name drugs, rather than 10 percent for generics.
Similarly, the government health office also lowered reimbursements across the board for medical devices in 2006.
These are among the reasons health care costs consume 10.8 percent of gross domestic product in Switzerland, compared with 16 percent in the United States, the highest level of spending among industrial countries, according to the Organization for Economic Cooperation and Development.
Still, along with lower costs and the freedom to choose doctors come bigger bills for individual patients. On average, out-of-pocket payments come to $1,350 annually. That is the highest among the 30 countries tracked by the O.E.C.D. and well above the $890 average for the United States, which comes in second.
Then there are the hefty prices of the insurance policies themselves, which can top 14,000 Swiss francs a year for a family of four in Zurich, or about $13,600. That is roughly comparable to the national average annual premium for a family policy under employer-sponsored group plans in the United States, but in high-cost American cities the figure can be much higher.
Direct comparisons are hard to make, however, because in the American system, employers and employees share the cost of premiums, which are also exempt from individual and corporate income taxes.
Nevertheless, Swiss citizens relish the lack of bureaucracy, especially compared with systems in Britain and Germany, even if their doctors grumble.
As in the United States, practitioners typically are paid on a fee-for-service basis, rather than on salary. But they make less than their American counterparts. According to the O.E.C.D., specialists in Switzerland earn three times more than the nation’s average wage, compared with 5.6 times for American specialists. General practitioners in Switzerland make 2.7 times more than the average wage, versus 3.7 in the United States.
That is partly because the Swiss health insurers are not shy about using their muscle with physicians.
Pius Gyger, director of health economics and health policy at Helsana, the country’s biggest insurer, cannot suppress a smile when asked about the effectiveness of the so-called blue letters.
“If there’s something strange, we knock at the doctor’s door,” he said. “For doctors, it’s an incentive to treat economically, but often perceived as a threat.”
He estimates that only about 3 percent of doctors get the letters and that fewer than 1 percent actually have to return money. Still, Mr. Gyger said, “it’s an easy exercise for us and it has an effect.”
Despite pressure on general practitioners, hospital physicians like Edouard Battegay at the University of Zurich say universal coverage also lowers costs by reducing emergency room visits.
Indeed, his E.R. is as quiet and efficient as a Swiss watch, and he still expresses amazement at what he saw when he worked briefly in Seattle.
“I’ve seen things in the U.S. that I’ve never seen here; it was a state of disaster,” he said. “Chronic disease management is better here. If you don’t treat hypertension, you treat strokes. Not treating patients is expensive.”
And even Dr. Schurter — who says her income has been flat for the last five years — praises the virtues of the Swiss system for patients struck by catastrophe.
When her daughter was found to have leukemia seven years ago, “I never worried for a second how and if she’d get treatment and if it would be paid for,” she said. “All was granted as naturally as the air we breathe.”
Swiss private insurers are required to offer coverage to all citizens, regardless of age or medical history. And those people, in turn, are obligated to buy health insurance.
That is why many academics who have studied the Swiss health care system have pointed to this Alpine nation of about 7.5 million as a model that delivers much of what Washington is aiming to accomplish — without the contentious option of a government-run health insurance plan.
In Congress, the Senate Finance Committee is dealing with legislation proposed by its chairman, Max Baucus, Democrat of Montana, which would require nearly all Americans to buy health insurance, but stops short of the government-run insurance option that is still strongly supported by liberal Democrats.
Two amendments that would have added a public option to the Baucus bill were voted down on Tuesday. But another Senate bill, like the House versions, calls for a public insurance option.
By many measures, the Swiss are healthier than Americans, and surveys indicate that Swiss people are generally happy with their system. Switzerland, moreover, provides high-quality care at costs well below what the United States spends per person. Swiss insurance companies offer the mandatory basic plan on a not-for-profit basis, although they are permitted to earn a profit on supplemental plans.
And yet, as a potential model for the United States, the Swiss health care system involves some important trade-offs that American consumers, insurers and health care providers might find hard to swallow.
The Swiss government does not “ration care” — that populist bogeyman in the American debate — but it does keep down overall spending by regulating drug prices and fees for lab tests and medical devices. It also requires patients to share some costs — at a higher level than in the United States — so they have an incentive to avoid unnecessary treatments. And some doctors grumble that cost controls are making it harder these days for a physician to make a franc.
The Swiss government also provides direct cash subsidies to people if health insurance equals more than 8 percent of personal income, and about 35 to 40 percent of households get some form of subsidy. In some cases, employers contribute part of the insurance premium, but, unlike in the United States, they do not receive a tax break for it. (All the health care proposals in Congress would provide a subsidy to moderate-income Americans.)
Unlike the United States, where the Medicare program for the elderly costs taxpayers about $500 billion a year, Switzerland has no special break for older Swiss people beyond the general subsidy.
“Switzerland’s health care system is different from virtually every other country in the world,” said Regina Herzlinger, a Harvard Business School professor who has studied the Swiss approach extensively.
“What I like about it is that it’s got universal coverage, it’s customer driven, and there are no intermediaries shopping on people’s behalf,” she added. “And there’s no waiting lists or rationing.”
Since being made mandatory in 1996, the Swiss system has become a popular model for experts seeking alternatives to government-run health care. Indeed, it has attracted some unlikely American admirers, like Bill O’Reilly, the Fox News talk show host. And it has lured some members of Congress on fact-finding trips here to seek ideas for overhauling the United States system.
The Swiss approach is also popular with patients like Frieda Burgstaller, 72, who says she likes the freedom of choice and access that the private system provides. “If the doctor says it has to be done, it’s done,” said Mrs. Burgstaller. “You don’t wait. And it’s covered.”
While many patients seem content, the burdens fall more heavily on doctors, especially general practitioners and pediatricians.
Dr. Gerlinde Schurter, Mrs. Burgstaller’s physician, says she feels squeezed by government regulators and insurance companies that have fought to hold down costs — most recently with a 15 percent cut in lab fees that forced her five-member group to lay off its principal technician.
Dr. Schurter also fears a so-called blue letter, a warning from an insurance company that she is prescribing too many drugs or expensive procedures.
If doctors cannot justify their treatments, they can be forced to repay insurers for a portion of the medical services prescribed. And while prescriptions are covered, the government has insisted that consumers fork over a 20 percent co-payment if they want brand-name drugs, rather than 10 percent for generics.
Similarly, the government health office also lowered reimbursements across the board for medical devices in 2006.
These are among the reasons health care costs consume 10.8 percent of gross domestic product in Switzerland, compared with 16 percent in the United States, the highest level of spending among industrial countries, according to the Organization for Economic Cooperation and Development.
Still, along with lower costs and the freedom to choose doctors come bigger bills for individual patients. On average, out-of-pocket payments come to $1,350 annually. That is the highest among the 30 countries tracked by the O.E.C.D. and well above the $890 average for the United States, which comes in second.
Then there are the hefty prices of the insurance policies themselves, which can top 14,000 Swiss francs a year for a family of four in Zurich, or about $13,600. That is roughly comparable to the national average annual premium for a family policy under employer-sponsored group plans in the United States, but in high-cost American cities the figure can be much higher.
Direct comparisons are hard to make, however, because in the American system, employers and employees share the cost of premiums, which are also exempt from individual and corporate income taxes.
Nevertheless, Swiss citizens relish the lack of bureaucracy, especially compared with systems in Britain and Germany, even if their doctors grumble.
As in the United States, practitioners typically are paid on a fee-for-service basis, rather than on salary. But they make less than their American counterparts. According to the O.E.C.D., specialists in Switzerland earn three times more than the nation’s average wage, compared with 5.6 times for American specialists. General practitioners in Switzerland make 2.7 times more than the average wage, versus 3.7 in the United States.
That is partly because the Swiss health insurers are not shy about using their muscle with physicians.
Pius Gyger, director of health economics and health policy at Helsana, the country’s biggest insurer, cannot suppress a smile when asked about the effectiveness of the so-called blue letters.
“If there’s something strange, we knock at the doctor’s door,” he said. “For doctors, it’s an incentive to treat economically, but often perceived as a threat.”
He estimates that only about 3 percent of doctors get the letters and that fewer than 1 percent actually have to return money. Still, Mr. Gyger said, “it’s an easy exercise for us and it has an effect.”
Despite pressure on general practitioners, hospital physicians like Edouard Battegay at the University of Zurich say universal coverage also lowers costs by reducing emergency room visits.
Indeed, his E.R. is as quiet and efficient as a Swiss watch, and he still expresses amazement at what he saw when he worked briefly in Seattle.
“I’ve seen things in the U.S. that I’ve never seen here; it was a state of disaster,” he said. “Chronic disease management is better here. If you don’t treat hypertension, you treat strokes. Not treating patients is expensive.”
And even Dr. Schurter — who says her income has been flat for the last five years — praises the virtues of the Swiss system for patients struck by catastrophe.
When her daughter was found to have leukemia seven years ago, “I never worried for a second how and if she’d get treatment and if it would be paid for,” she said. “All was granted as naturally as the air we breathe.”
Thursday, October 1, 2009
80 percent agreement on health care? No way that's true
WASHINGTON — President Barack Obama has said this repeatedly: Members of Congress agree on "about 80 percent of what needs to be done" to overhaul America's health care system.
Democratic congressional leaders have echoed that claim, using it to underscore that overhauling America's health care system is within their grasp.
No one, however, can offer specifics about what that 80 percent entails, other than to say that everyone agrees on key principles. A lot of lawmakers scoff at the figure, particularly since Democrats disagree sharply on two central elements: Whether to create a government-run health-insurance plan, and how to pay for all the changes under discussion.
"I don't know what that number means. I have no idea how you'd calculate something like that," said Sen. Kent Conrad, D-N.D., a senior member of the Senate Finance Committee. On Wednesday that panel labored through another round of bill drafting. It hopes to finish its work later this week, but final congressional action on the legislation is still probably months _and lots of tense votes and debates — away.
Conrad's view has bipartisan support.
"I don't see it," said Sen. George Voinovich of Ohio, a centrist Republican whom Democrats often woo.
"Most of the 80 percent doesn't involve money," quipped Finance Committee member Sen. Orrin Hatch, R-Utah.
Nevertheless, "80 percent" has become Washington-speak for legislative progress on Obama's major 2009 domestic initiative.
Obama regularly cites the number.
"There is agreement in this chamber on about 80 percent of what needs to be done, putting us closer to the goal of reform that we have ever been," he told a joint session of Congress on Sept. 9. Eleven days later, he told CNN that "basically we've got 80 percent agreement."
White House spokesman Robert Gibbs tried Wednesday to explain what Obama meant:
"I think it represents a confluence by many involved in the health care reform debate on agreement as to how we get affordable, accessible insurance for 30 million Americans that don't have it, how we get important insurance reforms and how we cut costs for millions of Americans that are fortunate to have health insurance."
However, it was noted, no health care measure today would get 80 percent support in Congress.
"The 80 percent number wasn't to be used in any scenario," Gibbs replied.
Yet the 80 percent mantra has become Democratic gospel.
After meeting with Obama on Sept. 8, Senate Majority Leader Harry Reid, D-Nev., even went one better, declaring: "We think we're up to 90 percent of things there are agreed upon."
A few days later, House Speaker Nancy Pelosi, D-Calif., told reporters that of the bills approved so far by four congressional committees, "we're at least 80, 85 percent in harmony. We have to resolve the remaining pieces of it. That is very much within range."
Asked to clarify what those percentages mean, Reid spokesman Jim Manley said, "There is no list, but the House and Senate are getting closer to action."
Pelosi spokesman Nadeam Elshami said that the figure represents agreement among Democrats and includes accords on barring companies from rejecting people with pre-existing conditions, creating an insurance exchange or marketplace, helping lower income people get coverage, and increasing Medicare prescription drug benefits for seniors.
To be sure, lawmakers do agree on certain principles.
"They agree everyone should have access to affordable coverage and the market should be reformed," said Elizabeth Carpenter, associate policy director of the New America Foundation's Health Policy Center, a liberal research group.
Karen Ignagni, the president and chief executive officer at America's Health Insurance Plans, listed specific areas of agreement: Requiring everyone to seek coverage, increasing the safety net by providing help for lower-income people, and making changes in the insurance market.
However, Carpenter noted: "Where there's not agreement is on the choices necessary to solve the problem."
Democrats are split over whether to back the public option, a government-run insurance plan, or instead to encourage co-ops -- nonprofit consumer-run companies that would provide coverage. Most Republicans oppose both ideas.
And wide divisions still split Democrats about where to find revenue, with Republicans flatly opposed to the leading proposals. House Democratic leaders prefer imposing income tax surcharges on wealthier taxpayers, while Finance Committee Democrats are eyeing a 40 percent excise tax on high-end insurance policies.
Committee votes have rarely reflected an 80 percent majority on anything major. The House Energy and Commerce Committee approved health care legislation this summer by 31-28. The Senate Finance Committee this week rejected two efforts to include a public option, by 15-8 and 13-10.
Other flashpoints remain, notably on abortion, Medicare and other hot topics. These aren't small details; there are wide gaps on each, lawmakers concede.
Maybe that's why, when pressed, Democratic leaders edge back from the 80 percent claim. On Tuesday, House Majority Leader Steny Hoyer, D-Md., cited comments on health care recently by Republican Whip Eric Cantor of Virginia, and saw little common ground.
"It did not appear to me to leap off the page that we agree with 80 percent of what has been proposed," Hoyer concluded.
Democratic congressional leaders have echoed that claim, using it to underscore that overhauling America's health care system is within their grasp.
No one, however, can offer specifics about what that 80 percent entails, other than to say that everyone agrees on key principles. A lot of lawmakers scoff at the figure, particularly since Democrats disagree sharply on two central elements: Whether to create a government-run health-insurance plan, and how to pay for all the changes under discussion.
"I don't know what that number means. I have no idea how you'd calculate something like that," said Sen. Kent Conrad, D-N.D., a senior member of the Senate Finance Committee. On Wednesday that panel labored through another round of bill drafting. It hopes to finish its work later this week, but final congressional action on the legislation is still probably months _and lots of tense votes and debates — away.
Conrad's view has bipartisan support.
"I don't see it," said Sen. George Voinovich of Ohio, a centrist Republican whom Democrats often woo.
"Most of the 80 percent doesn't involve money," quipped Finance Committee member Sen. Orrin Hatch, R-Utah.
Nevertheless, "80 percent" has become Washington-speak for legislative progress on Obama's major 2009 domestic initiative.
Obama regularly cites the number.
"There is agreement in this chamber on about 80 percent of what needs to be done, putting us closer to the goal of reform that we have ever been," he told a joint session of Congress on Sept. 9. Eleven days later, he told CNN that "basically we've got 80 percent agreement."
White House spokesman Robert Gibbs tried Wednesday to explain what Obama meant:
"I think it represents a confluence by many involved in the health care reform debate on agreement as to how we get affordable, accessible insurance for 30 million Americans that don't have it, how we get important insurance reforms and how we cut costs for millions of Americans that are fortunate to have health insurance."
However, it was noted, no health care measure today would get 80 percent support in Congress.
"The 80 percent number wasn't to be used in any scenario," Gibbs replied.
Yet the 80 percent mantra has become Democratic gospel.
After meeting with Obama on Sept. 8, Senate Majority Leader Harry Reid, D-Nev., even went one better, declaring: "We think we're up to 90 percent of things there are agreed upon."
A few days later, House Speaker Nancy Pelosi, D-Calif., told reporters that of the bills approved so far by four congressional committees, "we're at least 80, 85 percent in harmony. We have to resolve the remaining pieces of it. That is very much within range."
Asked to clarify what those percentages mean, Reid spokesman Jim Manley said, "There is no list, but the House and Senate are getting closer to action."
Pelosi spokesman Nadeam Elshami said that the figure represents agreement among Democrats and includes accords on barring companies from rejecting people with pre-existing conditions, creating an insurance exchange or marketplace, helping lower income people get coverage, and increasing Medicare prescription drug benefits for seniors.
To be sure, lawmakers do agree on certain principles.
"They agree everyone should have access to affordable coverage and the market should be reformed," said Elizabeth Carpenter, associate policy director of the New America Foundation's Health Policy Center, a liberal research group.
Karen Ignagni, the president and chief executive officer at America's Health Insurance Plans, listed specific areas of agreement: Requiring everyone to seek coverage, increasing the safety net by providing help for lower-income people, and making changes in the insurance market.
However, Carpenter noted: "Where there's not agreement is on the choices necessary to solve the problem."
Democrats are split over whether to back the public option, a government-run insurance plan, or instead to encourage co-ops -- nonprofit consumer-run companies that would provide coverage. Most Republicans oppose both ideas.
And wide divisions still split Democrats about where to find revenue, with Republicans flatly opposed to the leading proposals. House Democratic leaders prefer imposing income tax surcharges on wealthier taxpayers, while Finance Committee Democrats are eyeing a 40 percent excise tax on high-end insurance policies.
Committee votes have rarely reflected an 80 percent majority on anything major. The House Energy and Commerce Committee approved health care legislation this summer by 31-28. The Senate Finance Committee this week rejected two efforts to include a public option, by 15-8 and 13-10.
Other flashpoints remain, notably on abortion, Medicare and other hot topics. These aren't small details; there are wide gaps on each, lawmakers concede.
Maybe that's why, when pressed, Democratic leaders edge back from the 80 percent claim. On Tuesday, House Majority Leader Steny Hoyer, D-Md., cited comments on health care recently by Republican Whip Eric Cantor of Virginia, and saw little common ground.
"It did not appear to me to leap off the page that we agree with 80 percent of what has been proposed," Hoyer concluded.
Wednesday, September 30, 2009
Senators reject second 'public option' amendment
WASHINGTON (MarketWatch) -- Members of the Senate Finance Committee on Tuesday rejected a second amendment to a health-care reform bill that would have created a government-run health-care plan option. The vote was 13 to 10. Sponsors Sens. Charles Schumer, D-N.Y., and Maria Cantwell, D-Wash., said the amendment would hold down rising health-care costs. Senators rejected a similar amendment earlier Tuesday.
(http://bit.ly/Am3Bg)
(http://bit.ly/Am3Bg)
Tuesday, July 28, 2009
Cliff Asness on Health Care
Hedge-fund manager Clifford Asness, writing at Stumblingontruth.com:
Myth #1 Health Care Costs Are Soaring:
No, they are not. The amount we spend on health care has indeed risen, in absolute terms, after inflation, and as a percentage of our incomes and GDP. That does not mean costs are soaring.
You cannot judge the “cost” of something by simply what you spend. You must also judge what you get. I’m reasonably certain the cost of 1950s level health care has dropped in real terms over the last 60 years (and you can probably have a barber from the year 1500 bleed you for almost nothing nowadays). Of course, with 1950s health care, lots of things will kill you that 2009 health care would prevent. Also, your quality of life, in many instances, would be far worse, but you will have a little bit more change in your pocket as the price will be lower. Want to take the deal? In fact, nobody in the US really wants 1950s health care (or even 1990s health care). They just want to pay 1950 prices for 2009 health care. They want the latest pills, techniques, therapies, general genius discoveries, and highly skilled labor that would make today’s health care seem like science fiction a few years ago. But alas, successful science fiction is expensive. . . .
Health care today is a combination of stuff that has existed for a while and a set of entirely new things that look like (and really are) miracles from the lens of even a few years ago. We spend more on health care because it’s better. Say it with me again, slowly—this is a good thing, not a bad thing. . . .
In summary, if one more person cites soaring health care costs as an indictment of the free market, when it is in fact a staggering achievement of the free market, I’m going to rupture their appendix and send them to a queue in the U.K. to get it fixed. Last we’ll see of them.
Myth #1 Health Care Costs Are Soaring:
No, they are not. The amount we spend on health care has indeed risen, in absolute terms, after inflation, and as a percentage of our incomes and GDP. That does not mean costs are soaring.
You cannot judge the “cost” of something by simply what you spend. You must also judge what you get. I’m reasonably certain the cost of 1950s level health care has dropped in real terms over the last 60 years (and you can probably have a barber from the year 1500 bleed you for almost nothing nowadays). Of course, with 1950s health care, lots of things will kill you that 2009 health care would prevent. Also, your quality of life, in many instances, would be far worse, but you will have a little bit more change in your pocket as the price will be lower. Want to take the deal? In fact, nobody in the US really wants 1950s health care (or even 1990s health care). They just want to pay 1950 prices for 2009 health care. They want the latest pills, techniques, therapies, general genius discoveries, and highly skilled labor that would make today’s health care seem like science fiction a few years ago. But alas, successful science fiction is expensive. . . .
Health care today is a combination of stuff that has existed for a while and a set of entirely new things that look like (and really are) miracles from the lens of even a few years ago. We spend more on health care because it’s better. Say it with me again, slowly—this is a good thing, not a bad thing. . . .
In summary, if one more person cites soaring health care costs as an indictment of the free market, when it is in fact a staggering achievement of the free market, I’m going to rupture their appendix and send them to a queue in the U.K. to get it fixed. Last we’ll see of them.
Thursday, July 23, 2009
Obama Moves to Reclaim the Debate on Health Care
WASHINGTON — President Obama tried on Wednesday to rally public support for overhauling the nation’s health care system and said for the first time that he would be willing to help pay for the plan by raising income taxes on families earning more than $1 million a year.
“If I see a proposal that is primarily funded through taxing middle-class families, I’m going to be opposed to that,” Mr. Obama said in a prime-time news conference in the East Room of the White House. A surcharge on the highest-income Americans, under consideration in the House, “meets my principle,” he said.
On a day when the leader of fiscally conservative Democrats said a deal was a long way off and House Speaker Nancy Pelosi insisted that she had the votes to push a bill through, Mr. Obama used the news conference to take his message over the heads of lawmakers and straight to the public. Conceding that “folks are skeptical,” he sought to convince Americans that overhauling the nation’s health care system would benefit them and strengthen the economy.
“If somebody told you that there is a plan out there that is guaranteed to double your health-care costs over the next 10 years,” he said, “that’s guaranteed to result in more Americans losing their health care, and that is by far the biggest contributor to our federal deficit, I think most people would be opposed to that,”
“That’s what we have right now,” he said. “So if we don’t change, we can’t expect a different result.”
While Mr. Obama declared, “it’s my job, I’m the president,” he did not use the appearance at the White House to make any fresh demands on Congress, which is struggling to meet his timetable for both chambers to pass legislation before members break for August recess. Mr. Obama did not repeat that demand Wednesday night.
Instead, he sounded cerebral as he delved into policy specifics for nearly an hour and tried to link them to the concerns of ordinary Americans.
As he sought to reassure the public that a new health care system would be an improvement, he also acknowledged that there would be changes that could be unsettling, a point that is often raised by critics of overhauling the health care system.
“Can I guarantee that there are going to be no changes in the health-care delivery system? No,” Mr. Obama said. “The whole point of this is to try to encourage changes that work for the American people and make them healthier.”
Health legislation is Mr. Obama’s highest legislative priority, and his success or failure could shape the rest of his presidency. But while he is under increasing pressure from leading Democrats to delve more deeply into the negotiations by taking positions on specific policy issues, he largely resisted doing so Wednesday night.
But the president did weigh in how the government might pay for the plan.
In addition to saying he would be open to taxing those households earning more than $1 million — a scaled-back version of an earlier proposal that would have imposed a surcharge on households earning $350,000 or more — he signaled that he was also receptive to another idea under consideration in the Senate: taxing employer-provided health benefits, as long as the tax did not fall on the middle class.
On Capitol Hill, Ms. Pelosi said Democrats remained on track to reach a deal on major health care legislation. But she acknowledged that the process had slowed in response to concerns among conservative Democrats about the cost of the bill, and that some House Democrats were reluctant to embrace the income surtax on high-earners without knowing whether the Senate would go along.
Indeed, even as Ms. Pelosi insisted that Congress was closer than ever to achieving a comprehensive overhaul of the nation’s health care system, leaders of the Blue Dogs, a conservative faction of Democrats, said a deal was still a long way off. Asked if the House Energy and Commerce Committee could resume work on the bill by late Thursday, as House leaders hoped, Representative Charlie Melancon, a Blue Dog from Louisiana, said: “No way.”
A senior Democratic aide on Capitol Hill said party leaders now believed it was essential for Mr. Obama to be more specific about what he wanted in a health care bill — and not just exhort Congress to pass one.
“The president needs to step in more forcefully and start making some decisions,” said the aide, speaking on condition of anonymity because he did not want to be publicly identified as criticizing Mr. Obama. “Everyone appreciates the fact that Obama has devoted so much time to health care. The bully pulpit is powerful. But in view of the deadlines Congress has missed, we would like to hear more from the president about what he wants in this bill.”
While he faces pressures from fellow Democrats, Mr. Obama is also fending off attacks from Republicans who sense an opportunity to knock him off his stride by arguing that the health care bill, estimated as costing more than $1 trillion over the next decade, will not slow or reduce the growth of health spending.
The White House has been in a running debate this week with Senator Jim DeMint, Republican of South Carolina, who predicted that health legislation would prove to be Mr. Obama’s “Waterloo moment” and would break the president. To that, Mr. Obama said: “This isn’t about me. I have great health insurance, and so does every member of Congress.”
In his opening remarks Wednesday night, Mr. Obama said he was aware that many Americans are asking, “What’s in this for me?” But he also tried to appeal to the nation’s conscience, casting the issue as a matter of urgency to families who are losing their life savings trying to pay for medical care and to businesses burdened by trying to provide coverage to their employees.
Asked what the rush was to meet his August deadline for passage of House and Senate bills, Mr. Obama replied: “I’m rushed because I get letters every day from families that are being clobbered by health care costs. They ask me, ‘Can you help?’ ”
In fact, there is another reason Mr. Obama is rushed: he knows time is not on his side. The more Congress delays passage of a health bill, the more time his Republican opponents will have to marshal their opposition and kill it.
“If you don’t set deadlines in this town, things don’t happen,” Mr. Obama said. “The default position is inertia.”
“If I see a proposal that is primarily funded through taxing middle-class families, I’m going to be opposed to that,” Mr. Obama said in a prime-time news conference in the East Room of the White House. A surcharge on the highest-income Americans, under consideration in the House, “meets my principle,” he said.
On a day when the leader of fiscally conservative Democrats said a deal was a long way off and House Speaker Nancy Pelosi insisted that she had the votes to push a bill through, Mr. Obama used the news conference to take his message over the heads of lawmakers and straight to the public. Conceding that “folks are skeptical,” he sought to convince Americans that overhauling the nation’s health care system would benefit them and strengthen the economy.
“If somebody told you that there is a plan out there that is guaranteed to double your health-care costs over the next 10 years,” he said, “that’s guaranteed to result in more Americans losing their health care, and that is by far the biggest contributor to our federal deficit, I think most people would be opposed to that,”
“That’s what we have right now,” he said. “So if we don’t change, we can’t expect a different result.”
While Mr. Obama declared, “it’s my job, I’m the president,” he did not use the appearance at the White House to make any fresh demands on Congress, which is struggling to meet his timetable for both chambers to pass legislation before members break for August recess. Mr. Obama did not repeat that demand Wednesday night.
Instead, he sounded cerebral as he delved into policy specifics for nearly an hour and tried to link them to the concerns of ordinary Americans.
As he sought to reassure the public that a new health care system would be an improvement, he also acknowledged that there would be changes that could be unsettling, a point that is often raised by critics of overhauling the health care system.
“Can I guarantee that there are going to be no changes in the health-care delivery system? No,” Mr. Obama said. “The whole point of this is to try to encourage changes that work for the American people and make them healthier.”
Health legislation is Mr. Obama’s highest legislative priority, and his success or failure could shape the rest of his presidency. But while he is under increasing pressure from leading Democrats to delve more deeply into the negotiations by taking positions on specific policy issues, he largely resisted doing so Wednesday night.
But the president did weigh in how the government might pay for the plan.
In addition to saying he would be open to taxing those households earning more than $1 million — a scaled-back version of an earlier proposal that would have imposed a surcharge on households earning $350,000 or more — he signaled that he was also receptive to another idea under consideration in the Senate: taxing employer-provided health benefits, as long as the tax did not fall on the middle class.
On Capitol Hill, Ms. Pelosi said Democrats remained on track to reach a deal on major health care legislation. But she acknowledged that the process had slowed in response to concerns among conservative Democrats about the cost of the bill, and that some House Democrats were reluctant to embrace the income surtax on high-earners without knowing whether the Senate would go along.
Indeed, even as Ms. Pelosi insisted that Congress was closer than ever to achieving a comprehensive overhaul of the nation’s health care system, leaders of the Blue Dogs, a conservative faction of Democrats, said a deal was still a long way off. Asked if the House Energy and Commerce Committee could resume work on the bill by late Thursday, as House leaders hoped, Representative Charlie Melancon, a Blue Dog from Louisiana, said: “No way.”
A senior Democratic aide on Capitol Hill said party leaders now believed it was essential for Mr. Obama to be more specific about what he wanted in a health care bill — and not just exhort Congress to pass one.
“The president needs to step in more forcefully and start making some decisions,” said the aide, speaking on condition of anonymity because he did not want to be publicly identified as criticizing Mr. Obama. “Everyone appreciates the fact that Obama has devoted so much time to health care. The bully pulpit is powerful. But in view of the deadlines Congress has missed, we would like to hear more from the president about what he wants in this bill.”
While he faces pressures from fellow Democrats, Mr. Obama is also fending off attacks from Republicans who sense an opportunity to knock him off his stride by arguing that the health care bill, estimated as costing more than $1 trillion over the next decade, will not slow or reduce the growth of health spending.
The White House has been in a running debate this week with Senator Jim DeMint, Republican of South Carolina, who predicted that health legislation would prove to be Mr. Obama’s “Waterloo moment” and would break the president. To that, Mr. Obama said: “This isn’t about me. I have great health insurance, and so does every member of Congress.”
In his opening remarks Wednesday night, Mr. Obama said he was aware that many Americans are asking, “What’s in this for me?” But he also tried to appeal to the nation’s conscience, casting the issue as a matter of urgency to families who are losing their life savings trying to pay for medical care and to businesses burdened by trying to provide coverage to their employees.
Asked what the rush was to meet his August deadline for passage of House and Senate bills, Mr. Obama replied: “I’m rushed because I get letters every day from families that are being clobbered by health care costs. They ask me, ‘Can you help?’ ”
In fact, there is another reason Mr. Obama is rushed: he knows time is not on his side. The more Congress delays passage of a health bill, the more time his Republican opponents will have to marshal their opposition and kill it.
“If you don’t set deadlines in this town, things don’t happen,” Mr. Obama said. “The default position is inertia.”
Wednesday, July 22, 2009
Challenge to Health Bill: Selling Reform
WASHINGTON — What’s in it for me?
On the subject of health care reform, most Americans probably don’t have a good answer to the question. And that, obviously, is a problem for the White House and for Democratic leaders in Congress.
Current bills would expand the number of insured — but 90 percent of voters already have insurance. Congressional leaders say the bills would cut costs. But experts are dubious. Instead, they point out that covering the uninsured would cost billions.
So the typical person watching from afar is left to wonder: What will this project mean for me, besides possibly higher taxes?
Barack Obama was able to rise from the Illinois State Senate to the presidency in large measure because of his ability to explain complex issues and then to make a persuasive argument. He now has a challenge worthy of his skills.
Our health care system is engineered, deliberately or not, to resist change. The people who pay for it — you and I — often don’t realize that they’re paying for it. Money comes out of our paychecks, in withheld taxes and insurance premiums, before we ever see it. It then flows to doctors, hospitals and drug makers without our realizing that it was our money to begin with.
The doctors, hospitals and drug makers use the money to treat us, and we of course do see those treatments. If anything, we want more of them. They are supposed to make us healthy, and they appear to be free. What’s not to like?
The immediate task facing Mr. Obama — in his news conference on Wednesday night and beyond — is to explain that the health care system doesn’t really work the way it seems to. He won’t be able to put it in such blunt terms. But he will need to explain how a typical household, one that has insurance and thinks it always will, is being harmed.
The United States now devotes one-sixth of its economy to medicine. Divvy that up, and health care will cost the typical household roughly $15,000 this year, including the often-invisible contributions by employers. That is almost twice as much as two decades ago (adjusting for inflation). It’s about $6,500 more than in other rich countries, on average.
We may not be aware of this stealth $6,500 health care tax, but if you take a moment to think, it makes sense. Over the last 20 years, health costs have soared, and incomes have grown painfully slowly. The two trends are directly connected: employers had to spend more money on benefits, leaving less for raises.
In exchange for the $6,500 tax, we receive many things. We get cutting-edge research and heroic surgeries. But we also get fabulous amounts of waste — bureaucratic and medical.
One thing we don’t get is better health than other rich countries, whether it’s Canada, France, Japan or many others. In some categories, like emergency room care, this country seems to do better. In others, like chronic-disease care, it seems to do worse. “The fact that we spend all this money and don’t have better outcomes than other countries is a sign of how poorly we’re doing,” says Dr. Alan Garber of Stanford University. “We should be doing way better.”
So far, no one has grabbed the mantle as the defender of the typical household — the opponent of spending that creates profits for drug companies and hospitals at no benefit to people’s health and at significant cost to their finances.
Republicans have actually come out against doing research into which procedures improve health. Blue Dog Democrats oppose wasteful spending but until recently have not been specific. Liberals rely on the wishful idea — yet to be supported by evidence — that more preventive care will reduce spending. The American Medical Association, not surprisingly, endorses this notion of doing more care in the name of less care.
Mr. Obama says many of the right things. Yet the White House has not yet shown that it’s willing to fight the necessary fights. Remember: the $6,500 tax benefits someone. And that someone has a lobbyist. The lobbyist even has an argument about how he is acting in your interest.
These lobbyists, who include big names like Dick Armey and Richard Gephardt, have succeeded in persuading Congress to write bills with a rather clever feature. They include some of the ideas that would cut costs — but defang them.
One proposal would pay doctors based on the quality of care, rather than quantity, but it’s a pilot project. Doctors who already provide good care may well opt in; doctors providing wasteful but lucrative care surely will not. The bills would also finance research on which treatments are effective. But Medicare officials would not be prevented from continuing to spend taxpayer money on ineffective treatments.
In reaction, some people who should be natural supporters of reform have become critics. The Mayo Clinic — one of Mr. Obama’s favorite models of care — says the legislation fails to “help create higher-quality, more affordable health care.”
On Thursday, Mr. Obama will visit another example he likes to cite, the Cleveland Clinic. Its successes capture what real reform would look like. Like Mayo, the Cleveland Clinic pays its doctors a salary, rather than piecemeal, and delivers excellent results for relatively little money.
“I came here 30-some years ago,” Delos Cosgrove, a heart surgeon who is the clinic’s chief executive, told me. “And I have never received any additional pay for anything I did. It never made a difference if I did five heart operations or four — I got paid the same amount of money. So I had no incentive to do any extra tests or anything.”
This is the crux of the issue, economists say: the current fee-for-service system needs to be remade. The administration has made some progress, by proposing a powerful new Medicare overseer who could force the program to pay for good results and stop paying for bad ones.
But even a strong Medicare plan won’t be enough. Reform will need to attack the piecemeal system in numerous ways. Among the most promising, which Mr. Obama has resisted, is a limit on tax subsidies for the costliest health insurance plans. This limit would give households and employers a reason to become smarter shoppers.
Above all, reform can’t revolve around politely asking the rest of the medical system to become more like the Cleveland Clinic.
In recent weeks, polls have shown that a solid majority of Americans support the stated goals of health reform. Most want the uninsured to be covered and want the option of a government-run insurance plan. Yet the polls also show that people are worried about the package emerging from Congress.
Maybe they have a point.
On the subject of health care reform, most Americans probably don’t have a good answer to the question. And that, obviously, is a problem for the White House and for Democratic leaders in Congress.
Current bills would expand the number of insured — but 90 percent of voters already have insurance. Congressional leaders say the bills would cut costs. But experts are dubious. Instead, they point out that covering the uninsured would cost billions.
So the typical person watching from afar is left to wonder: What will this project mean for me, besides possibly higher taxes?
Barack Obama was able to rise from the Illinois State Senate to the presidency in large measure because of his ability to explain complex issues and then to make a persuasive argument. He now has a challenge worthy of his skills.
Our health care system is engineered, deliberately or not, to resist change. The people who pay for it — you and I — often don’t realize that they’re paying for it. Money comes out of our paychecks, in withheld taxes and insurance premiums, before we ever see it. It then flows to doctors, hospitals and drug makers without our realizing that it was our money to begin with.
The doctors, hospitals and drug makers use the money to treat us, and we of course do see those treatments. If anything, we want more of them. They are supposed to make us healthy, and they appear to be free. What’s not to like?
The immediate task facing Mr. Obama — in his news conference on Wednesday night and beyond — is to explain that the health care system doesn’t really work the way it seems to. He won’t be able to put it in such blunt terms. But he will need to explain how a typical household, one that has insurance and thinks it always will, is being harmed.
The United States now devotes one-sixth of its economy to medicine. Divvy that up, and health care will cost the typical household roughly $15,000 this year, including the often-invisible contributions by employers. That is almost twice as much as two decades ago (adjusting for inflation). It’s about $6,500 more than in other rich countries, on average.
We may not be aware of this stealth $6,500 health care tax, but if you take a moment to think, it makes sense. Over the last 20 years, health costs have soared, and incomes have grown painfully slowly. The two trends are directly connected: employers had to spend more money on benefits, leaving less for raises.
In exchange for the $6,500 tax, we receive many things. We get cutting-edge research and heroic surgeries. But we also get fabulous amounts of waste — bureaucratic and medical.
One thing we don’t get is better health than other rich countries, whether it’s Canada, France, Japan or many others. In some categories, like emergency room care, this country seems to do better. In others, like chronic-disease care, it seems to do worse. “The fact that we spend all this money and don’t have better outcomes than other countries is a sign of how poorly we’re doing,” says Dr. Alan Garber of Stanford University. “We should be doing way better.”
So far, no one has grabbed the mantle as the defender of the typical household — the opponent of spending that creates profits for drug companies and hospitals at no benefit to people’s health and at significant cost to their finances.
Republicans have actually come out against doing research into which procedures improve health. Blue Dog Democrats oppose wasteful spending but until recently have not been specific. Liberals rely on the wishful idea — yet to be supported by evidence — that more preventive care will reduce spending. The American Medical Association, not surprisingly, endorses this notion of doing more care in the name of less care.
Mr. Obama says many of the right things. Yet the White House has not yet shown that it’s willing to fight the necessary fights. Remember: the $6,500 tax benefits someone. And that someone has a lobbyist. The lobbyist even has an argument about how he is acting in your interest.
These lobbyists, who include big names like Dick Armey and Richard Gephardt, have succeeded in persuading Congress to write bills with a rather clever feature. They include some of the ideas that would cut costs — but defang them.
One proposal would pay doctors based on the quality of care, rather than quantity, but it’s a pilot project. Doctors who already provide good care may well opt in; doctors providing wasteful but lucrative care surely will not. The bills would also finance research on which treatments are effective. But Medicare officials would not be prevented from continuing to spend taxpayer money on ineffective treatments.
In reaction, some people who should be natural supporters of reform have become critics. The Mayo Clinic — one of Mr. Obama’s favorite models of care — says the legislation fails to “help create higher-quality, more affordable health care.”
On Thursday, Mr. Obama will visit another example he likes to cite, the Cleveland Clinic. Its successes capture what real reform would look like. Like Mayo, the Cleveland Clinic pays its doctors a salary, rather than piecemeal, and delivers excellent results for relatively little money.
“I came here 30-some years ago,” Delos Cosgrove, a heart surgeon who is the clinic’s chief executive, told me. “And I have never received any additional pay for anything I did. It never made a difference if I did five heart operations or four — I got paid the same amount of money. So I had no incentive to do any extra tests or anything.”
This is the crux of the issue, economists say: the current fee-for-service system needs to be remade. The administration has made some progress, by proposing a powerful new Medicare overseer who could force the program to pay for good results and stop paying for bad ones.
But even a strong Medicare plan won’t be enough. Reform will need to attack the piecemeal system in numerous ways. Among the most promising, which Mr. Obama has resisted, is a limit on tax subsidies for the costliest health insurance plans. This limit would give households and employers a reason to become smarter shoppers.
Above all, reform can’t revolve around politely asking the rest of the medical system to become more like the Cleveland Clinic.
In recent weeks, polls have shown that a solid majority of Americans support the stated goals of health reform. Most want the uninsured to be covered and want the option of a government-run insurance plan. Yet the polls also show that people are worried about the package emerging from Congress.
Maybe they have a point.
Tuesday, July 21, 2009
Employer Health Insurance Mandates: House vs. Senate
The two big health bills in the news at the moment — the one introduced in the House yesterday, and the one approved by the Senate HELP committee today — would both extend health insurance to millions more people. Both would also require that all but the smallest employers either offer health insurance to their workers, or pay a penalty.
But there are some key differences between the penalties that would be imposed by the two bills.
The mandate in the Senate bill, which applies to businesses with more than 25 employees, requires companies to pay a penalty of $750 per full-time employee.
Under the House bill, employers with payrolls of more than $400,000 a year would have to provide health insurance or pay an 8% penalty. Companies with payrolls between $250,000 and $400,000 would pay lower penalties; smaller companies wouldn’t be subject to the mandate.
So if we do a quick, back-of-the-envelope calculation, we can imagine a 50-person company paying each employee $50,000 for a total payroll of $2.5 million a year. That company’s penalty under the House bill for not offering insurance would be $200,000, or $4,000 per employee.
The Senate bill’s $750-per-employee penalty, by contrast, would add up to $37,500.
(Source: Wall Street Journal, Link: http://bit.ly/12SxyX)
But there are some key differences between the penalties that would be imposed by the two bills.
The mandate in the Senate bill, which applies to businesses with more than 25 employees, requires companies to pay a penalty of $750 per full-time employee.
Under the House bill, employers with payrolls of more than $400,000 a year would have to provide health insurance or pay an 8% penalty. Companies with payrolls between $250,000 and $400,000 would pay lower penalties; smaller companies wouldn’t be subject to the mandate.
So if we do a quick, back-of-the-envelope calculation, we can imagine a 50-person company paying each employee $50,000 for a total payroll of $2.5 million a year. That company’s penalty under the House bill for not offering insurance would be $200,000, or $4,000 per employee.
The Senate bill’s $750-per-employee penalty, by contrast, would add up to $37,500.
(Source: Wall Street Journal, Link: http://bit.ly/12SxyX)
Monday, July 20, 2009
Friday, July 17, 2009
House Panels Approve Health Plans
WASHINGTON — The House Committee on Education and Labor approved legislation on Friday morning to remake the nation’s health care system by a vote of 26 to 22. Three Democrats crossed party lines and voted against the bill — Jason Altmire of Pennsylvania, Jared Polis of Colorado and Dina Titus of Nevada.
The vote came eight hours after the House Ways and Means Committee approved the measure, 23 to 18, with three Democrats voting no. The dissident Democrats were Ron Kind of Wisconsin, Earl Pomeroy of North Dakota and John Tanner of Tennessee.
Democrats who voted against the bill cited such concerns as the tax increases, their effect on small businesses and the possibility that a new government-run health insurance plan might underpay doctors and hospitals by using Medicare reimbursement rates.
Of the five Congressional committees working on the legislation, three have now approved it.
On Thursday, a party-line Senate committee vote on health care legislation also underscored the absence of political consensus on what would be the biggest changes in social policy in more than 40 years.
The bill, which aims to make health insurance available to all Americans, was approved, 13 to 10, by the Committee on Health, Education, Labor and Pensions. The panel was the first Congressional committee to approve the health legislation.
“If you don’t have health insurance, this bill is for you,” said Senator Christopher J. Dodd, Democrat of Connecticut, who presided over more than three weeks of grueling committee sessions. “It stops insurance companies from denying coverage based on pre-existing conditions. It guarantees that you’ll be able to find an insurance plan that works for you, including a public health insurance option if you want it.”
The bill would also help people who have insurance, Mr. Dodd said, because “it eliminates annual and lifetime caps on coverage and ensures that your out-of-pocket costs will never exceed your ability to pay.”
But the partisan split signified potential trouble ahead. Republicans on the panel, who voted unanimously against the measure, described the idea of a new public insurance option as a deal-breaker. They said they still hoped that a consensus bill would emerge from the Senate Finance Committee.
The health and finance committees share jurisdiction over health issues. The finance panel, the next step on the way to passage of any measure, is now the focus of intense scrutiny. It must say how it intends to pay for its proposals and, unlike the health panel, has the power to do so because it can write tax legislation and has authority over Medicare and Medicaid.
President Obama hailed the Senate health committee’s action, but reiterated his insistence that each chamber of Congress approve a health care bill before the August recess. His comments increased pressure on the chairman of the Finance Committee, Senator Max Baucus, Democrat of Montana, who has been struggling for months to get a bipartisan bill.
“The HELP committee’s success should give us hope, but it should not give us pause,” Mr. Obama said. “It should instead provide the urgency for both the House and Senate to finish their critical work on health reform before the August recess.”
Senators said the White House had been sending mixed signals. For months, they said, it emphasized the need for a bipartisan bill. But in the last 10 days, one Democrat said, the message has been: “Hurry up. If you have to go without Republicans, it’s not the end of the world.”
As a presidential candidate, Mr. Obama boasted of his ability to transcend partisan splits that had stymied action in Washington. At a candidates’ forum in Las Vegas in March 2007 — even before he had a detailed health care proposal — Mr. Obama declared that “the most important challenge is to build a political consensus” on covering all Americans.
The Senate majority leader, Harry Reid of Nevada, has said he hopes to have a health care bill on the floor by July 27. That goal appears unrealistic, even though members of the Finance Committee said they were making progress in talks on how to pay for their bill, expected to cost at least $1 trillion over 10 years.
Several Democratic Finance Committee members, including Kent Conrad of North Dakota and Charles E. Schumer of New York, said they were intent on reaching an agreement with Republicans and were more concerned about the contents of the bill than the timetable.
It is unclear how long the White House and Democratic leaders in Congress will give Mr. Baucus to work things out. The senator said he was still optimistic about winning support from several Republicans on his committee like Charles E. Grassley of Iowa and Olympia J. Snowe of Maine.
Mr. Schumer said: “There’s a strong preference for bipartisanship because it makes the bill easier to pass. But if we cannot get bipartisanship, we must forge ahead because health care reform is too important."
Republicans said they were prepared for the possibility that Mr. Baucus or leaders of his party would lose patience and plow ahead on their own, in the absence of a bipartisan agreement.
“Time is fleeting,” Mr. Grassley said, praising Mr. Baucus’s efforts. On the most contentious issues, like the proposal for a new public insurance plan, he said, Mr. Baucus has shown that “he is willing to find a middle ground; he’s not an ideologue.”
Mr. Dodd said it was more important to get “a good bill” than a bipartisan one, even as he acknowledged that a bill with bipartisan support would be more sustainable in the long run.
“There’s a value in achieving bipartisanship,” Mr. Dodd said, “but I will not sacrifice a good bill for that. The people we are working for are not our colleagues, but the American public.” Mr. Dodd presided in the absence of Senator Edward M. Kennedy, Democrat of Massachusetts, the longtime champion of universal coverage who is battling cancer.
White House officials said they had a new standard for bipartisanship: the number of Republican ideas incorporated in the legislation, rather than the number of Republican votes for a Democratic bill. Mr. Obama said the health committee bill “includes 160 Republican amendments,” and he said that was “a hopeful sign of bipartisan support for the final product.”
Republicans said many of those amendments were technical, and they were scathing in their criticism of the bill approved by the health committee.
With a hint of sarcasm, Senator Michael B. Enzi of Wyoming, the senior Republican on the panel, noted that the bill’s title was the Affordable Health Choices Act. But “with its trillion-dollar price tag,” he said, “this bill is anything but affordable.”
“The bill gets an F,” Mr. Enzi said.
Senator Orrin G. Hatch of Utah, a Republican who has teamed up with Democrats to pass major health care bills over the last 25 years, said the measure approved Wednesday was “totally partisan.”
“From the start of the health care debate,” Mr. Hatch said, “Democrats have completely shut us out of the process.”
Senator Judd Gregg, Republican of New Hampshire, said the bill would not provide universal coverage or reduce health costs, but would result in some Americans’ losing insurance or even their jobs. “Small business will be massively impacted,” Mr. Gregg said.
Senator Barbara A. Mikulski, Democrat of Maryland, said the Republicans were sore losers. “We gave them hours of debate and opportunities to offer unlimited amendments,” she said. “At the end of the day, they did not want to support universal health coverage.”
The vote came eight hours after the House Ways and Means Committee approved the measure, 23 to 18, with three Democrats voting no. The dissident Democrats were Ron Kind of Wisconsin, Earl Pomeroy of North Dakota and John Tanner of Tennessee.
Democrats who voted against the bill cited such concerns as the tax increases, their effect on small businesses and the possibility that a new government-run health insurance plan might underpay doctors and hospitals by using Medicare reimbursement rates.
Of the five Congressional committees working on the legislation, three have now approved it.
On Thursday, a party-line Senate committee vote on health care legislation also underscored the absence of political consensus on what would be the biggest changes in social policy in more than 40 years.
The bill, which aims to make health insurance available to all Americans, was approved, 13 to 10, by the Committee on Health, Education, Labor and Pensions. The panel was the first Congressional committee to approve the health legislation.
“If you don’t have health insurance, this bill is for you,” said Senator Christopher J. Dodd, Democrat of Connecticut, who presided over more than three weeks of grueling committee sessions. “It stops insurance companies from denying coverage based on pre-existing conditions. It guarantees that you’ll be able to find an insurance plan that works for you, including a public health insurance option if you want it.”
The bill would also help people who have insurance, Mr. Dodd said, because “it eliminates annual and lifetime caps on coverage and ensures that your out-of-pocket costs will never exceed your ability to pay.”
But the partisan split signified potential trouble ahead. Republicans on the panel, who voted unanimously against the measure, described the idea of a new public insurance option as a deal-breaker. They said they still hoped that a consensus bill would emerge from the Senate Finance Committee.
The health and finance committees share jurisdiction over health issues. The finance panel, the next step on the way to passage of any measure, is now the focus of intense scrutiny. It must say how it intends to pay for its proposals and, unlike the health panel, has the power to do so because it can write tax legislation and has authority over Medicare and Medicaid.
President Obama hailed the Senate health committee’s action, but reiterated his insistence that each chamber of Congress approve a health care bill before the August recess. His comments increased pressure on the chairman of the Finance Committee, Senator Max Baucus, Democrat of Montana, who has been struggling for months to get a bipartisan bill.
“The HELP committee’s success should give us hope, but it should not give us pause,” Mr. Obama said. “It should instead provide the urgency for both the House and Senate to finish their critical work on health reform before the August recess.”
Senators said the White House had been sending mixed signals. For months, they said, it emphasized the need for a bipartisan bill. But in the last 10 days, one Democrat said, the message has been: “Hurry up. If you have to go without Republicans, it’s not the end of the world.”
As a presidential candidate, Mr. Obama boasted of his ability to transcend partisan splits that had stymied action in Washington. At a candidates’ forum in Las Vegas in March 2007 — even before he had a detailed health care proposal — Mr. Obama declared that “the most important challenge is to build a political consensus” on covering all Americans.
The Senate majority leader, Harry Reid of Nevada, has said he hopes to have a health care bill on the floor by July 27. That goal appears unrealistic, even though members of the Finance Committee said they were making progress in talks on how to pay for their bill, expected to cost at least $1 trillion over 10 years.
Several Democratic Finance Committee members, including Kent Conrad of North Dakota and Charles E. Schumer of New York, said they were intent on reaching an agreement with Republicans and were more concerned about the contents of the bill than the timetable.
It is unclear how long the White House and Democratic leaders in Congress will give Mr. Baucus to work things out. The senator said he was still optimistic about winning support from several Republicans on his committee like Charles E. Grassley of Iowa and Olympia J. Snowe of Maine.
Mr. Schumer said: “There’s a strong preference for bipartisanship because it makes the bill easier to pass. But if we cannot get bipartisanship, we must forge ahead because health care reform is too important."
Republicans said they were prepared for the possibility that Mr. Baucus or leaders of his party would lose patience and plow ahead on their own, in the absence of a bipartisan agreement.
“Time is fleeting,” Mr. Grassley said, praising Mr. Baucus’s efforts. On the most contentious issues, like the proposal for a new public insurance plan, he said, Mr. Baucus has shown that “he is willing to find a middle ground; he’s not an ideologue.”
Mr. Dodd said it was more important to get “a good bill” than a bipartisan one, even as he acknowledged that a bill with bipartisan support would be more sustainable in the long run.
“There’s a value in achieving bipartisanship,” Mr. Dodd said, “but I will not sacrifice a good bill for that. The people we are working for are not our colleagues, but the American public.” Mr. Dodd presided in the absence of Senator Edward M. Kennedy, Democrat of Massachusetts, the longtime champion of universal coverage who is battling cancer.
White House officials said they had a new standard for bipartisanship: the number of Republican ideas incorporated in the legislation, rather than the number of Republican votes for a Democratic bill. Mr. Obama said the health committee bill “includes 160 Republican amendments,” and he said that was “a hopeful sign of bipartisan support for the final product.”
Republicans said many of those amendments were technical, and they were scathing in their criticism of the bill approved by the health committee.
With a hint of sarcasm, Senator Michael B. Enzi of Wyoming, the senior Republican on the panel, noted that the bill’s title was the Affordable Health Choices Act. But “with its trillion-dollar price tag,” he said, “this bill is anything but affordable.”
“The bill gets an F,” Mr. Enzi said.
Senator Orrin G. Hatch of Utah, a Republican who has teamed up with Democrats to pass major health care bills over the last 25 years, said the measure approved Wednesday was “totally partisan.”
“From the start of the health care debate,” Mr. Hatch said, “Democrats have completely shut us out of the process.”
Senator Judd Gregg, Republican of New Hampshire, said the bill would not provide universal coverage or reduce health costs, but would result in some Americans’ losing insurance or even their jobs. “Small business will be massively impacted,” Mr. Gregg said.
Senator Barbara A. Mikulski, Democrat of Maryland, said the Republicans were sore losers. “We gave them hours of debate and opportunities to offer unlimited amendments,” she said. “At the end of the day, they did not want to support universal health coverage.”
Thursday, July 16, 2009
Significant Anthem Blue Cross California Small Group Changes Effective July 1, 2009
Anthem Blue Cross of California announced that they will be making major changes to their small group health insurance plans effective July 1, 2009. Specifically, they will be adding 14 new plans. Beginning January 1, 2010, Anthem Blue Cross will discontinue 9 plans.
Anthem calls their entire portfolio of small business medical plans Employee Elect with additional portfolios referred to as Employee Choice and BeneFits. During the past 10 years the Employee Elect portfolio has grown from 12 plans to 29. With these changes Anthem Blue Cross will offer 34 plans in their Employee Elect portfolio, including 10 HMO plans. For many years Anthem Blue Cross only offered 3 HMOs: the 100%; Classic $250; and the Saver HMO.
According to Anthem Blue Cross, their research about consumer preferences indicates that people want many choices. The large selection of plans addresses this preference. A small business in California (2-50 employees) can offer all 34 plans to their employees at one time.
To help make sense of the many plans, Anthem Blue Cross has grouped the plans into "families" or "suites" of plans. The plans in each family function the same way but have different deductibles, copayments, and out-of-pocket limits. Here are the families of plans in the new Employee Elect portfolio:
* Premier PPO - rich benefit plans that pay "reasonable & customary" out of network;
* Copay PPO - Moderate deductible plans with Dr. Office visits before the deductible;
* Gen Rx PPO - comprehensive benefits but no brand medicine;
* Solution - High deductible PPO plans with Dr. Office visits & Rx before the deductible;
* Lumenos HIA+ - HRA style plans with first dollar coverage then a deductible, Rx after the medical deductible;
* Lumenos HSA (100/70) - plans pay 100% after the deductible with new 3-tier Rx benefits (previously there was no copayment for Rx after the deductible - but non-formulary medicine was not covered);
* Lumenos HSA (80/70) - lower premium HSA plans with co-insurance after the deductible;
* Elements Hospital - these are basic hospital only plans with very limited - if any out of hospital benefits and Rx benefits;
* EPO - in network only benefits suitable for "wrap products" that are like an HRA and pay expenses prior to the deductible; and,
* HMO - there are 10 HMO plans grouped in 4 categories: 100% hospital; Classic; Saver and Select.
Anthem calls their entire portfolio of small business medical plans Employee Elect with additional portfolios referred to as Employee Choice and BeneFits. During the past 10 years the Employee Elect portfolio has grown from 12 plans to 29. With these changes Anthem Blue Cross will offer 34 plans in their Employee Elect portfolio, including 10 HMO plans. For many years Anthem Blue Cross only offered 3 HMOs: the 100%; Classic $250; and the Saver HMO.
According to Anthem Blue Cross, their research about consumer preferences indicates that people want many choices. The large selection of plans addresses this preference. A small business in California (2-50 employees) can offer all 34 plans to their employees at one time.
To help make sense of the many plans, Anthem Blue Cross has grouped the plans into "families" or "suites" of plans. The plans in each family function the same way but have different deductibles, copayments, and out-of-pocket limits. Here are the families of plans in the new Employee Elect portfolio:
* Premier PPO - rich benefit plans that pay "reasonable & customary" out of network;
* Copay PPO - Moderate deductible plans with Dr. Office visits before the deductible;
* Gen Rx PPO - comprehensive benefits but no brand medicine;
* Solution - High deductible PPO plans with Dr. Office visits & Rx before the deductible;
* Lumenos HIA+ - HRA style plans with first dollar coverage then a deductible, Rx after the medical deductible;
* Lumenos HSA (100/70) - plans pay 100% after the deductible with new 3-tier Rx benefits (previously there was no copayment for Rx after the deductible - but non-formulary medicine was not covered);
* Lumenos HSA (80/70) - lower premium HSA plans with co-insurance after the deductible;
* Elements Hospital - these are basic hospital only plans with very limited - if any out of hospital benefits and Rx benefits;
* EPO - in network only benefits suitable for "wrap products" that are like an HRA and pay expenses prior to the deductible; and,
* HMO - there are 10 HMO plans grouped in 4 categories: 100% hospital; Classic; Saver and Select.
Wednesday, July 15, 2009
Monday, July 13, 2009
Poll of Business Executives Shows Most Companies Not Aware of True Costs of Healthcare
MARIETTA, Ga., July 10/PRNewswire/ -- Contrary to a conventional perspective among business executives that the top healthcare cost drivers for employers are pharmacy and medical expenses, research presented during a recent online webinar, hosted by Source Media, showed that lost workplace productivity due to chronic and other illnesses is actually more costly to employers. The purpose of the webinar was to clarify the true cost drivers because, as three-quarters of webinar participants who responded to the webinar poll indicated, many employers are still focusing primarily on reducing medical and pharmacy costs.
Presenting the research was Ron Loeppke, MD, MPH, executive vice president of health and productivity strategy for Alere, who led a recent multiemployer study demonstrating that for every dollar an employer spends on medical and pharmacy expenses, they spend $2.3 on health-related productivity costs. The study, published in the April edition of the Journal of Occupational and Environmental Medicine, examined the effects of absenteeism and presenteeism, which occurs when employee workplace performance is impaired by a health condition. The study was sponsored by the American College of Occupational and Environment Medicine and conducted by the Alere Center for Health Intelligence in conjunction with the Integrated Benefits Institute.
Some 180 of the nation's top employers, health plans and benefit consulting firms learned about the study and other key facts while participating in "The Business Case for Better Health" webinar hosted by SourceMedia, publishers of Employee Benefits News and Employee Benefit Adviser. Nearly 74 percent of webinar participants who responded to the poll stated that pharmacy and medical expenses were the top cost drivers for their healthcare benefit programs, while 75 percent noted that the primary reason they offered health improvement programs was to save money.
"We need to find ways to encourage employers to look beyond just medical and pharmacy costs," noted Dr. Loeppke, who has also conducted a number of other studies on the impact of health on productivity. "We need to look at the burden of chronic illness as well as the health risks as precursors to chronic conditions and how that relates back to health-related productivity loss (presenteeism and absenteeism) - those are key factors that are eating into employers' profitability."
Loeppke and the other presenters - including Michael Taylor, MD, FACP, medical director for Health Promotion for Caterpillar and chairman of the Center for Health Value Innovation (CHVI), and Christine A. Reichardt, senior benefit analyst with Journal Communications, Inc. and also a member of CHVI - highlighted the value of health improvement and wellness programs as a tool to help improve businesses' bottom lines and preserve their "human capital." They emphasized the need for an integrated approach to healthcare benefits - one that focuses on prevention and wellness as well as worksite health programs, focusing on such issues as smoking cessation, diet, exercise and health screenings.
Prevention, health improvement and evidence-based treatment can make significant reductions to the economic burden of illness in America, according to Dr. Loeppke. In fact, he says, the Milken Institute has shown that compared to current trends, by 2023 with plausible improvements in preventing and treating chronic conditions, the U.S. could:
-- Avoid 40 million cases of chronic disease
-- Decrease treatment costs by $218 billion per year
-- Reduce the economic impact of disease by 27 percent, or $1.1 trillion
annually
-- Increase the nation's GDP by $905 billion through productivity gains
Identifying the true cost drivers and the value of productivity enables employers to create more targeted and meaningful benefit programs, according to presenters. More importantly, they said, such information helps to demonstrate the business value of a healthier workforce and sell the value of health and wellness programs to top executives.
For additional information or to view and listen to the webinar, go to http://eba.benefitnews.com/blog/bythenumbers/-2681123-1.html
To order a hard copy reprint of Dr. Loeppke's study, email alerenews@alere.com. Please include your name, title, organization, address and phone number.
Presenting the research was Ron Loeppke, MD, MPH, executive vice president of health and productivity strategy for Alere, who led a recent multiemployer study demonstrating that for every dollar an employer spends on medical and pharmacy expenses, they spend $2.3 on health-related productivity costs. The study, published in the April edition of the Journal of Occupational and Environmental Medicine, examined the effects of absenteeism and presenteeism, which occurs when employee workplace performance is impaired by a health condition. The study was sponsored by the American College of Occupational and Environment Medicine and conducted by the Alere Center for Health Intelligence in conjunction with the Integrated Benefits Institute.
Some 180 of the nation's top employers, health plans and benefit consulting firms learned about the study and other key facts while participating in "The Business Case for Better Health" webinar hosted by SourceMedia, publishers of Employee Benefits News and Employee Benefit Adviser. Nearly 74 percent of webinar participants who responded to the poll stated that pharmacy and medical expenses were the top cost drivers for their healthcare benefit programs, while 75 percent noted that the primary reason they offered health improvement programs was to save money.
"We need to find ways to encourage employers to look beyond just medical and pharmacy costs," noted Dr. Loeppke, who has also conducted a number of other studies on the impact of health on productivity. "We need to look at the burden of chronic illness as well as the health risks as precursors to chronic conditions and how that relates back to health-related productivity loss (presenteeism and absenteeism) - those are key factors that are eating into employers' profitability."
Loeppke and the other presenters - including Michael Taylor, MD, FACP, medical director for Health Promotion for Caterpillar and chairman of the Center for Health Value Innovation (CHVI), and Christine A. Reichardt, senior benefit analyst with Journal Communications, Inc. and also a member of CHVI - highlighted the value of health improvement and wellness programs as a tool to help improve businesses' bottom lines and preserve their "human capital." They emphasized the need for an integrated approach to healthcare benefits - one that focuses on prevention and wellness as well as worksite health programs, focusing on such issues as smoking cessation, diet, exercise and health screenings.
Prevention, health improvement and evidence-based treatment can make significant reductions to the economic burden of illness in America, according to Dr. Loeppke. In fact, he says, the Milken Institute has shown that compared to current trends, by 2023 with plausible improvements in preventing and treating chronic conditions, the U.S. could:
-- Avoid 40 million cases of chronic disease
-- Decrease treatment costs by $218 billion per year
-- Reduce the economic impact of disease by 27 percent, or $1.1 trillion
annually
-- Increase the nation's GDP by $905 billion through productivity gains
Identifying the true cost drivers and the value of productivity enables employers to create more targeted and meaningful benefit programs, according to presenters. More importantly, they said, such information helps to demonstrate the business value of a healthier workforce and sell the value of health and wellness programs to top executives.
For additional information or to view and listen to the webinar, go to http://eba.benefitnews.com/blog/bythenumbers/-2681123-1.html
To order a hard copy reprint of Dr. Loeppke's study, email alerenews@alere.com. Please include your name, title, organization, address and phone number.
Friday, July 10, 2009
How Cherry Picking Could Hurt Obama's Health Care Plan
William Vaughan was in St. Petersburg, Fla. this past winter taking care of his ailing father. He noticed the large number of newspaper ads for Medicare HMO plans. The private plans, offered by Humana ( HUM - news - people ), UnitedHealth ( UNH - news - people ) and others, would hold seminars with free food at restaurants or hotels to pitch senior citizens on the virtues of swapping their government Medicare for the HMO alternative.
Most of the events were in nice parts of Pinellas County. Very few were downtown or in other poor or minority areas. He collected information on 70 events and found that 45 were in affluent zip codes. Vaughan, whose day job is a policy analyst at Consumers Union in Washington, was pretty sure he knew why. "When 50% of the people spend only 3% of health dollars, you'll stay up all night trying to find that 50%," Vaughan says. Or, he jokes, "the [Medicare HMO] marketing people in Pinellas County must think low-income people and certain minorities don't like doughnuts as much as rich people do."
Insurance companies find ingenious ways to get healthy members in the door while being inconvenient to sickly applicants. That's bad news for reformers, who imagine an egalitarian world that doesn't discriminate against the sick. The four health care proposals now getting the most attention in Congress all require HMOs to offer coverage to all who apply, regardless of their health status.
Good luck with that. Insurance companies will have a financial motive to attract and keep the healthiest members, the ones who don't rack up hospital visits or take costly medications. If Obama Care means HMOs will have to compete with a new public plan, a disproportionate number of unhealthy people will end up in the latter.
Health plans started playing games with Medicare in the early 1990s--when the program started its experiments with privatization, paying a fixed amount to private health insurers for each member they could sign up. HMO companies would hold seminars for prospective new members on the third floor of elevatorless buildings or in places that required a long drive. You could count on only the fittest and most self-sufficient seniors to show up. Others would recruit at a 5k charity run or offer gym memberships as a perk and pat themselves on the back for promoting fitness. Barbells are not of much interest to those who are demented, bedridden or in a wheelchair--all health care gobblers, notes Paul Precht of the Medicare Rights Center.
Insurers would also structure benefits so that sick patients would be deterred or never re-enroll. "If you didn't want to attract cancer patients you would put in copayments and coinsurances that were less attractive than [regular] Medicare," says George Rapier, a doctor in San Antonio whose 60-physician practice contracts with Medicare HMOs.
(Source: Forbes, Link: http://www.forbes.com/forbes/2009/0713/health-obama-insurance-hmo-cherry-picking.html?partner=biotech_newsletter)
Most of the events were in nice parts of Pinellas County. Very few were downtown or in other poor or minority areas. He collected information on 70 events and found that 45 were in affluent zip codes. Vaughan, whose day job is a policy analyst at Consumers Union in Washington, was pretty sure he knew why. "When 50% of the people spend only 3% of health dollars, you'll stay up all night trying to find that 50%," Vaughan says. Or, he jokes, "the [Medicare HMO] marketing people in Pinellas County must think low-income people and certain minorities don't like doughnuts as much as rich people do."
Insurance companies find ingenious ways to get healthy members in the door while being inconvenient to sickly applicants. That's bad news for reformers, who imagine an egalitarian world that doesn't discriminate against the sick. The four health care proposals now getting the most attention in Congress all require HMOs to offer coverage to all who apply, regardless of their health status.
Good luck with that. Insurance companies will have a financial motive to attract and keep the healthiest members, the ones who don't rack up hospital visits or take costly medications. If Obama Care means HMOs will have to compete with a new public plan, a disproportionate number of unhealthy people will end up in the latter.
Health plans started playing games with Medicare in the early 1990s--when the program started its experiments with privatization, paying a fixed amount to private health insurers for each member they could sign up. HMO companies would hold seminars for prospective new members on the third floor of elevatorless buildings or in places that required a long drive. You could count on only the fittest and most self-sufficient seniors to show up. Others would recruit at a 5k charity run or offer gym memberships as a perk and pat themselves on the back for promoting fitness. Barbells are not of much interest to those who are demented, bedridden or in a wheelchair--all health care gobblers, notes Paul Precht of the Medicare Rights Center.
Insurers would also structure benefits so that sick patients would be deterred or never re-enroll. "If you didn't want to attract cancer patients you would put in copayments and coinsurances that were less attractive than [regular] Medicare," says George Rapier, a doctor in San Antonio whose 60-physician practice contracts with Medicare HMOs.
(Source: Forbes, Link: http://www.forbes.com/forbes/2009/0713/health-obama-insurance-hmo-cherry-picking.html?partner=biotech_newsletter)
Thursday, July 9, 2009
Obama Tells Officials to Prepare for Fall H1N1 Outbreak
President Barack Obama told public health officials in the U.S. to get ready for another outbreak of the H1N1 virus, saying there's potential for a "significant" reappearance of the bug this fall.
"We want to make sure we are not promoting panic but we are promoting vigilance and preparation," Mr. Obama said in a call to the H1N1 Influenza Preparedness Summit in Bethesda, Md.
Mr. Obama couldn't make the summit because he is in L'Aquila, Italy, for the Group of Eight leading nations' summit.
On the call, he said state and local officials should prepare to implement a vaccination program in the fall.
Write to Henry J. Pulizzi at henry.pulizzi@dowjones.com
"We want to make sure we are not promoting panic but we are promoting vigilance and preparation," Mr. Obama said in a call to the H1N1 Influenza Preparedness Summit in Bethesda, Md.
Mr. Obama couldn't make the summit because he is in L'Aquila, Italy, for the Group of Eight leading nations' summit.
On the call, he said state and local officials should prepare to implement a vaccination program in the fall.
Write to Henry J. Pulizzi at henry.pulizzi@dowjones.com
Tuesday, July 7, 2009
Health Care: The Insurance Industry’s View
To the Editor:
Re “Insurance Company Schemes” (editorial, June 29):
The current individual health insurance market is one in which people decide to purchase coverage only when they think they will need it. Massachusetts has demonstrated that if everyone is required to participate, it is possible to overhaul the market rules and provide consumers greater peace of mind.
Indeed, health plans have proposed guaranteed coverage for pre-existing conditions, discontinuing rating based on a person’s health status or gender, and simplifying health care choices for individuals and small businesses.
In a reformed health care system in which everyone participates, individuals will never again have to worry that they may lose coverage on the basis of their medical history or that the cost of their coverage will soar because others may have misrepresented their health status on an application.
Congress should not let the debate about whether to create a government-run plan impede reform when there is widespread consensus on so many critical issues, including sweeping insurance market reforms, new consumer protections, bringing everyone into the system, strengthening the health care safety net, providing a helping hand to working families and small businesses, and promoting prevention and wellness.
Karen Ignagni
President and Chief Executive
America’s Health Insurance Plans
Washington, June 30, 2009
Re “Insurance Company Schemes” (editorial, June 29):
The current individual health insurance market is one in which people decide to purchase coverage only when they think they will need it. Massachusetts has demonstrated that if everyone is required to participate, it is possible to overhaul the market rules and provide consumers greater peace of mind.
Indeed, health plans have proposed guaranteed coverage for pre-existing conditions, discontinuing rating based on a person’s health status or gender, and simplifying health care choices for individuals and small businesses.
In a reformed health care system in which everyone participates, individuals will never again have to worry that they may lose coverage on the basis of their medical history or that the cost of their coverage will soar because others may have misrepresented their health status on an application.
Congress should not let the debate about whether to create a government-run plan impede reform when there is widespread consensus on so many critical issues, including sweeping insurance market reforms, new consumer protections, bringing everyone into the system, strengthening the health care safety net, providing a helping hand to working families and small businesses, and promoting prevention and wellness.
Karen Ignagni
President and Chief Executive
America’s Health Insurance Plans
Washington, June 30, 2009
Monday, July 6, 2009
Hope, Fear over generic biotech drugs.
A push is under way to allow the sale of generic versions of biotech drugs — a move supporters say could boost access to vital treatments for cancer, heart disease and other ailments, saving consumers billions of dollars a year.
It's been 25 years since biotech drugs largely were omitted from legislation permitting the first generic versions of brand-name medicines. Now the Obama administration is working to begin approving so-called generic biologics "as quickly as possible," if Congress authorizes it.
With the president promoting the idea to help trim the country's staggering health care costs, experts on both sides of the issue say pressure is building to pass such a measure.
"This is a huge issue," said David Sloane, senior vice president of government relations and advocacy for AARP, noting that drug costs are the No. 1 issue for his organization's 40 million members. "There are enormous health implications and there are enormous cost implications."
But many biotech industry leaders and some consumers, including 59-year-old cancer patient Jack Aiello of San Jose, fear the legislation could make it so hard for companies to profit from biologic treatments that it could discourage them from creating new drugs, which could wind up hurting consumers.
"I'm all for cheaper drugs when the generic versions become available," said Aiello, a former marketing executive diagnosed with multiple myeloma in 1995. "I just don't want the research efforts to be discouraged because of that."
That concern is acute in the Bay Area, which has the world's biggest cluster of biotechnology companies. Once generic biologics hit pharmacy shelves, those firms may find it harder to obtain financing to develop drugs, some executives fear.
"I think you would find a lot of questioning among people in this industry whether this is worth investing in," said Dr. David Lacey, a senior research executive at Amgen, the world's biggest biotech company, which is based in Thousand Oaks and also has Bay Area operations.
If a bill is passed, biotech executives want to make sure it keeps their confidential drug data from being made available to generic drugmakers for 14 years after their medicine is marketed. But with the White House proposing to protect that data for only seven years and some lawmakers favoring only five years, some drug industry officials fear they soon could get stuck with a law that decimates their businesses.
"There is a lot of momentum building to pass something in this Congress," said Marie Vodicka of the Pharmaceutical Research and Manufacturers of America, which represents biotech and other drug companies. "What it's about in this legislation is getting it right."
Generics tend to be cheaper than the medicines they copy because they do not have to undergo the same testing as the originals. The savings from the Hatch-Waxman Act, which permitted the sale of generics 25 years ago, has been enormous, according to an analysis in May by the market research firm IMS Health.
Commissioned by the Generic Pharmaceutical Association, it concluded that generic drugs saved the U.S. health care system $734 billion over the past decade.
The Hatch-Waxman Act only permitted generic versions of chemically synthesized drugs regulated under the Federal Food Drug and Cosmetic Act. Biologic drugs, covered under the federal Public Health Safety Act, were excluded. And many people say it's time that changed, given the growing numbers of biologics — which are made through genetic engineering or other biological processes rather than simply chemically synthesized — being approved for sale.
In 2007, about $40 billion of the nearly $287 billion that U.S. consumers spent on prescription drugs were for biologics, according to the Federal Trade Commission, which threw its support behind generic biologics in a report last month.
Some people say generic biologics are especially needed because some biologic drugs carry a high price. Avastin, a cancer drug made by the Genentech division of Roche in South San Francisco, can cost a patient $8,800 a month, although the company provides it free to some patients.
Because biologic drugs are difficult to make, some experts have raised concerns that consumers buying generic biologics might not get as close a copy as they do with generic chemically synthesized drugs.
The complexity also would make it harder and more costly to produce generic biologics. While it typically takes up to five years and up to $5 million to put a generic drug on the market today, a generic biologic would take up to 10 years and cost up to $200 million, the FTC said.
That would most likely limit the numbers of generic manufacturers jumping into the biologic market and, as a result, biotech companies "will likely continue to reap substantial profits" from their drugs. Even so, some experts have estimated that generic biologics could save consumers up to $10 billion a year.
It's been 25 years since biotech drugs largely were omitted from legislation permitting the first generic versions of brand-name medicines. Now the Obama administration is working to begin approving so-called generic biologics "as quickly as possible," if Congress authorizes it.
With the president promoting the idea to help trim the country's staggering health care costs, experts on both sides of the issue say pressure is building to pass such a measure.
"This is a huge issue," said David Sloane, senior vice president of government relations and advocacy for AARP, noting that drug costs are the No. 1 issue for his organization's 40 million members. "There are enormous health implications and there are enormous cost implications."
But many biotech industry leaders and some consumers, including 59-year-old cancer patient Jack Aiello of San Jose, fear the legislation could make it so hard for companies to profit from biologic treatments that it could discourage them from creating new drugs, which could wind up hurting consumers.
"I'm all for cheaper drugs when the generic versions become available," said Aiello, a former marketing executive diagnosed with multiple myeloma in 1995. "I just don't want the research efforts to be discouraged because of that."
That concern is acute in the Bay Area, which has the world's biggest cluster of biotechnology companies. Once generic biologics hit pharmacy shelves, those firms may find it harder to obtain financing to develop drugs, some executives fear.
"I think you would find a lot of questioning among people in this industry whether this is worth investing in," said Dr. David Lacey, a senior research executive at Amgen, the world's biggest biotech company, which is based in Thousand Oaks and also has Bay Area operations.
If a bill is passed, biotech executives want to make sure it keeps their confidential drug data from being made available to generic drugmakers for 14 years after their medicine is marketed. But with the White House proposing to protect that data for only seven years and some lawmakers favoring only five years, some drug industry officials fear they soon could get stuck with a law that decimates their businesses.
"There is a lot of momentum building to pass something in this Congress," said Marie Vodicka of the Pharmaceutical Research and Manufacturers of America, which represents biotech and other drug companies. "What it's about in this legislation is getting it right."
Generics tend to be cheaper than the medicines they copy because they do not have to undergo the same testing as the originals. The savings from the Hatch-Waxman Act, which permitted the sale of generics 25 years ago, has been enormous, according to an analysis in May by the market research firm IMS Health.
Commissioned by the Generic Pharmaceutical Association, it concluded that generic drugs saved the U.S. health care system $734 billion over the past decade.
The Hatch-Waxman Act only permitted generic versions of chemically synthesized drugs regulated under the Federal Food Drug and Cosmetic Act. Biologic drugs, covered under the federal Public Health Safety Act, were excluded. And many people say it's time that changed, given the growing numbers of biologics — which are made through genetic engineering or other biological processes rather than simply chemically synthesized — being approved for sale.
In 2007, about $40 billion of the nearly $287 billion that U.S. consumers spent on prescription drugs were for biologics, according to the Federal Trade Commission, which threw its support behind generic biologics in a report last month.
Some people say generic biologics are especially needed because some biologic drugs carry a high price. Avastin, a cancer drug made by the Genentech division of Roche in South San Francisco, can cost a patient $8,800 a month, although the company provides it free to some patients.
Because biologic drugs are difficult to make, some experts have raised concerns that consumers buying generic biologics might not get as close a copy as they do with generic chemically synthesized drugs.
The complexity also would make it harder and more costly to produce generic biologics. While it typically takes up to five years and up to $5 million to put a generic drug on the market today, a generic biologic would take up to 10 years and cost up to $200 million, the FTC said.
That would most likely limit the numbers of generic manufacturers jumping into the biologic market and, as a result, biotech companies "will likely continue to reap substantial profits" from their drugs. Even so, some experts have estimated that generic biologics could save consumers up to $10 billion a year.
Thursday, July 2, 2009
The Family Doctor: A Remedy for Health-Care Costs?
The primary-care doctor is gaining new respect in Washington. Battles may be breaking out left and right over the various health-care bills emerging from Congress, but reformers on both sides agree that general practitioners should be given a central role in uniting the fragmented U.S. medical system.
This vision has a name: the "patient-centered medical home." The "home" is the office of a primary-care doctor where patients would go for most of their medical needs. The general practitioner would oversee everything from flu shots to chronic disease management to weight loss, and coordinate care with nurses, pharmacists, and specialists. A 2004 study estimated that if every patient had such a home, the resulting efficiencies might reduce U.S. health-care costs by 5.6%, a savings of $67 billion a year.
Instead, most patients today get a scant seven minutes with a general practitioner, who has time to do little more than ask cursory questions and focus on the problem at hand. The patient rushes to specialists for chronic conditions that could be managed by a regular doctor. (Today, these different physicians rarely coordinate.) Last-minute appointments are almost unheard of—one reason patients with minor complaints flock to already crowded hospital emergency rooms.
This medical home may sound like the "gatekeeper" model of the 1990s, a managed-care creation that was all about holding down costs. But advocates say the new concept is designed to help patients, not insurers. It's more like doctoring 1950s-style, when a Marcus Welby figure handled all the family's medical needs. This time it's juiced up with digital technology.
(Source: BusinessWeek, Link: http://www.businessweek.com/magazine/content/09_27/b4138034173005.htm?campaign_id=rss_smlbz)
This vision has a name: the "patient-centered medical home." The "home" is the office of a primary-care doctor where patients would go for most of their medical needs. The general practitioner would oversee everything from flu shots to chronic disease management to weight loss, and coordinate care with nurses, pharmacists, and specialists. A 2004 study estimated that if every patient had such a home, the resulting efficiencies might reduce U.S. health-care costs by 5.6%, a savings of $67 billion a year.
Instead, most patients today get a scant seven minutes with a general practitioner, who has time to do little more than ask cursory questions and focus on the problem at hand. The patient rushes to specialists for chronic conditions that could be managed by a regular doctor. (Today, these different physicians rarely coordinate.) Last-minute appointments are almost unheard of—one reason patients with minor complaints flock to already crowded hospital emergency rooms.
This medical home may sound like the "gatekeeper" model of the 1990s, a managed-care creation that was all about holding down costs. But advocates say the new concept is designed to help patients, not insurers. It's more like doctoring 1950s-style, when a Marcus Welby figure handled all the family's medical needs. This time it's juiced up with digital technology.
(Source: BusinessWeek, Link: http://www.businessweek.com/magazine/content/09_27/b4138034173005.htm?campaign_id=rss_smlbz)
Wednesday, July 1, 2009
HEALTH NEWS
June 29: In a controversial simple-majority vote Sunday night, the state Assembly approved a Democratic budget proposal that raises taxes on oil production and tobacco products and calls for deep cuts to programs to close most of the $24.3 billion budget shortfall through June 2010.
The state Senate is scheduled to convene today to vote on the 14-bill package, but Gov. Arnold Schwarzenegger today vowed to veto the proposal.
"I will veto any majority vote tax increase bill that punishes taxpayers for Sacramento's failure to live within its means," he said in a written statement. "The legislature will have a difficult time explaining to Californians why they are running floor drills the day before our budget deadline. We do not have time for any more floor drills or partial solutions."
But Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County), argued that it's time to get the budget back in balance. "For the governor or anyone to reject these solutions and to exploit the crisis for political gain or to get unrelated reforms or pet projects would really be the moral equivalent of hijacking an ambulance," she said.
By far the most controversial part of the Democratic proposal was the argument that new taxes can be approved with a simple-majority vote if the Legislature lowers other taxes by the same amount. Democrats tried such maneuvering in December when the state faced a $42 billion shortfall, but the governor vetoed that plan as well.
The current plan would lower the state's 18-cent excise tax on gasoline at the pump and impose new taxes on oil production and tobacco products. That bill was passed Sunday night in a 44-30 vote. A separate bill would impose an 18-cent fee on gasoline and use those funds for local transportation projects, alleviating the state's general fund woes. Such a scenario would raise $2.4 billion for the general fund.
The debate in the Assembly lasted late into the night on Sunday, with Republicans charging that approving a tax by simple majority votes is illegal and Democrats arguing such drastic actions are needed to save the state from financial ruin.
"Anyone who votes for this measure is voting to gut the Constitution of the state of California because you find it inconvenient right now," said Assemblyman Chuck DeVore, R-Irvine.
Later, William Monning, D-Santa Cruz, countered: "We're sharing the chamber with some who have placed more loyalty in their pledge never to raise taxes than in their oath to protect the health and well-being of the people of California."
Bass' decision to go ahead with the simple majority plan was made Sunday after another round of talks with Schwarzenegger. The majority-vote alternative was considered a last option because any plan passed with a majority vote by the Legislature takes effect 90 days after the governor signs it. Plans passed by a two-thirds majority go into effect immediately.
Immediately after the meeting with the governor, Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he expected there would be a lot of negotiating deep into the night, quipping that it was "shuttle diplomacy." He was back in the governor's office about an hour after the first meeting.
The governor presented Democrats with several "policy-related issues," Steinberg said after the first meeting, although he did not elaborate on what those were.
(Source: San Francisco Chronicle)
The state Senate is scheduled to convene today to vote on the 14-bill package, but Gov. Arnold Schwarzenegger today vowed to veto the proposal.
"I will veto any majority vote tax increase bill that punishes taxpayers for Sacramento's failure to live within its means," he said in a written statement. "The legislature will have a difficult time explaining to Californians why they are running floor drills the day before our budget deadline. We do not have time for any more floor drills or partial solutions."
But Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County), argued that it's time to get the budget back in balance. "For the governor or anyone to reject these solutions and to exploit the crisis for political gain or to get unrelated reforms or pet projects would really be the moral equivalent of hijacking an ambulance," she said.
By far the most controversial part of the Democratic proposal was the argument that new taxes can be approved with a simple-majority vote if the Legislature lowers other taxes by the same amount. Democrats tried such maneuvering in December when the state faced a $42 billion shortfall, but the governor vetoed that plan as well.
The current plan would lower the state's 18-cent excise tax on gasoline at the pump and impose new taxes on oil production and tobacco products. That bill was passed Sunday night in a 44-30 vote. A separate bill would impose an 18-cent fee on gasoline and use those funds for local transportation projects, alleviating the state's general fund woes. Such a scenario would raise $2.4 billion for the general fund.
The debate in the Assembly lasted late into the night on Sunday, with Republicans charging that approving a tax by simple majority votes is illegal and Democrats arguing such drastic actions are needed to save the state from financial ruin.
"Anyone who votes for this measure is voting to gut the Constitution of the state of California because you find it inconvenient right now," said Assemblyman Chuck DeVore, R-Irvine.
Later, William Monning, D-Santa Cruz, countered: "We're sharing the chamber with some who have placed more loyalty in their pledge never to raise taxes than in their oath to protect the health and well-being of the people of California."
Bass' decision to go ahead with the simple majority plan was made Sunday after another round of talks with Schwarzenegger. The majority-vote alternative was considered a last option because any plan passed with a majority vote by the Legislature takes effect 90 days after the governor signs it. Plans passed by a two-thirds majority go into effect immediately.
Immediately after the meeting with the governor, Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he expected there would be a lot of negotiating deep into the night, quipping that it was "shuttle diplomacy." He was back in the governor's office about an hour after the first meeting.
The governor presented Democrats with several "policy-related issues," Steinberg said after the first meeting, although he did not elaborate on what those were.
(Source: San Francisco Chronicle)
Tuesday, June 30, 2009
10 ways to beat the rising cost of Health Care
Deductibles, co-pays, and drug prices keep going up, up, up. These 10 smart moves can lower your expenses - but not the quality of the care you get.
1. NEGOTIATE: Most of us still aren't used to the idea of talking money with a doctor. But you won't be shocking his delicate sensibilities. "The uninsured frequently ask for a discount or a payment plan, but most insured consumers don't realize that they can negotiate," says Ruth Levin of Continuum Health Partners, a New York City hospital system.
2. SAY NO TO EXPENSIVE PRESCRIPTIONS: Health plans have gotten picky about pills. About 77% of workers with a drug benefit face three or more price tiers - one cost for generics and higher charges for "preferred" and "nonpreferred" brands. If Prevacid isn't on your preferred list, it could easily cost you $300 a year more than a generic version of Prilosec.
3. Get your free money. Sign up for that FSA: Need any more proof that humans aren't as rational as economists assume? Look at flexible spending accounts, a benefit that can put hundreds of bucks in your pocket. About 80% of large employers offer FSAs, but a mere 22% of their workers enroll, according to the consultancy Mercer.
4. Look before you leap into a high deductible: Wish you could pay a lower monthly premium? Many firms offer you a choice between a traditional plan and one with low monthly costs but a much bigger annual deductible. But high-deductible plans aren't a good fit for everyone.
5. Max out an HSA (but use it wisely): If your family's insurance deductible is higher than $2,300 you likely qualify for a health savings account, or HSA. Like FSAs, these accounts let you save pretax dollars for health costs. The key difference is that you get to keep your money there as long as you want. And so long as you use it to buy health care, you don't pay taxes when you withdraw it either.
6. Get in, get out, and pay a whole lot less: Physicians jam so many appointments into a day that it can be hard to squeeze in on short notice. And if you have to take your kid to an emergency room for a weekend illness, it could cost you a co-pay of $100 or more, especially if the insurer deems it a nonemergency. But there are easier, cheaper ways to get treatment for minor ailments.
7. Have an insurance game plan if you lose your job: You already know that you should have a cash emergency fund that covers six months' expenses. That figure should include insurance costs, because you don't want to let coverage lapse. Not only would you be vulnerable to huge costs if you fell ill, but if you let coverage slide for 63 days or more, your next employer doesn't have to immediately cover preexisting conditions.
8. Live healthier ... Or else: Employers want you to be healthier, and not because they love you. They're trying to control their health costs, says Kathy Harte, a consultant at Hewitt.
9. Avoid Medicare mishaps: Medicare has become a bit baffling. Besides traditional coverage, you can choose private plans called Medicare Advantage. And then there are all those new drug programs.
10. Cut vision and dental costs too: Your company may offer you optional vision benefits, which might seem pretty attractive. But run the numbers before you sign up. Add up the amount you spend on contacts, glasses, and optometrist visits each year. Then calculate how much you'd save with the plan's benefits. Some people find that the coverage costs about the same, or sometimes more, than they save. And remember, you can also pay for vision through your FSA or HSA.
(Source: CNN Money, Link:http://money.cnn.com/magazines/moneymag/moneymag_archive/2009/07/01/105825492/index.htm)
1. NEGOTIATE: Most of us still aren't used to the idea of talking money with a doctor. But you won't be shocking his delicate sensibilities. "The uninsured frequently ask for a discount or a payment plan, but most insured consumers don't realize that they can negotiate," says Ruth Levin of Continuum Health Partners, a New York City hospital system.
2. SAY NO TO EXPENSIVE PRESCRIPTIONS: Health plans have gotten picky about pills. About 77% of workers with a drug benefit face three or more price tiers - one cost for generics and higher charges for "preferred" and "nonpreferred" brands. If Prevacid isn't on your preferred list, it could easily cost you $300 a year more than a generic version of Prilosec.
3. Get your free money. Sign up for that FSA: Need any more proof that humans aren't as rational as economists assume? Look at flexible spending accounts, a benefit that can put hundreds of bucks in your pocket. About 80% of large employers offer FSAs, but a mere 22% of their workers enroll, according to the consultancy Mercer.
4. Look before you leap into a high deductible: Wish you could pay a lower monthly premium? Many firms offer you a choice between a traditional plan and one with low monthly costs but a much bigger annual deductible. But high-deductible plans aren't a good fit for everyone.
5. Max out an HSA (but use it wisely): If your family's insurance deductible is higher than $2,300 you likely qualify for a health savings account, or HSA. Like FSAs, these accounts let you save pretax dollars for health costs. The key difference is that you get to keep your money there as long as you want. And so long as you use it to buy health care, you don't pay taxes when you withdraw it either.
6. Get in, get out, and pay a whole lot less: Physicians jam so many appointments into a day that it can be hard to squeeze in on short notice. And if you have to take your kid to an emergency room for a weekend illness, it could cost you a co-pay of $100 or more, especially if the insurer deems it a nonemergency. But there are easier, cheaper ways to get treatment for minor ailments.
7. Have an insurance game plan if you lose your job: You already know that you should have a cash emergency fund that covers six months' expenses. That figure should include insurance costs, because you don't want to let coverage lapse. Not only would you be vulnerable to huge costs if you fell ill, but if you let coverage slide for 63 days or more, your next employer doesn't have to immediately cover preexisting conditions.
8. Live healthier ... Or else: Employers want you to be healthier, and not because they love you. They're trying to control their health costs, says Kathy Harte, a consultant at Hewitt.
9. Avoid Medicare mishaps: Medicare has become a bit baffling. Besides traditional coverage, you can choose private plans called Medicare Advantage. And then there are all those new drug programs.
10. Cut vision and dental costs too: Your company may offer you optional vision benefits, which might seem pretty attractive. But run the numbers before you sign up. Add up the amount you spend on contacts, glasses, and optometrist visits each year. Then calculate how much you'd save with the plan's benefits. Some people find that the coverage costs about the same, or sometimes more, than they save. And remember, you can also pay for vision through your FSA or HSA.
(Source: CNN Money, Link:http://money.cnn.com/magazines/moneymag/moneymag_archive/2009/07/01/105825492/index.htm)
Monday, June 29, 2009
Tax Break for Savers in Retirement Plans
As a financial advisor, you may be looking to motivate retirement plan sponsors and participants to stay the course. Here's a little extra motivation: the Saver's Credit.
Saving in a 401(k) plan can be a great way for low and moderate income employees to save on taxes - and they may be eligible for the Saver's Credit. The maximum Saver's Credit is $1,000 ($2,000 for married couples), and is taken in addition to any other tax benefits available to people who save in qualified retirement plans or traditional IRAs.
The Saver's Credit can provide additional motivation for companies looking to boost plan participation. It's an effective way to help eligible employees save for the future, and receive a tax benefit.
As always, I welcome the opportunity to help you grow your retirement book of business. If you would like to discuss a prospective client or would like to request a proposal, please give me a call.
(Source- TransAmerica, Link- http://www.irs.gov/newsroom/article/0,,id=200742,00.html)
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